Playing it coal: expansion plan draws Vale to Queensland

Vale intends to apply to build one of the four new export terminals being planned as part of a $6.2 billion expansion at the Abbot Point coal port, Vale's director of operations for Australia, Steve Badenhorst, said.

Vale is spending $24 billion globally this year on resources investments, including developing coal mines in Colombia and Mozambique. The deadline to lodge expressions of interest to build the Abbot Point terminals closes on August 1, the North Queensland Bulk Ports Corporation said.

"We want coal to be the third-biggest revenue stream at Vale behind iron ore and fertiliser," Badenhorst said. Morgan Stanley last month forecast a "buoyant pricing environment" for coal for most of the next five years as economic growth in Asia boosts demand and rail and port bottlenecks keep supply tight.

Vale's coal output in Australia this year may be less than the planned 8 million metric tonnes because of flooding earlier this year and a dispute over shipping with joint-venture partner Aquila Resources, Mr Badenhorst said.

Vale is also in a dispute with Aquila over the development of the jointly-owned Eagle Downs project.

"We would love to have control [of these assets]," Mr Badenhorst said. "However, this isn't part of our discussions right now. We need to find a legal framework."

Australia's planned carbon tax is "a risk" for Vale's plans, he added. "It largely depends on the type of coal the tax applies to. Thermal coal cannot live with any tax and it would kill many operations."

The proposed emissions trading system of the Prime Minister, Julia Gillard, is due to start next July with a fixed price for the first three to five years. The Australian Coal Association says the plan may force the closure of 18 mines in the next decade.