Scadden Energy Project

The Scadden Energy Project is a notional coal-to-liquids and/or coal export project near Esperance in Western Australia promoted by Blackham Resources. (The company refers to both the Scadden Energy Project and the Scadden Coal Project without clarifying whether they are being used interchangably or the energy project is referring to the coal-to-liquids proposal only and the coal project to the coal export proposal.)

In media releases Blackham stated that it was "evaluating the development of the Scaddan and Zanthus Energy Project’s into one of Australia’s premier coal to liquid (CTL) facilities, to produce an ultra clean diesel product, electricity and other CTL products. The Scaddan deposit is a world scale stranded deposit at shallow depth making it amenable to large scale open pit mining methods. The Scaddan Energy Project is located adjacent to an infrastructure corridor and only 60 km’s north of the deep water port of Esperance, Western Australia."

The Scadden Energy Project notionally involves the mining of 8 million tonnes of lignite a year from the Scadden mine and either processing it in an adjoining coal-to-liquids plant, exporting the coal or generating electricity for the local market. Blackham Resources state that of the 1.04 billion tonnes of coal resource, only 6% or 80 million tonnes is classed as a "measured resource".

Background
The Scadden Energy Joint Venture was formed in January 2008 between Scadden Energy (70%), a wholly owned subsidiary of Blackham Resources, and Premier Coal (30%). Under the Agreement establishing the joint venture Blackham was required to pay $1.2 million in cash or shares when it received all the information and all the titles over the Scadden deposit. A further $1.3 million in cash or shares was to be paid at the time of a decision to begin commercial mining operations as well as 25 cents a tonne on Blackham's share of run of mine coal but capped at $12.5 million. However, Blackham baulked at the first payment. In late March 2011 it was announced that Premier Coal had agreed to waive the payment. (As part of the renegotiations Premier Coal's share in the joint venture has been reassigned to Wesfarmers Resources).

Just before announcing its renegotiated agreement, Blackham announced that the initial drilling results from its 66 hole drilling programme suggested a larger resource than previously estimated. By late June Blackham Resources was boasting that the Scadden and Zanthus deposits amounted to 1.4 billion tonnes of lignite, of which Blackham's share was almost 1.1 billion tonnes. Based on the revised resource estimate, Blackham's Managing Director claimed that the resource could sustain a 60,000 barrel per day coal-to-liquid project.

Three months later Blackham announced that it had received an unsolicited offer of $15 million and a 50 cents per tonne royalty for its 70% interest in the Scadden Energy Joint Venture. Blackham announced that it was considering the proposal.

At the end of November 2011 Blackham announced the results of its scoping study for coal exports from the Scadden coal project. The cost of the project ranged between $408 million -- assuming Blackham funded major port development costs -- and $147 million, assuming a third party infrastructure group funded the port costs and recouped them by a per tonne charge. Blackham stated that 239 million tonnes could be produced over the first 30 years with total production over 60 years of 480 million tonnes. It proposed that a 8 million tonnes per year operation could be undertaken with raw lignite with minimal processing railed to the Port of Esperance. Blackham stated that the target market for the lignite as "primarily" the "power and gasification markets in India, China and Korea".

The company also stated that "environmental and social impact studies have not yet been undertaken in the Project area. The first phase of field studies could commence as early as Quarter 1 2012 to be incorporated into subsequent project studies. Mining, heritage and environmental approvals still need to be sought."

The company stated that the focus of the project "will now move to"


 * "further marketing studies and engaging potential buyers of the lignite";
 * continuing discussions with the Esperance Port and infrastructure groups interested in developing the multi user bulk commodity terminal; and
 * engage both above ground and below ground rail operators for future rail development access".

As of November 2012, no significant work has been undertaken on either of the coal projects. The company's quarterly reports for March and June repeated material from its December 2011 quarterly report. Significantly, the company's September 2012 quarterly report made no mention at all of its coal projects.

Related SourceWatch articles

 * Australia and coal
 * Australian Coal Association
 * Queensland and coal
 * Western Australia and coal

Blackham Resources announcements about the Scadden project

 * Blackham Resources, "Blackham reports further positive drilling results at Scaddan", Media Release, 14 March 2011.
 * Blackham Resources, Energy Project Termsheet Amended", Media Release, 25 March 2011.
 * Blackham Resources, produces further positive drilling results", Media Release, 9 May 2011.
 * Blackham Resources, Blackham proves up Billion tonne coalfield at Scaddan Energy Project", Media Release, 21 June 2011.
 * Blackham Resources, Blackham receives Unsolicited Offer for Scaddan Energy Project", Media Release, 21 September 2011.
 * Blackham Resources, "Blackham Completes Scoping Study for Scaddan Coal Export", Media Release, 30 November 2011.

External articles

 * Cole Latimer, "WA ‘coal rush’ threat", Australian Mining, June 23, 2011.
 * Robin Chapple (WA Greens member of parliament), "Coal Mining in Esperance", Robin Chapple's website, August 23, 2012.