It’s hard to imagine a commodity with a less appealing name than boghead coal, or to think it might play a role in a transport future dominated by electric vehicles (EVs), but the man who kick-started Australia’s lithium boom reckons boghead coal could be the next hot commodity.
Neil Biddle is a key person in the conversion of Pilbara Minerals (ASX: PLS) from a penny dreadful trading at less than $0.05 just six years ago into the 75th biggest company on the ASX with a value of $7 billion.
He has now turned his attention to Greenvale Mining (ASX: GRV) and it’s boghead coal (also known as torbanite) project called Alpha in Queensland.
The mineral is not coal in the conventional sense with qualities more like fine-grained oil shale, a material which almost became a major source of petroleum in Australia in the 1970s, but failed because of high processing costs and even higher levels of pollution.
But there is a product liberated in the processing of torbanite, which is of increasing value in Australia as the country closes its oil refineries, bitumen. In a future world dominated by EVs there will still be a need for bitumen as a cost-effective road building material.
Making a success of Alpha
Biddle’s plan is to pick up where earlier explorers failed at Alpha, which is located near the remote town of the same name in central Queensland.
Discovered as far back as 1939, Alpha’s torbanite was originally seen as a rich source of oil, potentially replicating a 19th century Scottish oil-from-shale business based at Torbanehill – hence the torbanite name for the mineral.
Decades of exploration and analysis failed to find a market for Alpha’s torbanite and with pressure building on all sources of fossil fuels it’s difficult to see the deposit being developed purely as a source of oil.
But what Biddle has in mind is a project yielding a number of products, ranging from locally generated electricity with emissions offset by a big solar farm and wind turbines, refined liquid petroleum products, industrial carbon, and high-quality bitumen.
The business plan is undoubtedly ambitious, but with Australia steadily losing access to bitumen extracted from locally refined oil there is no doubting demand growth because even EVs need smooth roads.
With Australia’s annual consumption of bitumen running at close to 800,000 tonnes a year, mainly from road builders, there is an assured market for one of the primary products earmarked for production by Greenvale.
And with local supply starting to decline as oil refineries are closed, the road builders are starting to look for new sources of supply with some already knocking on Greenvale’s door to see when bitumen will become available.
The commercialisation strategy for Alpha is still evolving, but Greenvale is getting closer to declaring a mineral resource, perhaps by the end of the year, with a feasibility study and an ore reserve statement targeted for completion in the first quarter of next year.
Renewable energy focus
Getting what is essentially a hydrocarbon project into production at a time of opposition to anything connected to coal or oil will not be easy, which is why Greenvale is placing increased emphasis on its hybrid energy proposal which includes solar power and gas-fired electricity fed into the regional grid.
In its latest quarterly report, the company said the inclusion of a hybrid power generation component introduced an important renewable energy aspect to the project, enhancing its sustainability credentials.
The conceptual mine plan is a simple open cut operation – extracting torbanite from a depth of five metres down to 50m over an initial 10 years of operation, with mined material fed into a processing system to yield a range of products.
In a September project update, Greenvale estimated development costs between $125 million and $200 million, with the bulk of the capital being allocated for power infrastructure such as the gas turbine and solar farm.
Biddle said analysis of the Alpha torbanite had confirmed that the project could yield products expected to be in high demand locally and internationally.
Greenvale’s plan for Alpha has not yet generated much investor interest with the company’s other major project, copper exploration in the Northern Territory receiving more attention, perhaps because copper is easier to understand than bitumen.
A stock to watch
After hitting a share price peak of $0.66 in mid-August, Greenvale shares have slipped back to trade around $0.25, valuing the stock at $101 million.
But what makes Greenvale a stock to watch is the past success of Biddle in taking a largely unknown lithium asset in WA’s Pilbara region and helping turn it into a globally significant source of raw material for EVs.
Bitumen is not as exciting as lithium, but it is a globally traded basic material used everywhere and without it the EVs of the future could be in for a rough ride.