Glencore still trying to offload WICET stake, but no bites

GLENCORE is still struggling to find a buyer for five million tonnes a year capacity on the $2.5 billion Wiggins Island Coal Export Terminal project after so many months, putting into question industry appetite for the project.

While commodities giant Glencore does support the industry-owned WICET model, it has been unable to fill a 5Mtpa allocation out of its 10.9Mtpa chunk it has been trying to sell off.

Glencore has been attempting to sell the capacity to avoid 'take or pay' provisions, which means that even if it is unable to use all of its allocation it will have to pay WICET for the space anyhow.

The Observer last got in touch with Glencore at the start of November, when it confirmed that it had not garnered any interest in the stake.

When contacted on Tuesday, Glencore confirmed that it had still not gotten any bites for the capacity.

According to UBS energy analyst Daniel Morgan, news of Glencore being unable to garner interest in the stake is hardly surprising given the state of the Queensland coal market.

"It's basically that corporates as a whole in the last 12 to 24 months have sought to step back from making large-scale capital investments, and couple that with recent coal prices and it's not a great picture" Mr Morgan said.

"When WICET started, the coal markets were a lot more buoyant and it was expected that in time after the first stage there would be a whole suite of coal projects which would be approved.

"Glencore trying to sell off that capacity really indicates the challenges in getting new coal to market in the near-term at least."

He said while there were recent signs of a bounceback for thermal coal prices in particular, it was too early to tell whether this would translate into an appetite for new projects to fill capacity on an expanded WICET project.

WICET project

  • Cost: $2.5 billion
  • Stage one capacity: 27Mtpa
  • Planned capacity: 80Mtpa
  • Stage one partners: Acquila Resources, Bandanna Energy, Caledon Coal, Cockatoo Coal, Glencore, Northern Energy Corporation, Wesfarmers Curragh, YancoalAquila

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