May 14, 2019 / 4:38 AM / 3 months ago

UPDATE 2-Australia's Pembroke wins govt approval for $700 mln coking coal mine

* Pembroke expects construction to start next year

* Company will soon look to negotiate supply contracts

* Demand for the steelmaking commodity remains high (Adds executive comment)

MELBOURNE, May 14 (Reuters) - Privately held Pembroke Resources on Tuesday won approval from Australia’s Queensland state to develop a $700 million coking coal mine, as it pushes to tap strong demand for the steelmaking ingredient in Asia.

Construction is due to start next year, with the company looking to begin negotiating contracts soon for supplies of coal from the mine, Chief Executive Barry Tudor told Reuters.

“In developing the mine, our preferred course is to obtain some project finance. And as a component ... we anticipate we will need to put in place some offtake agreements,” he said.

“We haven’t entered into any offtake or supply agreements yet. We got an approval today, so we can advance those discussions in a more tangible way now.”

Pembroke has been talking to potential customers in Japan, South Korea and India, and is also open to selling a stake in the mine that will eventually produce 15 million tonnes of nigh-quality coking coal a year out of the state’s developed Bowen Basin.

Tudor said Pembroke had seen a lot of “inbound interest” in the project and that he saw advantages in selling a stake. “There’s sales and marketing, you need to brand your product and there’s potential offtake,” he said. “Absolutely the door is open.”

The mine is expected to create 1,000 operational jobs and 500 jobs during construction, Queensland Premier Annastacia Palaszczuk said in a statement.

The approval comes as the state Labor government has faced criticism for prolonging a review of the controversial Adani thermal coal mine, and ahead of an election at the weekend.

Appetite for thermal coal, used to create heat, has been fading as renewable energy becomes more popular. But coking coal, which has a higher energy content, is vital for steel production.

$1 = 1.4395 Australian dollars Reporting by Melanie Burton; Editing by Michael Perry and Joseph Radford

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