Plans for the CopperString 1,000 km transmission line from Townsville to Cloncurry in north-west Queensland have been thrown into doubt by an announcement by Xstrata that it will obtain its power from the new gas-fired Diamantina Power Station under a 17-year contract with the Diamantina consortium.

 

The CopperString proposal would provide major energy users in Queensland’s North West Mineral Province with access to the National Electricity Market and also opportunities for renewable energy projects along the proposed transmission line to supply clean energy to the National Electricity Market.

 

As a result of Xstrata’s announcement, CopperString is currently reviewing the project’s viability.

 

Xstrata’s agreement with the Diamantina Power Station consortium extends from 2013 to 2030, with gas supply and pricing fixed until 2023. 

 

The consortium comprises joint venture partners APA Group, the owner and operator of the Carpentaria Gas Pipeline, and national energy company, AGL Energy Limited.

 

AGL Engery and APA Group have also announced a Power Purchase Agreement with Ergon Energy Queensland that will see the development and construction of the new $500 million 242 megawatt gas-fired power station.

 

AGL will supply the new Diamantina Power station with 138 petajoules (PJ) for the first 10 years of the project and will use the company’s existing gas supply arrangements.

 

AGL and APA have selected CTEC as the EPC contractor for this project with the fixed price turnkey contract supported by a sub-contract with Siemens, who will provide the majority of the power station equipment.

 

Xstrata will also invest US$30 million (A$28 million) over the next two years to support modifications to existing infrastructure to accommodate the integration of the new gas-fired Diamantina Power Station.

 

Xstrata will also invest US$30 million (A$28 million) over the next two years to support modifications to existing infrastructure to accommodate the integration of the new gas-fired Diamantina Power Station adjacent to the existing Mica Creek Power Station near Mount Isa.

 

Xstrata Copper North Queensland Chief Operating Officer Steve de Kruijff said the Diamantina Power Station consortium offers the most reliable and cost effective solution for the company's energy requirements.

 

“Critically, Diamantina Power Station is able to guarantee new capacity and gas supply from 2013, providing continuity of supply as current energy contracts expire,” Mr de Kruijff said.

 

He said the increased capacity from Diamantina Power Station would also ensure continuity of supply to the north west communities of Mount Isa and Cloncurry and facilitate the ongoing growth of the broader resources industry within the highly prospective North West Minerals Province.

 

Xstrata Zinc Australia Chief Operating Officer, Brian Hearne, said the potential 440MW capacity available through both Diamantina Power Station and the Mica Creek Power Station after the retirement of old plant, will support the life of mine planning for Xstrata’s north west Queensland operations,  and expansionary projects currently in development and planning.

 

Xstrata’s selection of the Diamantina Power Station consortium follows a two-year, competitive process to assess alternatives for long-term energy supply. The competitive process was established by the Queensland Government following the recommendations of the Sims Review into north-west Queensland energy needs commissioned by the Queensland Government and the Queensland Resources Council in 2009. The assessment was based on key criteria established by the Sims Review, including economic viability, regional growth and opportunities, environmental impact, reliability of energy supply and community interests.  Xstrata underwrote several million dollars into the feasibility studies and other activities undertaken by CopperString and Diamantina Power Station to enable both options to be fully considered.

 

The Diamantina Power Station will be a new 242MW high efficiency combined cycle gas-fired power station to be constructed and commissioned in two 121MW blocks each consisting of two 40MW gas turbines and one 41MW steam turbine. The first block is scheduled to be commissioned in December 2013 and the second in March 2014. Manufacturing slots reservations for long lead items were secured in advance of any final decisions, to allow delivery timelines to be achieved.

 

Diamantina Power Station will be built on a sublease within the Mount Isa Mines mining lease (ML8058). Site works are planned to commence in the first quarter of 2012 with development approvals already being progressed with the Mount Isa City Council.  It will be supplied with gas sourced from the Surat Basin coal seam gas reserves and transported through existing gas pipeline infrastructure to Mount Isa. A new gas compressor station is to be built at Ballera to provide a second option for transfer of gas between the South West Queensland pipeline and the Carpentaria Pipeline.