UPDATE: Major Miners Back Australia's Wiggins Island Coal Terminal

Plans to unblock an infrastructure bottleneck limiting coal exports from the Bowen and Surat Basins in Australia's Queensland state took a significant step forward Thursday, after eight miners agreed to ship 27 million tons a year through the Wiggins Island Coal Export Terminal.

Australia accounts for around two-thirds of global exports of the coking coal used in steelmaking, the vast majority of it coming from the Bowen Basin through the ports of Gladstone and Mackay. But the country's major coal export terminals have been hampered in recent years by infrastructure that is incapable of processing the volumes of commodities demanded by overseas consumers.

WICET, a consortium of 16 miners operating in the region, said agreement will allow it to arrange financing for the A$5 billion development, which is expected to be finalized by the end of April 2011 and start exports in 2014.

The eight miners include Xstrata PLC's (XTA.LN) Xstrata Coal subsidiary, Yanzhou Coal Mining Co. Ltd.'s (YZC) Yancoal, Wesfarmers Ltd.'s (WES.AU) Wesfarmers Curragh, Aquila Resources Ltd. (AQA.AU) and Cockatoo Coal Ltd. (COK.AU). Bandanna Energy Ltd. (BND.AU), Caledon Resources PLC (CDN.LN) and Northern Energy Corp. Ltd. (NEC.AU) will also be involved in stage one of the development.

Bandanna said that it had posted a bond of A$3.1 million to guarantee its commitment to transport coal through the port and commit an estimated A$5.9 million to the project's development costs.

An analyst at a European bank in Sydney, who asked not to be named, said that ports were a crucial link in the export chain because of the long time they took to start up.

"Ports you have a lead time of five years from the first plan through to production, (rail tracks) take about three years and above rail (rolling stock) takes about two years," he said.

However, he stressed that the larger concern around the port of Gladstone was rail rather than port capacity, and that Asian demand is growing so fast that even improvements to Queensland's infrastructure and the start of major exports from Mozambique would be unable to keep pace.

Gladstone currently handles around 50 million tons of coal a year and has capacity to transport a further 25 million tons, but shipping queues are common.

On Thursday, nine vessels were anchored outside the port compared to six at loading berths, according to data on the Gladstone Port Corp.'s website.

WICET's plan for exports through the port could extend by up to 80 million tons a year if stages two and three of the project go ahead after the first stage is completed in 2014.

Other members of the 16-member Wiggins Island consortium include BHP Billiton Ltd. (BHP), Rio Tinto PLC (RTP) and Macarthur Coal Ltd. (MCC.AU).

"How big those stages two and three will be depends on expressions of interest" from miners involved in the consortium, said a spokesman for WICET.

Those expressions were lodged by the end of August and are currently being assessed.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]