A potential coal mine in Tasmania's Midlands would require "large government subsidies" for it to be cost-competitive against larger mines in NSW and Queensland, the Australia Institute believes.
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The progressive think tank looked into the economics of the potential Midland Energy mine, which received a $50,000 exploration drilling grant from the Tasmanian Government in March to explore its two tenements at Jericho and Woodbury.
The Australia Institute found that shipping coal from Tasmania to targeted Asian markets could cost $50,000 to $100,000 extra compared with mainland states, Tasports would need to add coal loaders, and Asian coal demand had largely plateaued since a peak in 2011.
MORE ON THE MIDLANDS COAL MINE:
"The newest mine in NSW produces 10 million tonnes per annum (MTPA) while Queensland's new projects aim for up to 60 MTPA," the Australia Institute report reads.
"Midland Energy is looking to produce initially just 1 MTPA, with a longer term goal of reaching 3 MTPA.
"On a per tonne basis, it will be difficult for this mine to compete without further and larger government subsidy.
"Who will fund the coal loaders required at the port?"
Australian company Midland Energy launched a $10 million equity raising bid in the United States last month for its two advanced exploration tenements in Tasmania - one which covers an area from the west of Oatlands down to near Mt Mercer, and another which covers an area east of Woodbury.
Managing director Daniel Macri said there had been "years of successful exploration and feasibility studies" and "the time is right to embark on the next phase of development".
The company would reportedly consider a highwall mining method to dig up coal for power generation.
Despite providing an exploration grant, the state government says it does not support mining on productive agricultural land.
A group of 16 Tasmanian organisations combined for a rally in Hobart on Saturday to oppose Midland Energy's proposal, including groups that have delayed the Adani coal mine in Queensland. Concern centred on environmental damage and a need for more renewable energy.
The groups - including School Strike for Climate, Doctors for the Environment Australia and Farmers for Climate Action - have formed an alliance and vowed a Franklin Dam and Gunns pulp mill-style campaign if the project progresses to the next stage.