Bowen Basin QLD Mining Towns – Opinion on offer

I've worked in the Qld Bowen Basin coal mines for the past 15 years for a number of the big companies.
I've lived in a few of them – Middlemount, Moranbah, Biloela and Mackay but am now overseas.
I've also owned properties, but mostly have been able to rent them off the companies for anywhere from $16 to $80 per week.

My word of caution is that the Bowen Basin is based around coking coal – exported overseas to the steel mills (except some of the Southern areas – Biloela, Moura, Blackwater etc. which are not actually in the Bowen Basin, and the coal is of varying quality).  Anyway, the current boom is based around the price of Coking Coal, which at current prices of $300 US + is at prices way above anything ever seen before. Most people predict that price WON'T be sustained forever.  I read on this forum that the Bowen Basin has enough coal for many years (100+ years?).  That's true, but the mines won't close because they have run out of coal, it will be because the coal price will drop and eventually there won't be money to be made.  At that point almost ALL the coking coal mines will close and there will be widespread rectrenchments, just like has happened a number of times before. At that time, most of the towns will be vacant – for how long is anyone's guess, but you need to make sure you get out of there before it happens…..  Mining is a cyclical – it WILL happen, but I can't tell you when.

There are a number of other "threats" to the coal industry that haven't been mentioned on this forum, including:

1) Greenhouse gas emissions and Carbon Trading Schemes – have the potential to damage Australia's competitivity. Whatever happens, it will be in the next 5 years.
2) Emerging producers: e.g. China and India – they have the potential for producing coal much cheaper with cheap labour and they are closer to the customers (cheaper sea freight).
3) Customers (steel mills) would LOVE another country other than Australia to become competitive, so that they can introduce serious competition and lower prices – they are prepared to subsidise other countries (that's why I'm overseas).
4) Global Economy – as the Australian dollars appreciates against the US dollar, the Aus miing industry suffers as all global trading is done in US dollars.  Also, the arse falls out of demand whenever the US falls and no-one knows whether Chinese demand is really there….

I think the opportunities in places like Middlemoutn and Dysart are fantastic right now, but I just wanted to throw a word of caution – everything comes at a price and for the returns you are getting now, there is substantial risk – whether you realise it or not. As long as you understand that risk and are happy that you are getting a sufficient return for that risk then go for it.

Final Thought: With all those coal miners out there earning $100K-$200K p.a. why do you think they haven't already snapped up all the properties? I sold my home when I left and took the substantial capital gain.

Hi Guys,

Just read through all the posts.  I know I am coming to the table very late…..but… what can you tell me about Blackwater.  I have a property there.  I know it has boomed already.  What I want to know is…. should I sell it or will there be opportunities for some profit in the future?  At the moment it is virtually paying for itself other than rates and insurance. 

Cheers,
Tina

Hi Daedalus,

Thanks for replying. After reading your posts I thought you might never have to time to post again ……you seem to be so busy with the IPS!  I think you're right in that there's no point selling it at the moment.  There are heaps of properties for sale now.  My PM says that the Alinta Gas plant is either being constructed or will be and so rentals will go up.  I haven't been up there to check this out though….not as diligent as you . 

I am a bit of an armchair investor….I lack the confidence to take risks and by the time I am sure properties or opportunities are gone….Who dares wins I guess.  Again, thanks so much for the reply and great info in your posts.

Cheers,
Tina

Hi Quickchick ,

Great advice…..  I will do what you have suggested right now.  I find it great to be able to show my complete ignorance and have people give me advice!  Cheers,
Tina

Forgive me if I'm doubling up but I can't see if anyone asked about dear old Dingo…?

Your thoughts?

Thanks for the info Daedalus.  I kind of thought the same thing about a boom being a long way off  but the info I had access to was fairly limited so it's really good to speak with someone who's actually been through it.

Think I'll leave my horse in town…!

Hi Damian

I have recently done extensive reseach into the Bowen Basin.

I bought a property in Dysart 6 months ago and the capital growth has been fantastic as have the rents.

I also have a deposit down on an off the plan unit in Middlemount at a place called Prince Place.  The expected rent on these units is expected to be around $900 + a week and this is achievable I believe.  Its all about supply and demand and they are screaming out for more accomodation. 

Middlemount has 2 major projects in the pipleline.  German Creek mine is expanding and the construction of Lake Lindsay Mine. 

The worry that I have with Middlemount is that there is a lot of construction going on up there.  One of the big mining Companies have committed to spending $85Mil on developing the town to make it more appealing for the miners – a nicer place to live. Some of  this 85mil is apparently going to be spent  on easing the accomodation crisis. I heard they were going to build duplex's. 

The block of land next door to Prince Place has been sold to a developer who I understand is going to build a block of units.   

So, not sure how long the supply and demand will last.   The prices of the units did seem a little inflated but the yields and depreciation are great for now.

My Moranbah property settles tomorrow.  I think that Moranbah is a safe bet with BHP looking at a new mine 10klm out of town, a fertilization plant and explosives plant all in the pipeline. Rents are good and on there way up.  Hopfully prices will follow.

Maintenance is an issue in the older places.  It can be VERY expensive for labor.

I live in Victoria and have bought all properties sight unseen.

I could babble on here for ages Damian, but if  you are serious about investing in the Bowen I would suggest you ring the QLD Mines and Enery Department and ask them to send some information on the projected mines for the area.

I did this and they sent me 4 huge maps with all the information that I could ever need.

Also, do searches on the ABC News websites and check out the BHP, Anglo Coal and Xtrata websites.  The information you get from these is invaluable.  

Good luck with the investing and the new baby

If I can be of any help just ask away.

Keenas 

Hey guys,

I've actually been eyeing off Moranbah for awhile now. We used to live in Mackay so we had a good idea of what went on out there (company's leasing houses for miners) and the higher rate of rent charged.

I've found this thread very interesting – thankyou to all who have contributed. And it has fired up this Moranbah IP idea again.

So i've been doing some research and talking to the local council and real estate agents – and can someone share with me what in the world is going on out there? It may be just RE agents trying to get me excited – however i've spoken to a few in Moranbah and a few in Mackay who concentrate on Moranbah properties and there is NOTHING available to buy or even to rent! I'm being told that the properties are hardly on the market for a couple of days before they are gone! Some don't even make it to realestate.com. I was told by one RE agent that there is another shopping centre being built shortly and a new school (however the council didn't confirm this part) to cope with the growing population from the new mines being opened. Apparently one mine is being opened just near the BP on the ouskirts of town.

So are these RE agents pulling my leg, or is demand far outweighing supply right now?

Yes, its all true what the agents are saying about property in moranbah.

Do your reseach and you will see that there is HEAPS going on up there with much more to come.

There are no houses for sale and there are no houses for rent – supply and demand kicks in and rents go through the roof. Property prices follow.

Houses are selling within days and prices are not very negotiable.

I reckon Moranbah is a great place to invest – but be quick, i reckon prices are going up overnight !!   I believe the high rise property that I bought a month ago (settled last week) is now worth $30,000 more.

Good idea to contact the agents directly.  If you wait for them to reach the internet they are usually already gone.

As for Mt Isa – I dont know.  I am too excited about the Bowen Basin.  Surat Basin is worth a look too

Keenas

Hi Builderbob

Who are these houses for sale with ?

If  you do a search on Realestate.com.au there are no places for sale and there are no places for rent.

One appeared today for sale at $560,00 but is already under contract.

I am trying to purchase another property up there.  I have the agents on the job.  They have contacted me about 2 in the last week – both went under contract before i could have a serious look at them.

Are these properties that you mentioned above for sale with Moranbah Real Estate ??

I appreciate that  you are in the area and seeing this stuff first hand.  But i am more than a little surprised that there are places on the market unsold.

Keenas