What you need to know about the “shale boom”

After years of declining output and high costs, Australian mining company, Eni, announced in April that it would be buying 100,000 hectares of shales in Western Australia, bringing the total number of mining licences it has in the state to 300,000.

It is the largest such purchase in the country and could see it produce between $600 million and $700 million in revenue per year, according to Eni’s own figures.

The deal is not just a symbolic move by the company, as it has a track record of doing so.

As the world’s largest miner, Enid has been investing in the Western Australian shales, which are in the process of being cleared of their minerals.

Eni was awarded a license to mine the shales at an estimated cost of $1.5 billion and the state government has earmarked $500 million of that for environmental benefits.

A recent study by the Australian National University found that the state’s shales could yield between 10 and 15 per cent more energy and 12 to 14 per cent higher output per tonne of ore than a conventional mine.

However, the impact of this could be minimal, with the vast majority of the value of the mine coming from the mineralisation itself.

With the mine expected to generate just $200 million per year for the state, Enis claim they will produce up to $600m worth of revenue.

Despite this, some critics argue that the $600-million-per-year figure is misleading, as the state is only entitled to the mining tax if it has actually produced the mined mineral.

“The actual price of a tonne is a much more significant factor than the price of the mined ore, and the actual value of a shale can be much higher than the actual price,” said University of Western Australia researcher David McKeown.

If the price is actually the same, the difference in price will only be $20 to $30 a ton, he said.

Environmentalists are also concerned that Enis could have a negative impact on local waterways.

At least one mining company has already started drilling beneath the land, according the ABC, with one of the first results of the test coming back in August.

Although Eni has already purchased the 100,001 hectares of the Western Australia shales it is expected to spend an extra $200-million on the next phase of the project.

While the amount is relatively small in comparison to other mining projects in Australia, Enia is not alone in its ambitions to mine Western Australia’s vast resources.

In August, China’s State Council announced a similar deal for the country, which will produce a total of 8 million tonnes of coal, according a statement from the state.

Last month, China announced that it was going to acquire another 7.4 million tonnes, bringing its total to nearly 18.5 million tonnes.

There are also plans to purchase up to 60,000 more hectares of Western Australian shale.

According to Enia, it is only a matter of time before the shale boom continues to grow, with more and more companies signing up for mining licences.

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