Macmahon Holdings has been named as preferred mining contractor for the establishment and operation of QCoal’s Byerwen mine near Glenden.

The appointment is subject to the grant of mining leases for the $1.7 billion coal project.

Macmahon said the proposed contract was expected to be based initially on a cost-reimbursable model, moving to a hybrid of schedule of rates and cost-reimbursable model within the first year.

Macmahon will now commence mobilisation and other preparatory activities, with its scope of work in the proposed contract expected to include the full range of open-cut mining and bulk earthworks related services for at least three years.

The potential value of the mining contract over its life, if ultimately agreed between the parties, is still to be determined.

Macmahon chief executive officer Michael Finnegan said Macmahon was very encouraged to be selected by QCoal as the preferred contractor for the Byerwen mine.

“This is a quality project which will deliver significant benefits to the local and State economy,” Mr Finnegan said.

“While there is still a lot of detail to be negotiated, we are buoyed by our selection as preferred contractor, which highlights our ability to compete for desirable new projects.

“If we are successful in securing this opportunity, the project will mark our re-entry into the Queensland coal market following the successful conclusion of our Cameby Downs contract in 2013 and our Eaglefield contract in 2014 where we operated for 10-plus years.

QCoal Group said while this decision was subject to commercial agreements, the preferred contractor had been determined to facilitate a timely start-up of works at Byerwen, once the mining leases are granted.

“Given the QCoal Group’s commitment to local participation in both employment and procurement, this decision has provided an opportunity to maximise opportunities for locals,” the company said in a statement to iQ Industry Queensland magazine.