BILLIONS of dollars of investment are set to flow in the Pilbara after iron ore giant Rio Tinto last week signalled the state’s iron ore industry was officially back in full steam ahead mode.
BILLIONS of dollars of investment are set to flow in the Pilbara after iron ore giant Rio Tinto last week signalled the state’s iron ore industry was officially back in full steam ahead mode.
Rio last week formally opened its $1.7 billion Brockman 4 iron ore mine near Tom Price and approved the $1.8 billion development of the Hope Downs 4 joint venture with Gina Rinehart’s Hancock Prospecting.
Both moves came barely a week after the company approved $1.2 billion in spending on “early works” associated with a $13 billion future expansion to boost its Pilbara export capacity by half to 330 million tonnes a year by mid 2016.
Rio’s aggressive start to the new financial year comes as rival BHP Billiton continues its $6.3 billion Rapid Growth Project 5 expansion, and a $2.5 billion predevelopment program associated with the proposed RGP6 expansion that will boost its capacity to 240mtpa by late 2013.
The rush of announcements follows 18 months of uncertainty caused by the global financial crisis in which numerous major expansion programs were put on hold.
Speaking at the new 22mtpa Brockman 4 mine, Rio iron ore chief Sam Walsh said he was extremely pleased Rio was once more actively proceeding with expansions that would deliver “very very significant tonnes”.
“Here in the Pilbara we have our vision firmly set on 330 (mtpa) as the next major stage in our development and Brockman 4 will be an important part of that,” he said.
Rio plans to quickly double Brockman 4’s capacity to over 40mtpa and expected it would ultimately produce over 60mtpa, making it Rio’s single biggest Pilbara producer.
To that end, Rio has spent heavily on rail, processing and loading infrastructure upfront, meaning the expansion of Brockman 4 will cost only a fraction of the original development cost.
Overall, Mr Walsh said the expansion to 330mtpa would involve development or expansion of five other mines and doubling capacity at Rio’s Cape Lambert port to 180mtpa.
“The majority of that extra tonnage will actually come from here in the western Pilbara … in the greater Tom Price area,” he said. “The climate is right for us to move these projects forward.”
But it is not just the Pilbara heavyweights which have been infected by the development bug in recent weeks, as second tier miners and newcomers also announced significant progress with their own Pilbara ambitions.
Fast-growing junior producer Atlas Iron, which has already commissioned two small iron ore mines at Pardoo and Wodgina near Port Hedland, last week announced positive pre-feasibility results for its planned $178 million Turner River Hub project.
The hub will provide a central processing facility for Wodgina and the planned Abydos and Mt Webber mines nearby that will boost its capacity fourfold to 12 mtpa by 2012.
The positive study outcome follows a 50 per cent increase in Atlas’ total reserves to almost 54mt, including a maiden reserve of 19.1mt grading 57.5 per cent iron at Mt Webber.
Atlas has also started stockpiling ore at the state government-developed Utah Point multi-user bulk commodity berth at Port Hedland.
The $250 million wharf will export its first cargo on September 17, providing independent miners with 17mtpa of additional export capacity at the port.
Atlas’ progress at Turner River bodes well for fellow junior Giralia Resources, which this week released environmental scoping documents for public comment pertaining to its own 2mtpa operation on the adjoining leases at Mt Webber.
Similarly, Chinese state-owned miner MCC’s plans for a 15mtpa magnetite project at Cape Lambert were released for public comment last Friday. The project, acquired for $400 million from Tony Sage’s Cape Lambert Resources in 2008, is expected to start production in 2015.
But to achieve that, MCC will need to resolve how its railway crosses Rio’s existing Cape Lambert line. It also hinges on development of the nearby Anketell port proposed by Aquila Resources.
MCC consequently joined a loose port co-operation alliance with Aquila and Fortescue Metals Group last year in a bid to fast-track development.
Aquila wants to start exports in early 2014, and estimates the combined cost of the port, associated railway and its own 30mtpa West Pilbara mine at $5.7 billion.
Fortescue, WA’s third-largest iron ore miner, wants to use Anketell as the main export point for its planned Solomon iron ore mine. Fortescue expects to initially export 12mtpa from Solomon via Port Hedland from 2012, but needs Anketell to boost Solomon output to a targeted 60mtpa.
Meanwhile, Hancock Prospecting’s plans for the 55mtpa Roy Hill mine, 100km north of Newman, is waiting on government approvals for a dedicated 300km railway to Port Hedland.
When Hancock lodged its environmental scoping documents in March, Hancock said it would need approval by August 2010 to meet its March 2011 rail construction target.
In preparation, Hancock has
just struck a native title agreement enabling it to transport its ore through the Kariyarra people’s lands to the port.