Aviva Corporation has joined the ranks of companies hoping to develop downstream processing of iron ore in Western Australia’s Mid-West.
The South Perth-based company is hatching plans for a pig iron plant to tap into the global scrap iron shortage.
Aviva is currently in the pre-feasibility stage of a $US150 million project that would exploit what it is calling a major coal deposit located near Eneabba, along with existing iron ore supplies and infrastructure.
The company is undertaking pre-feasibility studies for a coal mine that also has the potential to supply electricity to iron ore mine industries in the Mid West.
Aviva Corporation CEO Lindsay Reed told WA Business News the project would also tap into the existing transport, energy and shipping infrastructure in the region.
However, other aspiring producers in the region have said more needs to be spent on port and rail infrastructure in the area before it can achieve its full potential.
Mr Reed said the company was currently awaiting the finalisation of a scoping study on the project, which will provide more detail.
Aviva plans to develop a pig iron project using technology from Midrex/Kobe steel, which he said was “one step further in value adding” to the other downstream processing plants proposed for the region and BHP Billiton’s Boodarie DRI/HBI plant near Port Hedland.
In the Mid-West Mt Gibson, which commenced iron ore production earlier this year, along with the Mid-West Corporation and Gindalbie Gold, both of which are aiming to become iron ore miners, are also aiming to develop pellet plants in the region.
In May Aviva secured the mining rights to the coal deposit near Eneabba, making one of four $80,000 option payments to acquire the rights to the coal deposit. It has been talking to potential partners for the project.
“Aviva believes that its raw materials are well suited for processing in Rotary Hearth Furnace technologies offered by Midrex Technologies and its parent company Kobe Steel,” Mr Reed said.
However, other companies looking to build both minerals and gas processing in WA have cited high construction and labour costs as barriers to developing such projects.
Mr Reed said the point of difference for the Eneabba project was that “it is a high value product that doesn’t need to go on large bulk tankers” and that there were economies of scale in shipping and other costs.
Aviva Corporation initially floated on the Australian Stock Exchange in the early 1990s as Egerton Gold.
It recapitalised last year after an unsuccessful run as a finance company. It spun out the original Egerton gold tenements into the newly-listed NGM Resources.
The company currently shares offices with NGM Resources and Cooper Energy.
Aviva’s board includes Mr Reed, a mining engineer and analyst, chairman Peter French who is a former Australian Guarantee Corporation Limited group general manager.
Rob Kirtlan and former Hamersley Iron managing director Dr Ian Burston are both directors of the company.
Dr Burston once managed CRA’s Hill River Project, which involved mining the nearby Hill River coal deposit to supply a proposed $1.5 billion, 600 megawatt coal power station about 300 kilometers north of Perth. The plan faltered when the WA Government created a national park over the coal deposit in 1991.