Balla Balla, Brockman deals headline positive iron ore prospects

A number of potential iron ore projects should bring the state’s economy an investment boost.

More than $8 billion of greenfields iron ore projects are either proposed or in development, while $450 million of brownfields work is under way as the state’s miners plan investments to maintain production.

The latest company to move forward was Brockman Mining, which today announced an access agreement for export of iron ore from the Maverick project through Utah Point.

Brockman plans to produce 2.5 million tonnes or iron ore per annum from Maverick, and is hoping to commence construction in the March quarter of 2017 with a view to begin commissioning in early 2018.

The company said it was in the final stages of negotiating road haulage arrangements and picking a mining contractor.

That's despite Brockman announcing to the market in March 2016 that it had signed a heads of agreement with Qube Holdings to undertake the trucking.

Earlier this week, Balla Balla Infrastructure Group, backed by New Zealand’s Todd Corporation, signed a state agreement with the government as the next step in a bid to export up to 50mtpa.

To secure that volume of ore the group will need to negotiate with deposit-holders in the central Pilbara, including for hematite from the Flinders Mines project north-west of Tom Price, which is majority held by Todd Corporation.

The Balla Balla project includes a $2 billion mine development and a further $3.6 billion for a rail link and port (see table), with a final investment decision not expected until at least March next year.

Speaking at the signing of the agreement, Balla Balla Infrastructure Group chairman Jon Young was bullish about the need for big projects.

“Our view is that the world actually needs one to two Balla Balla projects every year just to deal with organic growth and the restructuring of the Chinese steel industry,” Mr Young said.

The second big project on the horizon is Rio Tinto’s Koodaideri, with the company telling markets in November that it was undertaking feasibility work.

Completion of the $2.2 billion first stage would produce ore no earlier than 2021, Rio said, with the mine to eventually produce up to 70mtpa.

The investment would include a new crushing plant and 170 kilometres of rail to link into the main line.

Rio Tinto has one greenfields project currently under way and due for completion later this year, the $441 million Silvergrass mine, with Decmil and RCR Tomlinson both among those winning work on the project.

Atlas Iron also has potential greenfields options at Corunna Downs and McPhee Creek, which would act as replacement supply sources as Wodgina and Abydos dry up.

In its most recent quarterly, Atlas said a final investment decision could be as early March quarter this year, with production to follow around 12 months later.

Brownfields

Rio Tinto has a number of brownfields developments under way to bring replacement tonnes online, with its two key projects of West Angelas F and Yandicoogina Oxbow due for completion this year.

The state government approved both projects in June.

The mining giant has additionally filed with the Environmental Protection Authority for review of the Mesa A extension project, which would provide a supply of up to 25mtpa.

Much further into the future would be BHP Billiton’s South Flank, which the company has said is being studied.

That is intended to contribute to replacement production for the Yandi mine, which reportedly has at least five years of production remaining.

The EPA is reviewing Mineral Resources’ J5/Bungalbin East option, which would be a brownfields development requiring capital expenditure of up to $50 million, while Atlas Iron is expecting the second phase of a project to lift capacity at Mt Webber to be completed in September.

In December 2016, Mt Gibson Iron secured ministerial approval for the Iron Hill project, located just a few kilometres from its existing Extension Hill operation.

The company said it aimed to proceed to development as quickly as possible in order to start production in the first half of this year.

A few weeks later, Mt Gibson signed its third offtake agreement for Iron Hill, with a subsidiary of Chinese state-owned Shougang Concord International Enterprises.