MT Gibson Iron has big expectations for its future as it looks to grow from a small Mid West region iron ore producer to one with annual sales worth more than $1 billion.
MT Gibson Iron has big expectations for its future as it looks to grow from a small Mid West region iron ore producer to one with annual sales worth more than $1 billion.
This bold, five-year plan is based on a range of advanced projects, strategic partnerships and the new technology production of high-grade iron nuggets from a plant near Dongara, 60 kilometres south of Geraldton, scheduled to begin in 2008.
However, the early growth will come from increased production from its Tallering Peak hematite mine, 170km north-east of Geraldton, and the $750 million Extension Hill hematite and magnetite project at Mt Gibson, 300km south-east of Geraldton.
Also in the mix are the construction of two pellet plants in China and a joint venture with a major Chinese steel maker, all combining to double Mt Gibson’s magnetite production to 10 million tonnes per annum from 2009-10.
“We won’t do it alone, we will do it with partners, but we will be the stimulus,” Mt Gibson managing director Brian Johnson told the recent Mid West economic summit in Geraldton.
His prediction is underpinned by a confidence that iron ore prices will stabilise around current levels, expectations of further concentration of ownership of iron ore resources among the three major producers, and the virtual elimination of volatile spot trading through recent regularity action by the Chinese Government.
“Mt Gibson Iron is continuing to develop its marketing strategy to establish long-term relationships with financially sound mid-tier steel mills in China,” Mr Johnson said.
The company’s exploration focus is on further hematite production at Tallering Peak and Mt Gibson, and at two promising prospects at Koolanooka South, 150km south-east of Geraldton, and nearby Walebing.
The aim is to establish sufficient resources in the Mid West region to maintain direct hematite sales of 4.5mtpa for at least 10 years from early 2007. Under the first stage of development, hematite production from Tallering Peak is expected rise from 2mtpa this year to 3mtpa early next, with mine life out to 2011 on current reserves.
The second stage is for the production of 5mtpa of magnetite concentrate and 1.5mtpa of hematite beginning from Extension Hill, one of eight deposits at Mt Gibson, in 2007. The hematite project has a current mine life of at least 10 years and the magnetite 20-plus years.
The $640 million project includes mine and concentrator construction, a 290km underground slurry pipeline to Geraldton port, and the further construction of a dedicated berth-7 and associated storage and ship loading facilities.
A further $110 million has been earmarked for the two pellet plants close to markets up the Yangtze River in China, which will take 50 per cent of the Mt Gibson concentrate.
Mt Gibson Iron has an agreement with the Beijing-based Shougang Group, China’s fourth largest steelmaker, to develop the 5mtpa mine at Extension Hill and double magnetite concentrate production from 2009-10.
Stage three will involve the company moving into the ground breaking production of 96 per cent pure iron nuggets, a new technology competitor to the pig iron producing HIsmelt technology at Kwinana.
The first two commercial iron nugget plants in the world are currently being built in the US, and Mt Gibson is planning four 500,000tpa capacity units, the first coming on line in 2008 producing 500,000tpa, then doubling the next year.
The likely site for the iron nugget plant will be between Dongara and nearby Mingenew, fuelled by coal from the company’s deposits nearby.
Mr Johnson estimates that, if all this comes to fruition, Mt Gibson and its partners will be exporting $1.07 billion of iron ore products a year by the end of 2009.
“However, we are not getting carried away with the failed Kingstream Resources. I urge caution and reality rather than euphoria,” Mr Johnson said.
