25/11/2010 - 00:00

Cooperative connections adding value

25/11/2010 - 00:00

Bookmark

Save articles for future reference.

THE interconnectivity of industry in the state’s South West corner, based on the value adding undertaken by many of the region’s businesses, makes it very different from what we see to our north.

Cooperative connections adding value

THE interconnectivity of industry in the state’s South West corner, based on the value adding undertaken by many of the region’s businesses, makes it very different from what we see to our north.

In the Pilbara, apart from some gas sales to the mining companies, most players operate in isolation, competing for space and people to muscle-out rivals in digging up their product and shifting it to market.

Around Bunbury, though, there is a very different set of relationships based on the use of common infrastructure and the significant level of value adding, which makes the region’s miners suppliers to other players.

Obvious examples are Iluka supplying synthetic rutile to Cristal Global, bauxite miners providing jarrah waste to Simcoa, and the proposed supply of coal by Griffin to urea proponent Perdaman, which plans to build a plant at Collie.

Iluka processes mineral sands at Bunbury to produce synthetic rutile, which is sold to Cristal as feedstock for its titanium dioxide production plant at Kemerton. Cristal also uses gases and chemical provided by neighbouring plants owned by BOC and Coogee Chemicals.

The TiO2, a base ingredient predominantly used as a white pigment, is transferred to Cristal’s Australind production plant to be turned into more specialist products such those suitable for certain types of paints or plastics.

It is a neat arrangement that is relatively rare in Western Australia. The local demand for synthetic rutile is such that Iluka can run its Bunbury plant even though it can’t get enough raw material locally, and is forced to import it from interstate operations.

Iluka also buys some Cristal products, making it something of a two-way business arrangement.

While the Iluka-Cristal relationship is between separate companies, Cristal went one step further in 2008 by acquiring former ASX-listed company Bemax, which operates mines in the area and its Bunbury Mineral Separation Plant from which supplies the TiO2 plant at Kemerton.

Another interesting synergy is that between the local bauxite miners and another Kemerton operation, Simcoa’s silicon metals plant.

Simcoa’s production process requires a carbon feedstock that burns with the quartz containing silicon dioxide in an electric arc furnace to produce silicon metal – a product used in everything from alloys to hair products.

For years the company’s key carbon feedstock was jarrah extracted from forestry, an extremely pure wood that burns at very high temperatures. There’s not so much of it these days and the company has looked for other sources, from pruning and discarded material in the plantation forestry sector to the by-product of bauxite mining.

Jarrah forest sits above much of the South West’s bauxite deposits. Simcoa takes the leftover wood once the best logs are removed for other uses.

It is also looking for other feedstock supplies from the region.

The Perdaman urea plant at Collie is another example of such a synergy. The $3 billion project will use coal from the local area as a feedstock to produce 2 million tonnes of urea per year. It has a 25-year agreement with Griffin Coal, part of the Griffin Group that has experienced significant financial difficulty over the past year.

The urea is expected to displace imported urea, which is marketed throughout WA, including the South West, by Wesfarmers subsidiary CSBP.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options