Diverse range of mining opportunities

The petroleum and iron ore sectors have grown to dominate Western Australia’s resources industry but there is still plenty of growth happening in other sectors as diverse as molybdenum, vanadium, nickel, gold, copper and zircon.

There could also be a major expansion of at least one of the state’s alumina refineries next year after protracted delays.

These developments would all add to the size and diversity of WA’s resources sector.

The value of nickel production in WA jumped to $5.6 billion last year and new projects coming on stream are likely to further increase production.

The industry’s recent growth has come from companies such as Jubilee Mines and View Resources, which have expanded their operations or opened new mines.

Just last week, Jubilee announced it would proceed with the $90 million development of its Sinclair nickel mine.

Most nickel projects involve development of nickel sulphide deposits, which traditionally have dominated the industry.

However the sector’s biggest growth potential lies in the development of nickel laterite deposits, which are extensive in WA but have proven difficult to process.

The largest nickel laterite producer is Minara Resources, which encountered many technical challenges at its Murrin Murrin project but has become a highly profitable producer.

BHP Billiton is set to become the biggest nickel laterite producer, once it completes development of its $2.75 billion Ravensthorpe nickel mine.

The Ravensthorpe project has been hit by big cost increases and construction delays, which are likely to make aspiring developers of other ‘greenfields’ projects wary.

Heron Resources and GME Resources are evaluating nickel projects that involve the use of relatively low risk heap leach processing.

Heron has engaged GRD Minproc and Snowden Mining Consultants to conduct a feasibility study of its Jump-up Dam project, which proposes annual production of 10,000 tonnes of nickel commencing during 2009.

The feasibility study, due for completion next month, follows a scoping study, which estimated the project would cost up to $US350 million ($A435 million) to develop.

Applecross-based GME Resources recently completed a pre-feasibility study for its NiWest nickel project at Murrin Murrin.

The study by engineering firm Aker Kvaerner estimated it would cost $455 million to develop the project.

GME is proceeding with a bankable feasibility study for the project, which would have annual output of 13,100t.

Heron Resources and Metals X are involved in two much larger nickel projects.

In both cases, the local companies have brought in big international partners.

Global mining giant CVRD Inco is driving the $1.4 billion Kalgoorlie nickel project, in which Heron will retain a minority stake, while Metals X has brought in China’s largest nickel producer, Jinchuan Group, as its partner for the Wingellina nickel project.

A scoping study completed in April estimated it would cost about $1.6 billion to develop a project producing 40,000t of nickel a year.

In the alumina sector, current producers Alcoa and BHP Billiton have been evaluating expansion plans for their refineries at Wagerup and Worsley respectively.

Both groups have obtained environmental approvals but have delayed the projects because of high construction costs.

Alcoa’s environmental review, lodged in 2005, said it planned to spend $1.5 billion on the Wagerup expansion, which would lift annual output from 2.5mt to 4.7mt (pictured above).

Alcoa is understood to be still working on the expansion but has been non-committal about when it might proceed.

BHP’s environmental review, also lodged in 2005, said it planned to spend $900 million expanding the capacity of its Worsley refinery from 3.7mt to 4.4mt. These projects would also involve a substantial expansion of their bauxite mining operations in the Darling Range.

Separately, junior exploration company United Minerals Corporation is pursuing an ambitious plan to develop the vast bauxite deposits on the Mitchell Plateau, an isolated area at the northern tip of the Kimberley region.

UMC has negotiated a memorandum of understanding with Norwegian aluminium producer Norske Hydro, which it hopes will result in the development of an integrated bauxite mine and alumina refinery.

UMC has estimated the project would cost between $4 billion and $5 billion, including associated infrastructure.

It is proceeding with a drilling program to establish the size and quality of its bauxite deposits.

In other mining sectors, Moly Mines, Precious Metals Australia and Sydney-based CBH Resources are all advanced in preparing for new projects in WA. All three have started ordering equipment for their mines, indicating their confidence in the projects proceeding.

Moly is aiming to become WA’s first big molybdenum producer, through its Spinifex Ridge project in the Pilbara.

It is due to release the results of its bankable feasibility study later this month, after lifting the project’s output from 15mt to 20mt a year.

PMA suffered a setback earlier this month when it ran into a contractual dispute with its gas supplier Santos and is now seeking to arrange alternative energy supplies while also completing its funding arrangements.

CBH is aiming to start site works early next year once it obtains final environmental approval for its Panorama zinc-copper mine in the Pilbara.

Another project moving close to development is Gunson Resources’ Coburn zinc project. Gunson has partnered with China Triumph Engineering Co to develop the $100 million-plus project.