Gindalbie, Midwest projects at risk

Gindalbie Metals Ltd and Midwest Corporation Ltd could be the losers from a state government review of the Mid West, which has endorsed the big iron ore projects planned for the region but put a question mark over several others.

The review, announced yesterday, states that the government has a "predisposition" to development of most of the Mid West's large iron ore deposits, including at Jack Hills, Weld Range, Tallering Peak, Yalgoo and Wiluna West.

The review also favours the development of identified magnetite ore bodies in the south west section of the Karara / Mungada / Blue Hills area.

This is good news for Gindalbie's $1.6 billion Karara iron ore project, which the company is keen to proceed with following completion of a bankable feasibility study in September.

However the sting in the tail is that "the Government is not predisposed to the extraction of the hematite deposits of the area".

This puts a question mark over Gindalbie's $94 million Mungada hematite project, which the company wants to develop following completion of the bankable feasibility study.

Gindalbie has been targeting first production at Mungada in the first quarter of 2009, with the mine set to provide early cash flow for Gindalbie and its partner, China's Ansteel, in the lead up to commissioning of the much larger Karara project in 2010.

Gindalbie managing director Garrett Dixon said the company did not agree with the negative interpretation, but was seeking clarification.

"There are a few things that could be read in different ways," he said.

Midwest Corp noted the government's predisposition towards development of Jack Hills and Weld Range, where it has proposed projects.

"In relation to the expansion program of Midwest's Koolanooka / Blue Hills direct shipping project, the government's strategic review suggests that the government's predisposition is not to support hematite projects at Koolanooka and Blue Hills but that each project will be considered on a case by case basis," the company said.

"In light the minimal environmental impact of the Koolanooka / Blue Hills direct shipping project, which involves mining previously mined pits, and the economic benefit that it would bring to the communities of Morawa and Perenjori, the company will continue the process of seeking environmental approval of the project."

The Association of Mining and Exploration Companies said the review provided some degree of direction for the future of the State's iron ore industry but also left questions unanswered.

"It's good that we've now got the Review's Executive Summary and proposed State Government actions, and they do provide some direction for the State's iron ore industry," AMEC's Policy and Public Affairs Manager Ian Loftus said.

"Serious uncertainty remains, however, in relation to which particular mining and exploration tenements will be impacted and which companies will be affected.

"It looks like a number of mining companies will have their future potential operations curtailed or even denied, so it's likely that some companies, their shareholders, and their workers won't be happy," said Mr Loftus.

"The creation of additional conservation estate, as detailed in the review, is undoubtedly linked to the ongoing conversion of pastoral leases by the State."

He added, "we'd now like to see the fine details of the Review so that the full impacts can be assessed by the whole community."

"On a final note, I'd like to extend thanks to the hard-working public servants in the Environment and Resources Departments that have worked very hard to complete the Review," said Mr Loftus.

Recommendations from the review are pasted below:

As a result of this Strategic Review, Government will provide the confidence for mining, investment, community and conservation interests by demonstrating its support for the establishment of an environmentally acceptable long term iron ore industry base in the region by endorsing a framework that:
- commits to sustainable economic, social and environmental outcomes in respect to development proposals and conservation needs in the banded iron ranges;
- provides for reservation as Class A conservation reserves (i.e. national parks, nature reserves or conservation parks) over appropriate areas of banded iron ranges;
- provides clear indications that the Government is pre-disposed to the development of key strategic iron ore resources needed to underwrite and sustain the proposed Oakajee Port and related infrastructure;
- provides guidance to the EPA and decision making authorities for the remaining ranges, including the objective of achieving appropriate conservation outcomes in high conservation value Midwest Ranges currently undergoing assessment.
- provides adequate opportunity for further evaluation of prospectivity and conservation values to allow for informed decisions on land use.
Consistent with this framework the Government:
- Commits to the creation of Class A nature reserves or national parks over the Helena-Aurora Range, Die Hardy Range and Mt Manning Range (as generally recommended in Bulletin No 1256), with an indicated pre-disposition against development of these ranges,
- Indicates its predisposition towards development over areas of
o Jack Hills
o Weld Range
o Tallering Peak
o Yalgoo
o Wiluna West
where substantial iron ore resources are identified and are required to sustain a long term mining industry while also providing for an adequate level of conservation of their biodiversity values,
- Indicates a predisposition that in the interests of sustainable economic development in the highly biodiverse Karara/Mungada Blue Hills area, to allow the development of the identified magnetite resource in the south west section of the range but the Government is not predisposed to the extraction of the hematite deposits of the area.
- Further considers both the economic and biodiversity values present in the Koolanooka Hills when projects in this area come forward for assessment
- Indicates its intention to place the
o Booylgoo
o Bulga Downs
o Cashmere Downs
o Perrinvale
o Walling
o Warriedar/Pinyalling
o Wolla Wolla
o Lake Austin
o Bungalbin East
ranges into an appropriate reserve status (e.g. conservation park or nature reserve not of Class A) that will facilitate ongoing assessment of both biodiversity and prospectivity with a view to reviewing that status in 3 years in light of increased knowledge at the appropriate time.
- Agrees that an updated strategic review of available information on biod[versity and mineral resource values in three years will make more specific recommendations for conservation reserves across the remaining BIF ranges in the Midwest and Goldfields regions with development proposal in these areas put forward in the interim to be considered on a case by case basis as required and with reference to the key principles,
Further, the Government will draw to the EPA's attention the Government's predisposition, as set out above, that exploitation of appropriate iron ore resources should be carried out sustainably by ensuring that critical thresholds for conservation of biodiversity are recognised in the consideration of development proposals and that best practise
environmental management and mitigation programmes are committed to by developers.