West Perth iron ore company Gindalbie Metals Ltd will locate the company's pellet plant in China, after rejecting a series of Western Australian options.
The Karara joint venture pellet plant will be located at Yingkou port, in north-east China, one kilometre from a 5 million tonne steel mill due for completion in 2008. The joint venture with China's Anshan Iron and Steel Group (AnSteel) has a targeted production of 10mt per annum of iron products including hematite, magnetite concentrate and pellets.
Gindalbie said in an announcement that, according to a definitive feasibility study conducted by the jv partners, building the plant in China would halve the potential costs to $180 million.
The jv partners had previously considered building the plant on a site at the industrial park at Narngulu, 6km east of Geraldton, with a base case production of 4 mtpa of blast furnace pellets and 4mtpa of concentrate.
That decision came after the company announced in April this year that it wished to build at Oakajee deepwater port, with the concentrate to be delivered there via a 250km slurry pipeline.
Gindalbie chairman George Jones said the Yingkou site demonstrated significant capital and operating costs advantages.
"This configuration will not only enhance the overall economics and financial returns from Karara project but may also lead to an earlier development schedule," he said.
The first stage of development will mine direct shipping hematite ore, producing around 1.5 million tonnes a year, with the second stage - to mine around 20 million tonnes of lower grade magnetite ore a year - also to use the Chinese plant.
The second stage of development is still at a study stage, with a definitive feasibility study due for completion in February of next year.
The magnetite ore will be concentrated on site in WA, slurried and transported by a 225 kilometre pipeline to Geraldton for shipping to the plant.
Gindalbie shares picked up 1.5 cents to close at 47.5 cents on the ASX today.
