Grange Resources selects $150m power solution

18/10/2007 - 13:11

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Aspiring iron ore miner Grange Resources Ltd has selected its preferred power transmission option, which will have indirect benefits for communities on the south coast that have been plagued by poor power supplies in recent years.

Grange Resources selects $150m power solution

Aspiring iron ore miner Grange Resources Ltd has selected its preferred power transmission solution, which will have indirect benefits for communities on the south coast that have been plagued by poor power supplies in recent years.

Grange said its preferred option was to build a new transmission line direct from Muja near Collie to its Southdown mine site, north-east of Albany.

Company secretary Neil Marston said this option would cost about $150 million, with Grange contributing about $120 million and Western Power the balance.

Grange has also agreed to provide additional funding of about $10 million for an upgrade of substations in the region.

The substations will provide enhanced power supplies for the immediate area and for communities further afield, such as Bremer Bay and Jerramungup.

The alternative power transmission option was to transmit power via Albany, as part of an upgrade planned by Westen Power, but that was found to be more expensive.

Mr Marston said Grange was close to finalising a power supply agreement. It has previously disclosed that it was in negotiations with Griffin Energy, Alinta and Wesfarmers to supply power to the mine.

The Grange project involves a mine and concentrator being built at Southdown, to produce between 3.5 million and 6.6 million tonnes of concentrate per year.

The concentrate will be transported on a 100km slurry pipeline to the port at Albany, which will need to be upgraded to handle the additional export volumes.

The company is currently seeking environmental approvals for the mine and port projects.

 

A Grange announcement is pasted below:

 

GRANGE PROVIDES UPDATE ON SOUTHDOWN TRANSMISSION LINE

Following extensive consultation with Western Power, Grange Resources Limited (ASX: GRR), is pleased to
announce it has determined the preferred network solution for supplying power to the proposed Southdown
Magnetite (Iron Ore) Mine. Southdown is located near Wellstead 90 km north-east of the city of Albany in
Western Australia.

Two options had been under consideration, with either a route via Albany in conjunction with a planned
upgrade of the town's general power supply or a direct route to Southdown.

A study of the capital costs of the two options has demonstrated that supplying power directly to Southdown
from Muja is the superior option. The preferred solution is therefore to supply the mine using a direct route
option of a single circuit 220 kV line on lattice towers from Muja to Southdown via Kojonup and
Gnowangerup. Grange has now committed to this alignment in order to remove project and community
uncertainty over the route.

Grange Managing Director, Mr Geoff Wedlock, said that the preferred line solution is clearly the best option
for the business going forward and another step towards implementation of the Southdown Project.

Grange reviewed all reasonable power supply solutions for the project including on-site generation using
renewable energy such as wind power. However a wind farm needs network access via a transmission line
in order to supply back-up grid power on calm days or to sell their surplus energy to other network
consumers. Grange has been in dialogue with a number of parties interested in developing wind generation
capacity near the mine once the line is built and these options will be pursued.

In order to address some of the concerns raised during community consultation last year, Grange
Resources will provide supplementary funding to enable Western Power to install new substations in the
Shire of Gnowangerup and near the mine at Wellstead during the line construction phase. These two
substations will provide enhanced power not only to the local areas impacted by the transmission line route,
but also to growing communities further east of the line such as Bremer Bay and Jerramungup. Planned
upgrades to the Albany area power supply will be unaffected.

Western Power received Environmental Protection Authority approval for the Muja to Southdown alignment
in August 2007 after conducting the required environmental impact assessments. Grange Resources and
Western Power will now work with the community to ensure that the transmission line is developed in a
timely manner to meet the project schedule.

Environmental approvals for the mine and the Albany port development are expected from around the
middle of 2008 with development activities to commence soon after.


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