Western Australia’s emerging Mid-West iron ore companies, seed producers from Australia’s second largest iron ore region, have shown the state government the money.
Western Australia’s emerging Mid-West iron ore companies, seed producers from Australia’s second largest iron ore region, have shown the state government the money.
In return, the government has confirmed Oakajee, 20 kilometres north of Geraldton, as the preferred site for a new, privately funded, deep water port capable of taking 150,000 tonnes-plus ore carriers to ship up to 60 million tonnes of iron ore a year by 2012.
That is significant. In 2004, WA shipped 200mt of iron ore, almost all of it from the Pilbara. This increased to 256mt last year and, given current expansion plans by BHP Billiton and Rio Tinto, is expected to rise to about 315mt this year.
Late last year, Planning and Infrastructure Minister Alannah MacTiernan told the iron ore industry in Geraldton that, while she heard its plea for a deep water port to augment an ageing, increasingly overwhelmed Geraldton port, proven resources, solid contracts and financial backing were needed before the state government could come on board.
That has happened.
The region is in production, has the projects, big-ticket Chinese and Korean partners, substantial off-take agreements and now, given Premier Alan Carpenter’s commitment to Oakajee, the political will.
The major projects include Murchison Metals Ltd’s Jack Hills and Midwest Corp Ltd’s Weld Range projects, 380km and 350km respectively north-east of Geraldton, and Gindalbie Metals Ltd’s Karara and Mt Gibson Iron Ltd’s Extension Hill mine projects, 200km east and 330km south-east of Geraldton.
Mr Carpenter conceded that the scale of iron ore mining proposals emerging in the Mid-West could not be handled by Geraldton Port’s ultimate 20mt/year capacity.
“Our next step will be to consider a report from the government steering committee, which will look at the design process, timing of construction and the operational management of the Oakajee port,” he said.
The report will consider the roles of government and the private sector in the funding, development, regulatory access and management of the key port and rail infrastructure. However, both the Geraldton and Oakajee ports will be run by the Geraldton Port Authority.
Four of the recently formed five-member Geraldton Iron Ore Alliance want to have a new deep-water port operational by 2010.
Alliance founder and Gindalbie CEO David McSweeney told WA Business News that, in the total Mid-West infrastructure scenario, it was important not to repeat the mistakes of the Pilbara, a reference to the closed infrastructure facilities in the world’s second largest iron ore province, and a view supported by Ms MacTiernan.
Costs for Oakajee currently range from about $300 million for just the port to $1.3 billion for the port and rail to Murchison Metals’ Jack Hills project.
Possible options for the Oakajee port and rail network include construction by a consortium associated with one of the major iron ore producers, probably Murchison or Midwest Corp Ltd, or by a specialist engineer/infrastructure provider, possibly with some limited state government funding.
Midwest recently began shipping ore from its Koolanooka hematite project, 150km east of Geraldton. But its main game is the joint development of its billion dollar Weld Range hematite project and Koolanooka magnetite concentrate/pellet project, with China’s largest iron ore importer, Sinosteel Corp.
The target is between 15mt and 20mt/year over 15 years from Weld Range and about 5mt/year of concentrates/pellets from Koolanooka by the end of the decade.
Murchison’s $24 million starter project at Jack Hills is scheduled to produce 1.2 mt/year from June.
The company has also secured the backing of South Korean steel major and 4 per cent shareholder, POSCO Ltd, for a stage-2 development targeting 25mt/year from mid 2010.
Gindalbie expects to begin direct shipping of 1.5mt/year from its billion dollar Karara iron ore project in mid 2007, rising to 4mt/year by 2009, with pellet production from 2010.
Anshan Iron and Steel, China’s second biggest steelmaker, recently took a 50 per cent stake in Karara and has signed off-take agreements for its entire 10mt/year iron ore products output.
Tallering Peak miner Mt Gibson Iron Ltd’s second stage involves the $620 million development of its 5mt/year Extension Hill mine, 330km south-east of Geraldton, with China’s fourth largest steelmaker Shougang Group.
The partners plan to double production to 10mt/year from 2009-10 following commissioning around late 2007.
