Mineral Resources and Brockman Mining have announced plans to jointly develop a major iron ore mine that will underpin construction of a new rail line and port facilities at Port Hedland.
Mineral Resources and Brockman Mining have announced plans to jointly develop a major iron ore mine that will underpin construction of a new rail line and port facilities at Port Hedland.
The joint venture agreement covers the Marillana project, which Brockman said was the largest iron ore deposit in the Pilbara not owned by one of the ‘big three’ miners.
The two companies are targeting production of 20 million tonnes per annum, potentially rising to 30mtpa.
MinRes said the mine would cost a maximum of $300 million to develop.
The agreement proposes that the Marillana joint venture would use rail and port infrastructure MinRes is aiming to build.
This includes a 320-kilometre light railway that MinRes has estimated will cost up to $1.6 billion to build.
MinRes also intends to build a new stockyard and Cape-size wharf at South West Creek in Port Hedland, though it is yet to finalise plans or obtain approval from the Pilbara Ports Authority.
Brockman said mine construction was expected to start in the fourth quarter of 2018 and be completed by the third quarter of 2019.
The joint venture plans to commence small-scale production of between 3mtpa and 5mtpa using road haulage and the existing Utah Point berth in Port Hedland.
This is the same infrastructure MinRes currently uses for its Iron Valley mining operation.
The joint venture agreement is a big setback for privately-owned BBI Group, which has been seeking to develop the Balla Balla port west of Port Hedland.
BBI has estimated its project – combining a new port, a heavy rail line and new mine – would cost $6 billion to develop.
With Brockman throwing in its lot with MinRes, BBI Group will need to secure another mining project to underpin its railway and port.
The other likely candidate is Flinders Mines, however, Flinders told the ASX in June it has no commercial agreements in place with BBI Group.
Brockman said it opted for the MinRes joint venture as this would allow Marillana to be developed faster than under the BBI plan.
It said construction of the MinRes railway and port facilities at South West Creek were expected to commence in mid 2019 and be operational by the end of 2020.
MinRes managing director Chris Ellison said he expected Marillana would be a low-cost operation.
“Both companies recognise that MRL is firmly on track to commence construction of its Pilbara Infrastructure Project by the middle of 2019 such that the timing was right to formalise an arrangement that will see us work together to bring the project into operation,” he said.
“MRL has the demonstrated ability to develop world-class mining projects on time and on budget as well as the proven capability of producing iron ore at the mine gate for a cost that is comparable with the lowest-cost producers in Australia.
“This on-site capability will now be fully complemented by the low operational cost benefits that will be realised by using MRL’s innovative lightweight mine-to-port rail system linked to a Cape size carrier berth in the world’s largest bulk commodity port to deliver the Marillana product from the mine into a ship.
“We firmly believe that the Marillana product can be produced and delivered to China on a lowest-quartile cost basis globally.”
The Marillana ore is also likely to attract a pricing premium in the key Chinese market, as it produces a beneficiated grade of 60.5 per cent to 61.5 per cent iron.
Brockman chairman Kwai Sze Hoi welcomed the deal.
“Access to infrastructure and economic alignment with an infrastructure owner are the keys to development in the Pilbara,” he said.
“This joint venture delivers all of the elements needed for the successful development of the wonderful Marillana orebody, including MRL’s Pilbara project development and mining services capability and expertise.
“Brockman is confident that Marillana’s superior quality ore will take its rightful place in the seaborne iron-ore trade very soon.”
