About $300 million will be invested by Mineral Resources into expansion projects in the 2020 financial year, led by moves to boost Yilgarn iron ore output nearly 50 per cent.
About $300 million will be invested by Mineral Resources into expansion projects in the 2020 financial year, led by moves to boost Yilgarn iron ore output by nearly 50 per cent.
The Applecross-based mining business said it had released $US 820 million in cash from its partial sale of the Wodgina lithium operation.
In guidance released at the company’s annual general meeting today, MinRes flagged $120 million for expansion of Yilgarn iron ore operations, $20 million on drilling and feasibility for Pilbara iron ore operations, $50 million to complete construction at Wodgina and $30 million for gas assets.
A further $110 million will be spent on sustaining capital, including $50 million to maintain operations at the Iron Valley mine until March 2021, bringing total capital expenditure to $410 million.
MinRes said the investment into the Yilgarn business will reduce the cost of operations and extend business life for at least another 10 years.
The company will buy a new crusher at Koolyanobbing, a stacker, reclaimer, automatic train loader and construct haul roads.
The company bought the Koolyanobbing operation last year, with previous owners Cliffs Natural Resources otherwise planning to shut the mine down.
At the time, MinRes expected to produce 6mtpa of iron ore for five years.
That run rate lifted to be 7.5mtpa at the end of June 2019, and the company will target a 11mtpa rate by early in the March quarter next year.
MinRes now has about 109 million tonnes of iron ore resources in the region, at a 56.8 per cent purity.
Managing director Chris Ellison said MinRes had a history of developing stranded or undervalued assets.
“When we acquired the Koolyanobbing operations off Cleveland-Cliffs last year, we had a clear vision to use the newly acquired infrastructure as the foundation blocks to build a long-life, high-value iron ore business in the Yilgarn region,” Mr Ellison said.
“The early success of that vision has seen MRL safely grow our Yilgarn iron ore business to a run rate of 7.5Mtpa and with the ramp up to 11Mtpa will see another 190 much-needed permanent jobs created in regional Western Australia, bringing the total number of jobs to 654 across the mine, rail and port operations.
“The announcement today of a significant Mineral Resource in the Yilgarn should underpin a profitable business and hundreds of regional jobs for years to come.
“This is great news for MRL shareholders and for regional Western Australia.”
Broad business
A group of anti-fracking advocates planned a protest outside the AGM this morning to argue against unconventional drilling in the Perth Basin.
The company is planning 250 kilometres of seismic work at its nine Perth Basin tenements, and will drill one well.
But Mr Ellison said he was looking for conventional gas.
“We are concerned about the environment... we’re not fracking and we don't intend to,” he said.
“We understand gas still causes emissions but we burn a lot of diesel in our pits.”
Mr Ellison said the business spent about $250 million on diesel annually, and planned to use conventional gas resources to reduce that to zero and lock in a good long term cost of fuel.
Gas through the Goldfields Gas Pipeline might cost $470 per gigajoule, he said, but could potentially be liquefied and trucked to sites at a cheaper rate.
“My plan is not to frack,” Mr Ellison said.
“(If we find unconventional gas) I’ll ask the shareholders to vote on it”
In lithium, the business hit pause earler this year on the development of a refinery at Wodgina after an earlier deal to bring Albemarle Corporation in on the project.
Construction of processing trains which would feed a refinery at Wodgina are effectively complete, but were put under care and maintenance in recent weeks.
The lithium market will remain difficult for some time, Mr Ellison said, and he expected the Wodgina spodumene processing operations to remain offline for at least a year.
Demand was softer than current pricing reflected, he said.
Lower subsidies for electric vehicles and slow development of the processing plants which offtake lithium hydroxide were both problematic, Mr Ellison said.