New life for iron ore

AT LEAST $1 billion will be spent in the next year or two to expand production of a commodity that costs less per tonne than good gardening soil, or two cups of coffee in a five-star hotel.

Iron ore, a low-cost, high volume mineral for which WA is one of the two leading global exporters, has been a major pillar of our economy for a third of a century and is now about to experience a new surge in growth.

Work on two major new mines, Mining Area C (MAC) and the West Angelas, will begin next year, providing a welcome stimulus in the construction industry that has been awaited for two years.

MAC will be completed by BHP Iron Ore in little more than two years, although ore will be mined and shipped in that period.

The West Angelas mine, now controlled by Rio Tinto, will be launched after a similar construction period, but it appears likely earlier plans prepared by the previous owners, North Ltd, to build a duplicate railway will be abandoned.

New mines have appeared in the Pilbara in recent years to prolong the life of the original giants, Mt Whaleback (operated by BHP) and Tom Price (Rio Tinto) and to provide new types of ore to an evolving steel industry.

When the first mine was opened 35 years ago there were heady predictions that the region could produce 20 million tonnes a year. The current level of production is about seven times this figure and is expected to rise.

Iron ore miners receive half the price, in inflation adjusted terms, than they did 30 years ago, but are more profitable.

Some of this gain can be attributed to a weak Australian dollar, but most has come from improved technology, and greater efficiency.

Forty years ago iron ore was carried in ships of 12,000 tonnes, would look like Rottnest ferries against the ore carriers of 300,000 tonnes that plod across the world’s oceans today.

BHP is experimenting with trains that will move 36,000 tonnes of ore, satellites keep track of the giant trucks and shovels that work in the opencuts, with computers measuring the speed with which loading takes place.

In a developing country thousands of people could be employed in a mine; in the Pilbara a handful may work on a shift.

All this has meant the remaining two producers in the Pilbara make strong profits but are constantly aware of the intense competition they face, particularly from Brazil.

The type of ore offered to steel mills among the Pilbara industry’s mainly Asian customers can require the subtlety of a wine blender to produce ore with the required characteristics.

For an industry that now employs only a few thousand people, it has a major impact on WA’s economy.

A new mine in the Pilbara means more jobs in Perth engineering shops, in warehouses, and among a score of service industries.

The royalties that flow to the Government give this State a strong base on which to provide schools, hospitals and other community infrastructure.

Certainly the Pilbara has been changed forever by the miners. Oases of green suburbia have been carved out of the red Hamersley Range, the Dampier Archipelago, off the iron ore ports, are dotted with pleasure craft at weekends.

There is little sign that the long boom will end, for the iron ore companies estimate there is enough ore in the region to last at least a century, at current rates of production.

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