CONTROVERSIAL junior miner Bauxite Resources has all but given up on shipping raw bauxite to China as it starts afresh to establish a major bauxite mining and refining business in the South West.
CONTROVERSIAL junior miner Bauxite Resources has all but given up on shipping raw bauxite to China as it starts afresh to establish a major bauxite mining and refining business in the South West.
Later this month, Bauxite shareholders will be asked to approve a revamped mining and refining joint venture with Chinese conglomerate Yangkuang Group aimed at delivering a 1.1 million tonnes per annum alumina refinery in the South West by late 2015.
At the same time, the Foreign Investment Review Board will rule on Yangkuang’s involvement that, if approved, will trigger a significant cash injection that will enable Bauxite to formally launch its five-year plan to become a major alumina producer.
The company this year suspended its Bindoon trial mine after a fierce campaign by some local residents opposed to Bauxite’s efforts to expand to commercial scale production under its existing quarrying permit.
The trial was aimed at generating early cash flow to fund its exploration and development studies into an integrated mining and refining venture with Yangkuang.
But the state’s Environmental Protection Authority then determined the project should be subjected to a full public environmental review, leading Bauxite to instead seek approval for a larger 2mtpa operation.
But Bauxite chairman Barry Carbon said direct shipping grade bauxite prices had since plummeted, making a direct shipping operation increasingly unlikely given it would be unviable at current ore prices below $US50 per tonne.
“We’re not walking away from Bindoon, we would be letting a lot of people down if we did. But the trial process has shown us how we can do things better,” he said.
Though the Bindoon mine would still be evaluated on receipt of EPA approvals, Bauxite’s focus, under incoming chief executive Scott Donaldson, would now be on its proposed mining and refining venture with Yangkuang.
Subject to shareholder approval, the joint venture will be restructured to avoid a potential $200 million early tax liability by swapping Bauxite’s 25 per cent free carried stake for a 9 per cent contributing interest and 30 per cent share of offtake.
Yangkuang will also pay 70 per cent of exploration and study costs, and reimburse Bauxite for 70 per cent of costs to date once it has FIRB approval.
Mr Carbon said the partners would then launch an $8 million annual exploration program on 24,600 square kilometres of tenements between Moora and Pemberton, and formally begin assessing potential refinery sites based on their access to power, water, infrastructure and bauxite.
Mr Carbon said the partners had already identified a number of potential sites, including Shotts industrial estate at Collie, Kemerton, Wundowie, Manjimup and Kwinana.
