29/08/2012 - 10:36

Pipeline slows as big projects near completion

29/08/2012 - 10:36


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Pipeline slows as big projects near completion
ON FIRE: Sandfire’s DeGrussa copper mine is scheduled to start operations next month. Photo: Sandfire

Western Australia’s pipeline of significant non-iron ore projects is showing signs of a quick slowdown as construction of major projects is due to be completed by the end of next year.

The two largest projects completed this year were BHP Billiton’s $US3 billion Worsley Alumina expansion and Atlantic’s $500 million Windimurra Vanadium plant.

 The total value of the six completed projects so far this year was $4 billion (see list of major projects here).

The total value of projects due to be completed by the end of next year is $2.7 billion. This includes the $1.6 billion Rio Tinto Argyle diamond mine expansion and the $740 million joint venture between Anglogold and Independence at the Tropicana gold mine.  

However, long-term growth in these mining sectors has been hampered as three significant projects worth $5.1 billion have stalled. 

Moly Mines has cancelled its $608 million Spinifex Ridge molybdenum-copper project, Kagara has gone into voluntary administration and its administrator, Taylor Woodings, is trying to sell its $997 million Admiral Bay project.

Perdaman Industries’ $3.5 billion Collie urea project has been put on hold indefinitely as legal action continues against its coal supplier.

There has also been speculation BHP Billiton wants to sell its nickel operations in Western Australia after its stainless steel  materials division, which includes the Nickel West operations, experienced a $556 million fall in underlying earnings. The big miner has also sold its Yeelirrie uranium project to Cameco.

This week Kagara’s administrator, Taylor Woodings, said Rothschild Australia was co-ordinating the sale of the Admiral Bay project.

Taylor Woodings is exploring options as it markets Admiral Bay and Kagara’s North Queensland assets. Rothschild worked with Kagara when it was trying to organise a joint venture at the Admiral Bay site and has already had some early interest from potential buyers.

The project has been on hold since Kagara went into voluntary administration in May after it was unable to refinance a $40 million debt with ANZ.

Earlier this month WA-based Talison Lithium entered a deal with US chemical producer Rockwood Holdings, which proposes to sell 100 per cent of Talison Lithium’s ordinary share capital to Rockwood, which is estimated at $724 million.

The proposed deal has halted progress at Talison’s $200 million Kwinana lithium carbonate plant expansion. Rockwood has indicated a strong interest in continuing the expansion. 

Talison’s Greenbushes expansion was completed in June, increasing the mine’s total production capability to 700,000 tonnes per annum.

Of the six projects completed this year, the most recent was Regis Resources’ Garden Well gold mine. Construction of the project was completed just over a week ago and commissioning has started. 

The mine is being readied for full-scale operations and Regis expects its first gold pour early next month.

Once it reaches full capacity the mine will be able to process 4 million tonnes of ore per annum.

Next month Sandfire Resources’ DeGrussa copper mine is scheduled to start operations.

The mine is now more than 86 per cent complete and is on track to finish within budget. It will have a capacity 1.5mtpa.

The first concentrate production and shipment are scheduled for the last quarter of this year.

The power station was connected this month, which will supply power for its underground mining operations. The DeGrussa aerodrome is already receiving fly-in, fly-out workers.

In the uranium sector, Cameco, Mega Uranium and Toro Energy’s projects now offer the most long-term potential as they hope for a recovery in long-term uranium prices.


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