Rare earths, specialty metals and uranium show there’s more to WA than iron ore

WESTERN Australia’s iron ore industry is booming, however sectors such as rare earths, specialty metals, uranium and gold have also attracted significant investment from overseas and local players.

Even some projects that had previously stalled, including Rio Tinto’s underground extension at the Argyle diamond mine and Moly Mines’ Spinifex Ridge molybdenum project have come back online after significant capital injections. 

Rio Tinto experienced a roadblock in relation to the development of its $1.6 billion underground diamond mine when the GFC hit in 2008. 

In response to global market conditions, a decision was made to slow the development of the project, which resulted in a workforce reduction and a demobilisation of contractors.

However, in September last year, Rio Tinto announced an investment of $803 million in the underground mine, which it said would extend the life of the current open-pit project to at least 2019.

WA-based Moly Mines’ attempts to become Australia’s only molybdenum producer were also foiled by the GFC and the commodity’s fluctuating price.

In early 2008, the company had completed a full feasibility study and was ready to start construction at Spinifex Ridge, Australia’s largest molybdenum prospect. 

Moly Mines managing director Derek Fisher said the GFC forced the company into survival mode. 

“It’s a painful story; we got within weeks of financing this, we had every major bank in the world wanting to finance it and we missed out by about three weeks from getting that financing away,” Mr Fisher told WA Business News. 

A $200 million investment from Chinese shareholder Hanlong and increased profits from its iron-ore mine allowed the company to make its second attempt at getting the project off the ground.

Moly Mines recently signed various project debt facilities agreements totalling $US494 million with the China Development Bank for the construction of the Spinifex Ridge mine. 

It has also agreed to a $US608 million fixed-price engineering contract with China’s CACS Corporation; local firm GR Engineering has signed up as the main sub-contractor.

Another major project to experience more than its fair share of difficulties over the past decade was the Windimurra Vanadium project, located 600 kilometres north of Perth. 

Originally developed by a local company, it was bought by international mining group Xstrata and subsequently decommissioned.

Atlantic acquired 100 per cent of the project in late 2010 and is proceeding with the completion and commissioning of the project, with vanadium production expected to commence next month.

Specialty metals

There has been increased investment in specialty metals such as vanadium and lithium, and rare earth metals during the past decade. All are typically used in hybrid cars, batteries and electronic devices. 

Reed Resources has completed a definitive feasibility study on its $489 million Barrambie Vanadium Project, 600km north-east of Perth. 

The company recently signed a memorandum of understanding with China Nonferrous Metal and Australian firm Arccon, which covers an engineering procurement and construction contract and financing assistance for the project.

Meanwhile, Galaxy Resources is poised to be the first Australian lithium producer to adopt a ‘value- add’ strategy, using its lithium carbonate to manufacture battery packs to capitalise on China’s growing demand for electric vehicles and clean energy. 

The WA-based company recently struck a deal with US battery producer K2 Energy, which will provide it with licensing and commercial support for the construction and operation of its proposed $135 million Jiangsu battery manufacturing plant in China. 

Galaxy mines lithium-laden spodumene from its $80 million Mt Cattlin project just north of Ravensthorpe, which will be processed at Galaxy’s Jiangsu Lithium Carbonate plant in China, which is nearing commissioning. 

Toronto Stock Exchange-listed Talison Lithium, which mines and processes spodumene at Greenbushes, south of Perth, last year merged with Canadian lithium explorer Salares Lithium and completed Stage 1 of its Greenbushes expansion.

Talison started its $65 million Stage 2 expansion works in April, which will more than double capacity to 740,000 tonnes of lithium concentrate per annum; commissioning of which is anticipated to commence in the second quarter of 2012. 

Australian companies have also tapped into the rare earths market, an industry that has been boosted by China’s decision to place heavy restrictions on its rare earths export quotas. 

Rare earths miner Lynas Corporation has commissioned the concentrator plant at its Mt Weld project, located 35km south of Laverton, and completed a feasibility study for a proposed Concentration Plant expansion. 

The ore from Mt Weld will be concentrated and exported to Lynas’s purpose-built advanced materials processing plant in Malaysia, which is to be completed later this year. 

The mine is expected to be in production for 20 years, with its first phase producing an estimated 33,000tpa of rare earth concentrates.

Uranium 

Another area attracting significant investment in WA is the uranium sector.

South Australian-based Toro Energy is the first of four companies to enter the public review phase of the approvals process, for its Wiluna Uranium project in the Mid West.

The company recently released its Environment Review and Management Program (ERMP) and associated documentation for public review and comment.

Subject to the approvals process and government decisions, Toro Energy expects on-ground construction by late 2012, production by late 2013 and first uranium sales in 2014.

Uranium mining policy in WA has undergone significant changes in recent years, with the Barnett government overturning the ban on uranium mining in 2008. 

While there are no commercial uranium mines in WA, the four projects undergoing state and federal approval processes are: BHP Billiton’s Yeelirrie project; Toro’s Wiluna project; Canadian company Mega Uranium’s Lake Maitland project; and the Kintyre project, a joint venture between Canadian uranium miner Cameco and Mitsubishi. 

Last month, BHP Billiton said it was continuing work at its Yeelirrie uranium mining project, but had deferred its ERMP to focus on environmental and economic outcomes to meet internal standards. 

Its planned $20 billion expansion of the world’s largest uranium deposit at Olympic Dam in South Australia is still going through the approvals process, with the company having released its final supplementary environmental impact statement in June. 

Mega Uranium and Cameco/Mitsubishi are both in the middle of completing ERMP studies and are planning to submit ERMPs to the Environmental Protection Authority in the next 12 months.

Gold 

Two major gold projects currently under way highlight the buoyancy of WA’s gold industry.

AngloGold Ashanti Australia and Independence Group’s $740 million Tropicana Gold Mine project will produce 3.45 million ounces of gold over a 10-year mine life.
Construction of the mine is under way and first gold production is anticipated in the December quarter of 2013.

Development of Regis Resources $109 million Garden Well Gold Project is also under way, with first production scheduled for September 2012. 

Next’s week’s feature in WA Business News will focus on the gold sector.