OPINION: Lithium and gold are among the minerals proving there’s life for resources outside the north-west.
As far as most Western Australians are concerned, mining in their state is confined to the Pilbara and the Goldfields around Kalgoorlie. But if you take a closer look, there is a genuine mining boom under way much closer to Perth, with the South West and adjacent regions enjoying a resources renaissance.
Lithium mining in the timber, wine and dairy country close to Greenbushes has been the newsmaker this year as production expands to meet the demand for lithium-ion batteries in electric cars, power storage and household tools.
Lithium is also found elsewhere in the south of the state, including new and proposed mines on the edge of the southern fringes of the Wheatbelt, such as Galaxy Resources’ Mt Cattlin project on the road between Esperance and Albany, and Kidman Resources’ Mt Holland project near Hyden.
In terms of dollars and jobs, however, an even more significant event is occurring closer to Perth with the price of alumina hitting a record high, which means WA’s big bauxite mining and alumina refining industry is having its best year in decades.
This is good news for the handful of potential exporters of the unprocessed ore (bauxite) and two big alumina producers – South32 (the majority owner of the Worsley refinery near Collie), and a company called Alumina, which is a silent partner in Alcoa’s chain of three refineries (Kwinana, Pinjarra and Wagerup) that operated as Alcoa World Alumina and Chemicals (AWAC).
The strong alumina price has flowed from a fundamental shift in the Chinese aluminium industry, with the government there enforcing environmental clean-up regulations that restrict local bauxite mining, alumina refining and aluminium smelting, leading to an increase in imports from Australia and other countries.
According to a recent research note from Deutsche Bank, AWAC’s profit margin at recent spot (overnight) alumina prices reached a record $US230 a tonne thanks to the price of alumina surging to a high of $US480/t. That price is expected to retreat next year, but its rise is a pointer to better times ahead for WA’s sometimes politically controversial alumina industry.
Titanium minerals and zircon, in decline after reaching peak production in the 1990s, are also enjoying a revival thanks to rising prices as China continues is massive commercial and home-building campaigns. (Titanium minerals are key ingredient in paint, while zircon used in ceramics.)
Iluka Resources, the long-term leader in titanium minerals and zircon, remains the dominant producer but was joined last year by ambitious new producer MZI Resources, which operates a small mine at Keysbrook.
Arguably the metal least associated with parts of WA outside the Goldfields, gold mining could spread further south-west if a theory being explored by a number of mining companies lives up to its potential.
Tiny Ausgold, an explorer with the Katanning project in the Great Southern as its flagship, has been an early player in a geological treasure hunt. The prize it is seeking is gold associated with the westernmost of six major mineralised regions that make up WA’s southern third (also known as the Yilgarn Craton).
Each of those regions hosts gold mines, with most of the gold associated with fault lines where the earth’s surface split billions of years ago to allow the upward flow of mineralised fluids.
The best known of the regions (or terranes) is the Kalgoorlie-Norseman belt, which has yielded 160 million ounces of gold, surrounded by the Laverton, Leonora and Wiluna belts, and with the Yamarna Belt to the far east in the process of being opened up by a new miner, Gold Road Resources.
The westernmost region, closest to Perth, has one big gold mine, the Boddington project of Newmont Mining, with exploration for more gold deposits in what could be a prolific source of gold historically hampered by agriculture’s land use dominance.
Ausgold, which is getting closer to a mine, has been joined in the Wheatbelt gold hunt by Explaurum, which has outlined a potential mine under wheat fields near Narembeen, and should soon be joined by a new Wheatbelt gold explorer, Cygnus Gold, which is in the process of raising funds.
Like Ausgold and Explaurum, the key to Cygnus is the theory of gold missed by early prospectors because (a) they were lured to Kalgoorlie, and (b) farmers had cleared the surface, planted crops and started raising sheep.
Under the wheat crop, and hard to explore without landowner approval, there might be gold-bearing structures, just as they are in the regions stretching to the east, all the way to Gold Road’s Yamarna discovery.
Interestingly, Gold Road is believed to be acquiring a shareholding in Cygnus because it is a company exploring virgin territory in the west, just as it did in the east (with considerable success).
Alumina, lithium, titanium minerals and gold are the keys to WA’s regional mining boom, one that has started without many people noticing.
