Small step for Southdown Magnetite

The long-awaited Southdown Magnetite project, near Albany, has achieved a win after obtaining federal environmental approval, but securing funding is a challenge. 

ASX-listed Grange Resources was given the green light for Southdown on June 30, with the approval covering an open pit mine, desalination plant and pipelines.

That included a slurry pipeline of about 100 kilometres to the Albany port to transport ore.

Southdown has moved very slowly.

Grange has secured road access for the proposed pipelines with Main Roads WA, and has been in negotiations with the state government and landowners for site access for years.

The Tasmanian headquartered business is still working on securing a new equity partner for the project, a process which has also been a multi-year endeavour.

Sojitz Corporation and Kobe Steel, both Japanese, have previously been reported to own 30 per cent of Southdown, with Grange holding the remainder.

The magnetite project has been in the works for more than a decade.

The deposit was first discovered in 1983, with a resource of about 1.2 billion tonnes at 34 per cent grade.

Wood Mackenzie senior analyst Kim Christie said securing an investment partner would be critical for Grange.

“(It’s) one of those projects that until they get a strategic partner, they’ll find it difficult to develop,” Ms Christie said.

“At current prices they’d make good money.

“But it’s quite a big project… quite a bit of capital expenditure.”

Estimates for the project’s cost are around $3 billion.

Ms Christie said there would also be caution about the long term trend of iron ore prices, with Vale expected to bring supply back into market, and concerns about slowing demand growth in China.

If Grange can find an investment partner, it could take as long as five years to get the project into production.

Southdown would produce 10 million tones of magnetite at a concentration of nearly 69 per cent iron.