It’s a long way to the top when you want to extract iron ore from rock in Western Australia – just ask BHP Billiton.
The mining giant conspicuously failed in its attempt at starting a secondary processing operation there – and no one else has succeeded – but that isn’t deterring several others from trying.
Are they visionary pioneers or just completely mad?
Not only do they face the tyranny of cost in transporting resource, materials and manpower across huge distances between mines and markets, but all of them are looking to produce magnetite in a land where haematite is king.
Citic Pacific has a $6 billion Sino Iron magnetite project under development in the Pilbara while in WA’s Mid-West region, Asia Iron’s Extension Hill project is looking to start production in late-2014, and Australia’s only dedicated magnetite producer, Grange Resources, wants to be on stream at Southdown, near Albany, in 2015.
First off the block, though, is likely to be Gindalbie Metals’ $2.6 billion Karara iron ore project, which is just a few months away from commissioning.
“We’re approaching it like any other new project,” Gindalbie’s chief executive Tim Netscher told The West Australian newspaper recently, “but there is a fair degree of pressure on us to succeed.”
You bet, Tim. Substantial investment is needed to strip away the waste from the magnetite to bring it up to the 66%-plus premium concentrate grading required for it to be exported.
It will be the first secondary iron-ore processing operation in WA since BHP blew $4 billion on its hot briquetted plant at Port Hedland, which fell apart so spectacularly in 2004.
Chinese steelmaker Ansteel has taken a large ownership stake and underwritten the Gindalbie mine’s entire output – but that is still no guarantee that the operation will succeed in producing enough magnetite of export quality and transporting it at a price that is economically viable.
But hey, in the iron ore industry, it helps to have balls of steel.