Iron ore, having hit the doldrums late last year, is staging a strong recovery in Western Australia at the moment. We have recently noted the developments at the inner harbour berths of Port Hedland – a transport route that will integral to the evolution of the next tier of iron ore miners in the state – and the appointment of Ian Campbell as Chairman of the North West Iron Ore Alliance (NWIOA). In more good news, Rio Tinto has exported its three billionth tonne of iron ore from Australia, Aurox Resources has entered into a A$10 million Equity Line of Credit Agreement to help develop its Balla Balla project in the Pilbara, and NWIOA member Atlas Iron has agreed to merge with fellow miner Warwick Resources.
The Atlas merger is by way of a Schemes of Arrangement with Warwick. Atlas says Warwick’s shareholder and optionholders will participate in the company’s fast growing production profile, mining and project execution expertise, existing direct shipping ore (DSO) resources of 127 Mt at 56.7% Fe within 160 km of Port Hedland, exposure to the Ridley Magnetite project with a resource of 2,000 Mt at 36.5% Fe, substantial Pilbara land holding and expertise of the management and technical team.
Atlas is currently mining and exporting from its 100%-owned Pardoo project, located 75 km by road from Port Hedland and completed its first shipment of DSO in early December 2008. Atlas is planning to export 1 Mt during 2009 from the project, expanding to 2.4 Mt/y following commissioning of the Utah Point port facility. When combined with additional export tonnages from its Wodgina and Abydos DSO projects, the company is targeting DSO exports at an annualised rate of 6 Mt in 2010, growing to 12 Mt by 2012.
The combined company will be targeting additional production of 14 Mt/y from Atlas’ and Warwick’s South East Pilbara projects. Development of these projects is planned to coincide with the completion of the two new berths at Port Hedland, which are due to be completed in late 2013. On conclusion of this project development the combined company will be targeting an export rate of 26 Mt/y of DSO by the end of 2014.
Atlas Managing Director David Flanagan said: “This transaction with Warwick brings with it a very large South East Pilbara iron ore tenement portfolio with exceptional resource potential. Developed in a project pipeline with our current North Pilbara projects, we expect to be able to gain real operating synergies from this suite of projects and substantially increase production rates. The team at Warwick has done a fantastic job in securing this extensive landholding and building the resources and exploration targets at these projects. The next stage for Atlas will be to rapidly grow the resource inventory and bring them into production.”
Warwick Chairman Will Burbury said: “Atlas has made a very attractive offer to Warwick shareholders which not only provides an immediate uplift in the value of Warwick shares but provides our stakeholders the opportunity to participate in the continued development of our projects as well as exposure to existing production with a rapidly growing production profile, and the Atlas team’s mining and marketing expertise and capability.”
Atlas has completed technical due diligence on the Warwick tenements around Mt Newman and it is satisfied they have potential for commercial resources of iron ore consistent with Warwick’s previously stated range (including existing resources of 26.4 Mt) of 139 to 247 Mt at 56% to 60% Fe.
Export milestone
Rio’s milestone tonne was loaded on to the Pacific Ruby, a Cape-size vessel berthed at the company’s recently expanded Cape Lambert port. The 240,000 t cargo consisted of iron ore from the Yandicoogina and Mesa J mines and was bound for POSCO, the largest South Korean steel producer. Rio operates 11 mines and three terminals at two ports (Cape Lambert and Dampier) in the Pilbara.
“It is fitting that such a milestone should comprise ore drawn from the furthest reaches of our Pilbara operations, as it highlights the sheer scale and complexity of Rio Tinto’s integrated production network,” acting CEO and Managing Director, Pilbara Mine Operations, Greg Lilleyman said. “These were two quite different products sourced from mines more than 300 km apart, separately transported on two rail lines to meet at a new four-berth port for shipping to fulfil the requirements of one of our most significant long-term customers.
“The rapid, exponential growth of Rio Tinto’s Pilbara operations can be gauged by the fact that we took 25 years to ship our first billion tonnes, 12 years to reach our second billion tonnes and now just six years to post our third billionth tonne.”
Rio Tinto’s first shipment of iron ore from Australia – 52,000 t of Tom Price ore – was sent on 22 August 1966. The Huon Maru set sail from Dampier bound for Japan, for eventual steel production by Yawata Iron and Steel (Nippon Steel). In 1972, Robe River Mining (now 53% Rio Tinto) began exporting iron ore from the newly built port at Cape Lambert, while Hamersley Iron (100% Rio Tinto) opened its second port terminal in Dampier later that year.
In 2009, Rio Tinto plans to export 200 Mt of iron ore, virtually all of it from the Pilbara, compared with the then-impressive total of 761,000 t exported in 1966.
