Mining industry discusses market outlook for South Australia

By Neil Murphy, CEO, South Australian Freight Council and Alex Todd, Economic Development Manager, Regional Development Australia Whyalla & Eyre Peninsula 

The 7^th Annual Mining South Australia conference and exhibition was again held in Whyalla in late November 2013 and brought together over industry and all levels of government  to hear about the latest developments from the major projects, mines and explorers in South Australia.

Following the welcome to Whyalla from Mayor Jim Pollock who outlined the many opportunities available in the region the keynote address was delivered by the Hon Tom Koutsantonis, Minister for Mineral Resources and Energy and Minister for Transport and Infrastructure (amongst other portfolios).

Minister Koutsantonis highlighted the ongoing expansion of mining exploration, production and exports occurring within South Australia, including recent successes in iron ore exports by Arrium and the vast potential presented by the Unconventional Oil and Gas industry emerging in the State, which the Minister described as an “energy revolution”. Minister Koutsantonis also discussed the establishment of the Mining and Petroleum Services Centre of Excellence and acknowledged the investment risks the mining sector is taking each and every day.

Dr Paul Heithersay, Deputy Chief Executive, Resources and Energy from the Department for Manufacturing, Innovation, Trade, Resources and Energy expanded on the outlook for mining in SA theme and emphasised that the China story will continue to drive demand, especially for iron ore and gas. Dr Heithersay suggested that all signs indicate that another upswing in Chinese demand is imminent.

Darryl Gobbett, Chief Economist for Prescott Securities Limited discussed the great period of urbanisation that is continuing throughout the underdeveloped world, especially in China and India, and how this is driving demand for infrastructure, and ultimately mining commodities. Mr Gobbett highlighted that whilst growth in Chinese demand may be slowing, it is growth just the same, and is on such a scale that the export opportunity remains a key driving force for Australian miners. Mr Gobbett also highlighted the conundrum that sees strong demand lead to rising commodity prices which in turn leads to a strong Australian dollar.

Joe Mastrangelo, Director of the Resource and Energy Sector Infrastructure Council emphasised the need to establish strong partnerships to progress projects, explained the role of RESIC in this context, and highlighted the successful project outcomes that they have been able to facilitate. Joe discussed the Port Bonython concept and its current status.

Jon Hobbs, General Manager Whyalla Port for Arrium outlined the recent expansion of the Whyalla transshipment operations and future plans to progress iron ore exports from the region. Mr Hobbs discussed the impacts as well as the positive cash flow available to junior miners seeking to establish and expand operations. Jon emphasised that the State’s planning processes are good if you “truly answer” the questions that are posed, but also discussed the many risks associated with project development, particularly for factors out of your control and over time.

John Nitschke, Chairman of IMX Resources continued the unconventional solutions theme by outlining their Rotainer loading system operating through the Outer Harbor at Port Adelaide. This system avoids the capital costs associated with dedicated bulk loading facilities for small volume miners and reduces dust and spillage. Mr Nitschke also outlined future iron ore mining development opportunities for the company.

Nate Toll, Managing Director of Braemar Infrastructure discussed the proposed logistics solutions for the Braemar Province (Peterborough to Broken Hill areas) which are anticipated to provide a start-up volume of 25 mtpa. A slurry pipeline to a floating offshore loading platform is envisaged, with approvals being sought for significant expansion as the various Braemar producers come online.

Steve McClare, General Manager of Hillgrove Resources discussed the Kanmantoo (copper concentrates) mine and logistics systems, including B-Double road transport to Port Adelaide using purpose built containers and loading to ship using a Rotainer located on the Inner Harbour. The company has recently reduced processing costs and expanded the recoverable reserves.

Dr Andrea Marsland-Smith, Geology Manager for Heathgate Resources discussed Uranium production in the Frome Basin which is rated as one of the 5 most naturally radioactive places on earth, and specifically the opportunities presented in the Beverley area (north-east of the State), including the Four Mile deposits. Dr Marsland-Smith discussed the conditions necessary to implement an in-situ recovery process and highlighted the benefits that would accrue to Heathgate from an upgrade of the Strzelecki Track.

Greg Pauline, CEO of Genesee and Wyoming Australia discussed the capabilities of the rail operator and their recent gains in securing contracts to haul iron ore for Arrium and others. This development has seen the company invest heavily in new rolling stock and state-of-the-art locomotives to perform the task.

Hugo Klingenberg, Senior Manager Network Development, ElectraNet discussed power needs in the region and the benefits of increasing transmission capacity on the Eyre Peninsula from 135KV to 275KV. The Eyre Peninsula transmission network is nearing capacity so any enhancement will service both the existing community as well as any new mining operations. The potential to install wind farm capacity to augment power generation on Eyre Peninsula would also be facilitated.

Andrew Napier General Manager of the Port Pirie Development Project for Nyrstar outlined the current status of plans to convert the primary lead smelter at Port Pirie into an advanced metals recovery and refining facility so as to increase capacity and improve processes. Investments will likely include a new oxidation furnace to replace the aging sinter plant and will enable processing of Nyrstar’s zinc smelter residues and an increased range of other feedstock.

Mark Parry, Managing Director and Chief Executive Officer of Rex Minerals discussed the status of the Hillside Mine on Yorke Peninsula near Ardrossan and the process that sees the company expecting to commence construction in 2014 and enter production in early 2016. This proposed mine is Australia’s largest undeveloped Copper project and expects to produce 75,000 tonnes of copper per annum, 60,000 ounces of gold and 1.2 million tonnes of iron ore.

Charlie Huckerby, Bulk Shipping Research Analyst, Braemar Seascope outlined movements in ship charter rates and comparisons between shipping from the Eyre Peninsula, the Pilbara in WA and Brazil, including forecasts for charter rates.

Mark Elford, Executive Director Strategic Transport and Infrastructure Planning, Department of Planning, Transport and Infrastructure (DPTI) outlined the State Governments activities with regard to transport planning for the mining sector, particularly the Draft Integrated Transport and Land Use Plan and the Regional Mining and Infrastructure Plans.

To round out the day a panel discussion was facilitated by Neil Murphy, CEO of the SA Freight Council and the Conference Day Chair. Participants on the panel included Jon Hobbs General Manager of Whyalla Port for Arrium, Capt. Ian Ives, Director, Transhipping Operations for CSL Australia Pty Ltd and Mayor Brenton Vanstone from the Port Pirie Regional Council and they discussed optimal infrastructure solutions for the region.

Conclusion

Overall, there were good quality presentations from a range of speakers both from Industry and Government. Day one focused on the outlook for the resources industry, a number of mining projects, infrastructure needs for the mining industry and some potential solutions.

Day two was chaired by Alex Todd, Economic Development Manager, RDAWEP who also delivered a presentation on the infrastructure needs and priorities identified for the Whyalla and Eyre Peninsula region. The second day focused on new opportunities and exploration with topics ranging from unconventional gas to finance, shipping costs, exploration and new mining projects. Many new opportunities were identified, in particular, a number of speakers highlighted the massive unconventional gas reserves requiring development and exploitation in the Cooper basin over the next decade. In addition, two key themes discussed included the lack of infrastructure for mineral and oil as well as gas developments.

In contrast to earlier conferences during 2013, many speakers and delegates were optimistic about the outlook for mining and projects during 2014.

To view the conference presentations, visit the Informa Australia Slideshare account.

Mining South Australia 2013 in the news:

Eyre Peninsula electricity supply holding up development (ABC)

New data to help SA explorers (www.miningnews.net)

SA Mining booklets officially launched (www.whyallanewsonline.com.au)

Mining conference dubbed a success (www.whyallanewsonline.com.au)