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Since production began in the state in the 1960s, Western Australia has become one of the driving

forces in world iron-ore mining. Built on a foundation of high-grade ores and a geographical location that has proved fundamental to serving the needs of Far Eastern steelmakers, the industry grew steadily through the 1970s, 80s and 90s. During the past few years, however, there has been a dramatic acceleration in the pace of development, as the state’s established producers have invested heavily in new capacity. At the same time, a number of new entrants have been lining up financing with the aim of cashing in on what has been a very lucrative market, especially since Chinese demand for high-quality iron ore has tightened the supply:demand relationship to an unprecedented degree.

By way of illustration, during calendar 2004 operations in Western Australia (WA) in which Rio Tinto has either full ownership or an equity holding produced 126.6 Mt of ore, compared to 118.5 Mt in 2003. In terms of attributable production, Rio Tinto’s share of this amounted to 107.8 Mt last year and 102.6 Mt in 2003. The state’s other principal producer, BHP Billiton, reported attributable production for the year of 81.3 Mt out of a total of 94.5 Mt from the operations in which it has interests. That the bulk of the

increase of 2004’s output came towards the end of the year indicates clearly the momentum with which WA’s iron-ore industry is continuing to develop.

While the two big producers currently have the lion’s share of the state’s productive capacity, they are by no means alone when it comes to bringing new capacity on stream. Amongst the smaller producers, Portland Ltd has a well-established operation in the Yilgarn area - not the Pilbara - while Mt Gibson

Iron commissioned its first mine a year ago. Other participants whose projects are various stages of development include Midwest Corporation, Aztec Resources and Fortescue Metals Group, of which the latter has major project proposals in the pipeline. Add to these Hancock Prospecting, patiently waiting in the wings and now awaiting the outcome of legal deliberations over pre-emptive rights in relation to its Hope Downs joint venture with South African iron-ore

Over the past few years, Western Australian iron-ore producers have been responding to surging demand with major investments in new mines and infrastructure. MQW looks at the industry today, where it has come from, and what the future may hold.

Australia’s iron Australia’s iron giant

Top: Drill pattern at Paraburdoo mine (Hamersley Iron) - Photo courtesy of Pilbara Iron.Right, Map 1: Iron-ore provinces in western Australia.Above, Map 2: Operations and development projects in the Pilbara Province.Source (both maps): WA Dept of Industry and Resources.

giantOver the past few years, Western Australian iron-ore producers have been responding to surging demand with major investments in new mines and infrastructure. MQW looks at the industry today, where it has come from, and what the future may hold.

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miner, Kumba Resources, and there is little shortage of interest in WA’s iron-ore opportunities.

An unimaginable resourceWhile WA’s iron-ore industry is a product of the past 40 years or so, its iron-ore resources were known about in concept, if not quantitatively, for much longer. Prospecting in the Pilbara - the region of northwestern WA inland from Port Hedland and Dampier, 1,200 km northeast of Perth - in the 1800s revealed the presence of iron ore, but with domestic demand satisfied by occurrences in the east of Australia, there was little incentive to develop here. The region’s isolation was enhanced in 1938 when the Australian government placed a ban on iron-ore exports, and it was not until the ban was lifted in 1960 that investment in infrastructure and production facilities began to flow in.

However, WA’s iron-ore industry was already established before developments began in the Pilbara. In 1950, BHP (then the Broken Hill Proprietary Company, and Australia’s largest steelmaker) began mining on Cockatoo Island, off the state’s northwest coast, in an operation that lasted until 1986. Initially, this was a purely domestic operation, providing ore for BHP’s own steelmaking activities. Also offshore, the company’s Koolan Island mine ran from 1964 to 1996.

By the end of the 1960s, both Hamersley Iron (then owned by a joint venture between Rio Tinto and US company, Kaiser Steel) and a consortium including BHP had established their first mines in the Pilbara, at Mt Tom Price and Mt Whaleback respectively. US investment was also involved in the establishment of Robe River Iron Associates, which brought its first mine into production in 1972; Cleveland Cliffs Iron Co. was a founder partner in Robe and, as events have turned out, seems likely to return to WA’s iron-ore industry in the near future if its agreed take-over of Portman is successful.

Other companies have come and gone as well in the intervening years. Rio Tinto bought out Kaiser’s holding in Hamersley in the 1970s, and in 2000 bought North Ltd, which in the mean time had become the majority holder in Robe River after its own merger with Peko Wallsend. Cleveland Cliffs had also long gone, while the focus of investment interest during the 1980s and 90s switched from ‘Old World’ mining companies to Far Eastern iron-ore consumers. Thus several of the major developments that took place during these two decades involved

joint ventures between the established producers and oriental steelmakers, initially from Japan and more recently from China.

WA’s iron-ore industry has involved some famous individual names as well, amongst whom rank people such as Thomas Price, who worked for Kaiser Steel and after whom Hamersley Iron’s first operation was named, and Lang Hancock, of whom the story is told that he realised the Pilbara’s potential in the early 1950s after flying through the Hamersley Ranges but had to wait until the government lifted its ban on claim staking ten years later before being able to develop investor interest in it.

As Graph 1 shows, there have been a number of clear stages in the development of WA’s iron-ore industry, with jumps in Australian production and exports coinciding with new mines

being opened. It should be noted that the graph shows total Australian production and export figures, not just those for WA, although the state has contributed over 95% of national iron-ore output in recent years. For the first nine months of 2004, ABARE estimated that WA operations had contributed 166.8 Mt out of national production of 170.2 Mt, the remainder coming from operations in South Australia and Tasmania.

A key feature of the Pilbara is its arid/tropical climate. Rainfall is highly variable from year to year, averaging 300-400 mm, although in March 2004 a cyclone delivered more than 300 mm of rain in 36 hours to the central Pilbara, the first significant rain in four years. Daytime temperatures can reach 47°C in the summer, but are typically in the mid-20°Cs in winter.

Above, Graph 1: Total Australian iron ore production and exports, 1960-2003. Source: ABARE.Top: A typical water hole in the Pilbara region of Western Australia. Photo courtesy of BHP Billiton.

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Ores for all marketsThe success of WA’s iron-ore industry can, in part, be put down to the fact that it is not dependent on only one type of ore, but has had the opportunity to exploit a range of different grades. In addition, changes in steelmaking technology have gone hand-in-hand with production scheduling, such that ore types that were less marketable 20 or 30 years ago now find ready outlets as steelmakers’ own requirements have changed. Add to this the producers’ ability to supply their ores as lump, fines, pellets or direct-reduced iron, and it is easy to see the attraction of WA’s products across the market sphere.

While all of the state’s iron resources are derived from original banded iron formations (BIFs), different weathering regimes have led to the formation of several major ore types, including the Brockman, Marra Mamba, Channel and Detrital ores. In addition, two main host BIFs have been identified, the 3,300 Ma Nimingarra Formation and the 2,500 Ma Brockman Formation, along with other BIFs of lesser economic importance. Across the ore provinces, in-situ leaching processes associated with supergene enrichment have led to the replacement of the original sedimentary iron oxides, carbonates and silicates by different, higher-grade oxides, with metamorphic and hydrothermal activity having been locally important in the transformation process.

There are some important differences between the various ore types in terms of both chemical and physical properties. Some Brockman ores, such as those found at BHP’s Mt Whaleback and Hamersley’s Mt Tom Price for example, consist mainly of haematite (Fe2O3) . Often low in phosphorus, these have traditionally provided the best lump ore from the Pilbara. Other Brockman ores, however, can include a goethite (FeO(OH)) component, leading to a

lower proportion of high-value lump material in the product mix, while Brockman satellite ores, which only formed around 150 Ma, consist of both martite (haematite that has replaced magnetite) and goethite.

Marra Mamba martite-goethite ores, by contrast, while also high-grade, are softer than Brockman ores and produce less lump material. Some occurrences, such as at BHP’s Mining Area C and Hamersley’s Marandoo, contain harder Marra Mamba ores, however, leading to an improved lump yield.

Channel iron deposits are different from bedded ores, having been formed by the accumulation of haematite-rich gravels in slow-moving stream beds, probably only at 5-25 Ma. With goethite forming a cementing matrix to these haematite cores, many of these deposits were later partially eroded, leaving remnants that are found across the Pilbara, and particularly in the Robe River area. One of the highest-grade channel ores occurs at Yandigoogina, while elsewhere in the Pilbara this type of deposit, also known as pisolitic limonite, can vary widely in grade.

Finally, detrital deposits are, as the name suggests, found where weathering has eroded earlier deposits and has deposited ore fragments in traps such as drainage channels. This type of deposit formed the basis for mining at Hamersley’s Brockman No.2 operation, now depleted.

BHP Billiton’s consortiaBHP Billiton Iron Ore’s operations in the Pilbara encompass six mining operations that are linked to its port and processing facilities at Port Hedland by 696 km of railway infrastructure that runs a fleet of nearly 50 locomotives and over 2,200 ore wagons. BHPB also owns the Boodarie Iron hot briquetted iron plant, designed to produce direct-reduced iron as a means of adding value to ore fines, but currently on care-and-maintenance.

Mine construction began at Mt Whaleback in 1967, the deposit having been discovered ten years earlier, with the first ore being exported from Port Hedland to Japan in early 1969. BHP developed Mt Whaleback as a partner in the Mt Newman consortium that now includes the Japanese firms, Mitsui and CI Minerals/Itochu, the three companies also having established similar joint ventures to cover the development of the Mt Goldsworthy and Yandi projects. Today, BHPB has an 85% holding in all three joint ventures, and wholly owns the Jimblebar operation. At Area C, the three joint venturers have been joined by the South Korean steelmaker, POSCO, with a 20% holding in C deposit, while BHPB has entered into an agreement over future production from Jimblebar with four Chinese steel companies taking a 40% holding in the Wheelarra part of the property.

The Mt Newman operation encompasses output from Mt Whaleback, which holds the largest reserves of high-grade Brockman remaining in the Pilbara, and satellite orebodies 23, 25, 29 and 30. Jimblebar (formerly named McCamey’s Monster, and which BHP acquired in 1992) is some 30 km east of Newman. BHPB’s Yandi and Area C mines lie around 100 km northwest of Newman, while the company’s Yarrie operation is completely separated from the others, 220 km east of Port Hedland, with which it has its own rail link.

Typical products from the various operations include blended high-grade lump ore and fines from Mt Newman/Jimblebar, high-grade lump and fines plus high-silica ores from Mt Goldsworthy/Yarrie, pisolitic (channel ore) fines and lump from Yandi, and Marra Mamba lump and fines from Area C. In addition, the Mt Newman operation supplied feed to the Boodarie Iron direct-reduction plant. Typical iron contents of the various products are in the range 64.0-65.4% for materials from Mt Newman, 58.5-58.9% from Yandi, 57.0-65.1 from Goldsworthy and 62.1-63.0 from Mining Area C.

As of June 2004, BHBP reported an

BHPB’s Mineral Resource BaseOre Type Resource (Mt)Brockman low P 1401Brockman high P 1862Detrital (lump) 74Marra Mamba 2139Pisolite 1334Yarrie 234Source: BHPB (June 2004)

Loading iron ore at BHP Billiton Iron Ore’s Port Hedland shiploading facility. Photo courtesy of BHP Billiton.

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estimated reserves at its Mt Newman operations to be 558 Mt of Brockman ore at Mt Whaleback (453 Mt proved and 105 Mt probable), 26 Mt at satellite orebodies 23 and 25 (18 Mt proved and 8 Mt probable), and 210 Mt at Jimblebar (154 Mt proved and 56 Mt probable), plus 66 Mt of Marra Mamba ore at satellite orebodies 29, 30 and 35 (52 Mt proved and 14 Mt probable). All of these are used to form Newman blended ores for marketing. In addition to its existing operations, BHPB has a number of properties in the Newman area for which permitting has been completed or is being sought. Of these, satellite orebodies 18 and 24 have the largest resources, with 123 Mt (97 Mt measured, 22 Mt indicated and 4 Mt inferred) and 104 Mt (indicated) of low-phosphorus Brockman ore respectively.

Reserves of ores reported as at June 2004 used for creating BHPB’s Mt Goldsworthy blend, based on output from the Yarrie and Nimingarra mines, are much lower at around 13 Mt (9 Mt proved and 3 Mt probable), while Area C’s various deposits contain an estimated 499 Mt (343 Mt proved and 156 Mt probable) and Yandi 901 Mt (555 Mt proved and 346 Mt probable).

Major investmentsSpeaking a year ago at an analysts’ meeting, the president of BHPB’s iron ore operations, Graeme Hunt, reminded his audience that the iron ore business has been going through a stage of unprecedented demand. “Fortunately,” he said, “we have been able to lift our performance to meet that demand. We have broken production records right across the business, lifting from around about 70 Mt/y up to a 90 Mt/y rate currently. On top of that,” he went on, “we are well positioned to capitalise on the investments we have made in Area C, which was commissioned last October [2003], and the port and rail expansion which was commissioned at the end of January this year [2004].

“The acceleration to a balanced system capacity of 100 Mt is within a few weeks of being completed,” Mr Hunt added, “and the rapid growth project to accelerate the system capacity to 110 Mt is ahead of schedule. We are also looking at platforms to ensure that we have long-term success. One of those is moving into a feasibility study on the next expansion, which will take us to the order of 145 Mt, the focus there being not just on capacity but on efficiency as well.” Of this 145 Mt, 60 Mt/y would come from Mt Newman, 40 Mt from Area C and 45 Mt from Yandi, BHPB is suggesting.

The projects Mr Hunt described in his remarks - developing Area C and

the expansions to the company’s port capacity - have both incurred major investment. In 2004 BHPB completed a A$1,000 asset-development programme that increased its capacity by around 25% over three years. Development of Area C included a 39 km-long spur rail line to service the mine, which has an initial capacity of 16 Mt/y but which can also be expanded at low incremental cost to meet future market demand. Expansion to 23 Mt/y has already taken place as part of the company’s A$145 million Rapid Growth Project,

announced in early 2004. Meanwhile, the company’s Products

and Capacity Expansion (PACE) project focused on its port and processing facilities and included a new stockpile area, a lump re-screening facility and a second berth at the Finucane Island shiploading terminal. Other upgrades included modifications to handling systems at Nelson Point, upgrading the under-harbour tunnel conveyor to 10,000 t/h and the addition and expansion of rail sidings to accommodate longer trains.

BHP commissioned its Boodarie Iron hot briquetted iron facility in

1999 at a capital cost of some A$2,600 million. The first FINMET plant in the world, using technology developed jointly by Voest Alpine Industries and FIOR de Venezuela, Boodarie was designed to process 5.7 Mt/y of high-grade Mt Newman iron-ore fines into partially metallised iron granules that are then compressed into 2.5 Mt/y of briquettes for use in electric-arc furnace and blast-furnace operations.

The process uses hydrogen and carbon monoxide produced from natural gas in a steam reforming plant to produce metallic iron directly from iron oxide by direct reduction. Ore conveyed from the Finucane Island stockpiles provided the feedstock, with gravity and magnetic separation being used to raise the iron content of the fines to around 68%. After drying, the ore was metered into a four-train reactor plant, with the granular metallic iron product being briquetted at a temperature of 650°C before the briquettes were conveyed back to Finucane Island for shiploading.

Right from the beginning, the plant proved unable to meet its targets, with the result that BHP wrote down its value on several occasions, finally taking a A$794 million after-tax charge on its March 2000 quarterly results. The company persevered with Boodarie Iron, however, with output slowly ramping up despite a technical breakdown that resulted in BHPB invoking force majeure on briquette shipments in March 2002.

In the year to June 2003, the plant produced 1.67 Mt of briquettes, but in May 2004, BHPB was again forced to close it, following an accident there. Operations having remained suspended whilst investigations took place, last November BHPB announced that the facility was to be placed on care-and-maintenance until a decision had been made as to its future. At that time, Boodarie Iron’s vice-president, Anthony Kirke, said that the company would require several months to fully consider all of the available options for the plant including a resumption of operations, alternative uses for the facility, or full closure.

Boodarie Iron: a step too far?

Ore from BHP Billiton Iron Ore’s new mine at Orebody 18, near Newman, Western Australia. Photo courtesy of BHP Billiton.

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Other projects may have been smaller, but have also had a significant impact on operation efficiency. For instance, BHPB has increased the number of stockpiles for various products at the port allowing two ore-trains to be dumped simultaneously, so reducing both the average time that trains are held at the port (by around 20%) and the number of backlogs. Elsewhere, a study found that inaccurate weighing equipment was resulting in its mine trucks being underloaded by around 7%, so fixing this problem helped to optimise hauling capacities and hence truck utilisation.

Ore types for each marketBoth major Pilbara iron miners have the ability to produce a range of products that satisfy their customers’ specific chemical and physical specifications.

By way of illustration of this capability, speaking at the Australian Journal of Mining’s 7th Annual Global Iron Ore And Steel Forecast Conference a year ago, BHPB’s Graeme Hunt noted that his company’s products generally fit within three niches. “First, Mt Newman ores are our high-haematite, high-Fe, low-LOI (loss on ignition) ores and are mined from our Brockman deposits. The chemical, granulating and sintering properties of Mt Newman High Grade Fines means that it is increasingly popular with inland Chinese customers.

“Similarly, our High Grade Mt Newman Lump is appreciated for its high Fe, as well as its high reducibility and low alkalis, though this product remains popular outside China as well. The remaining resources from our Goldsworthy operations, centred around

Yarrie, are also in this class, and show similarities to our Newman ores.

“Despite more than 34 years of sustained production growth, we still have about 1.4 Bt of low-phosphorous Brockman resources available, mainly in the Newman area, and approximately 1.8 Bt of high-phosphorous Brockman ore in our resource base, sufficient to support many more years of increased production.

“Yandi has found itself a niche as a high Value-In-Use (VIU), low-alumina product, in particular for coastal mills. After leading the market development for low-alumina pisolite ore, demand for our Yandi Fines product remains strong. The main market for this product is high-technology coastal mills, particularly in Japan, Korea, Taiwan and Australia. Our Yandi Fines have been complemented by the introduction of Yandi Lump. This fills a niche for low-cost, low-alumina ore for high-technology customers not pushing the limits on blast-furnace productivity. Most Yandi Lump is sold to Japan.

“MAC™ ore, the product from our Area C mine, is one of the new generation Marra Mamba products which is aimed at satisfying the increasing demand for high value-in-use, low-gangue ores. The high VIU ores like Yandi and MAC™ have desirable chemistry but require optimised sintering practices to ensure high productivity in customer steel plants.”

Mr Hunt went on to provide a geographical breakdown of BHPB’s markets for the preceding financial year. Japan accounted for 42%, he said, China 23%, South Korea 15%, Australia 10% (including fines processed into briquetted iron), Taiwan 7% and Europe 3% of the tonnage sold.

Rio Tinto’s Pilbara portfolioThe Rio Tinto group’s iron-ore operations in WA encompass two separate production organisations: the company’s original Hamersley Iron and Robe River Iron Associates, of which Rio Tinto acquired majority ownership through its purchase of North Ltd in 2000. Last year, Rio Tinto created Pilbara Iron to manage its Pilbara mining, rail and export facilities on behalf of Hamersley and Robe River, which remain independent and continue to market their output separately. Pilbara Iron now has responsibility for nine mines, three ports and the largest privately owned railway in the world, handling more than 130 Mt/y of iron ore. Rio Tinto’s iron ore group also includes HIsmelt® , the direct iron smelting technology for which the first commercial plant is scheduled for commissioning later this year at

By mid-2005, the world’s first commercial-scale HIsmelt®

plant should be operational. Having begun research into the potential for a new system for producing metallic iron from iron-ore fines in the early 1980s, within ten years CRA (before its merger to form today’s Rio Tinto) had commissioned a US$105 million, 100,000 t/y-capacity demonstration plant at Kwinana. The plant produced its first hot metal in 1993, with subsequent design changes being made in order to optimise the process before Rio Tinto and its partners in the HIsmelt joint venture (Nucor, Mitsubishi and Shougang Corp.) committed the A$400 million investment needed to build an 800,000 t/y plant there in 2003.

HIsmelt is a direct iron-making process in which iron-ore fines and/or other iron-containing materials and ordinary thermal coal are injected directly into a molten iron bath to produce pig iron. The reactions take place under pressure inside a vertical smelt reduction vessel, which is refractory lined within the hearth and water-cooled above. The hearth contains a molten iron bath, with a thick slag layer lying over the metal. Slag-free hot metal is continuously tapped from the vessel while slag is batch tapped.

Long-term testwork has shown that the process can handle a range of ore types and feed sizes, including minus-6 mm ore fines and typical pellet-feed material, high-phosphorus ore fines from the Pilbara (with the phosphorus

reporting to the slag) and steel-plant waste, including mill scale, fines, dusts and sludges. In terms of fuel, the process testwork encompassed materials ranging low-volatile coke breeze to high-volatile coals.

In the process coal, iron-bearing fines and fluxes are simultaneously injected into the molten iron bath using nitrogen gas as a carrier. The initial reaction involves the formation of carbon monoxide and hydrogen, with the metal and slag erupting in a fountain as the gases escape from the molten metal in the bath. A hot-air blast above the bath burns off the carbon monoxide and hydrogen, providing the energy needed to reduce the ore to metallic iron, while offgases are drawn off, cooled and scrubbed before being used as a fuel for air heating or power generation.

Rio Tinto developed HIsmelt with the aim of being able to use high-phosphorus iron-ore while doing away with conventional iron-making processes such as coke-making, sintering and pelletising. It can also be used for recycling iron- and steel-plant wastes, while producing a high-quality pig iron that has a ready market in electric-arc steelmaking.

Such is the confidence with which the joint venture views the potential for HIsmelt that in August 2003 it licensed the technology to the Chinese company, Laiwu Steel Group Ltd, allowing it to build an 800,000 t/y plant identical to that shortly to be commissioned at Kwinana.

HIsmelt: New iron-making technology

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Kwinana, some 40 km south of Perth on WA’s west coast.

Hamersley Iron’s original mine, Mt Tom Price, started production in 1966, its low-phosphorus Brockman ore still comprising the most important constituent of the company’s direct-shipping ore blend. Part of the output from Mt Tom Price has been replaced with ore from Marandoo, 45 km away, which Hamersley commissioned as a 13 Mt/y operation in 1994 as its first source of Marra Mamba ore.

Mt Tom Price was joined in 1972 by Paraburdoo, which today is operated as part of a single complex with Channar. A 60:40% joint venture between Hamersley and China Iron & Steel Industry and Trade Group Corporation, Channar was opened in 1990, giving the complex a capacity of around 21 Mt/y of ore.

With Paraburdoo’s reserves on the point of exhaustion, its capacity is being replaced by ore from the Eastern Range deposit, 10 km away, which has been developed by the BaoHI Ranges joint venture in which Hamersley has a 54% stake and Shanghai Baosteel Group Corporation 46%. Hamersley is the mine operator, and is to supply Baosteel with an average of 10 Mt/y of iron-ore products for 20 years.

Hamersley opened its Brockman operation in 1992. Located some 60 km

northwest of Tom Price, Brockman produced high-grade detrital ore until 1998, then moved to working bedded iron ores. Following a major upgrade, the mine reopened in 2003 with a potential capacity of 8 Mt/y. Future expansion in this district is focused on the nearby Nammuldi mine, which produces Marra Mamba ores.

The company’s most recent operation, Yandicoogina, opened in 1998 and produces a separate iron-ore product, Yandi (HIY) fines. Located about 90 km northwest of Newman, Yandicoogina has recently been expanded to a capacity of 36 Mt/y from a single open-pit operation.

By comparison with Hamersley’s high-grade haematite ores, Robe River’s operations were founded on lower-grade pisolite (limonite) material. Production at the company’s mine near Pannawonica began in 1972, with the output being processed to pellets as a means of upgrading the iron content. However, changed economics brought the closure of the pelletising operation in 1980, after which Robe’s output focused on the production of sinter fines.

During the 1990s, Robe’s mining was firstly concentrated on the Mesa J deposit, with the development of West Angelas beginning in 1998. West Angelas came on stream four years later, adding Marra Mamba ore to Robe’s product line. Aside from shipping

clean ore, Mesa J also produces pisolite that is contaminated with clay waste, with two processing plants having been installed since 1999 to bring this material back up to shipping specifications. Ore from Mesa J and West Angelas is railed 203 km and 420 km respectively to the company’s processing and port facilities at Cape Lambert.

In terms of infrastructure, the Pilbara Rail Company operates the transport system from both Hamersley and Robe River’s operations to Rio Tinto’s export port facilities at Lambert Point and Dampier. With a combined capacity of 116 Mt/y, the two rail systems are interconnected, allowing Hamersley to use Robe’s shipping facilities if required.

Dampier has two ship-loading terminals, Parker Point and East Intercourse Island (EII), which between them have 23 live-blending stockpiles. Meanwhile, Robe’s Port Walcott terminal at Cape Lambert has different process

Above: A haul truck at Paraburdoo. (Hamersley Iron).

Below: Paraburdoo wet processing plant.

Both photos courtesy of Pilbara Iron.

Opened in 1966, Mt Tom Price is the longest-established of

the Pilbara mines. Based on an ore resource 8 km long by 1 km wide, the main pit is now some 400 m deep. Ore is produced from up to ten individual pits according to blending requirements, with the production in 2004 of 20 Mt of ore requiring the removal of a further 28 Mt of waste.

The mine has a fleet of Bucyrus, Driltech, Qubex and SKS rigs for blasthole drilling, with Dyno-Nobel Anfo and emulsion used for blasting. Bench heights are typically 6-7 m. The operation relies on six Hitachi and Terex hydraulic excavators/shovels for loading, with ore and waste being handled by ten Terex MT4400 and 11 Komatsu 830E trucks.

Run-of-mine ore is processed through one of two plants. Low-grade shaly ore is first screened at 200 mm, with minus-200 mm material forming the feed for the Tom Price

concentrator. Here, heavy-medium and gravity separation are used to produce a higher iron-content concentrate, the plant accounting for around 40% of the operation’s annual output. Plus-200 mm low-grade material is mixed with high-grade ore, with subsequent crushing and screening to produce both lump and fine products. Fines from both processing routes are combined and blended before loadout, with lump products being handled separately. Typical output from Mt Tom Price is in the ratio 60% lump ore to 40% fines.

The operation’s workforce lives in the nearby town of Tom Price, which has a population of some 4,000 and has medical, education and tourist facilities. Mining is continuous on a 12-hour shift basis, with a normal dayshift for office workers. Development plans include a feasibility study into increasing the operation’s capacity beyond its current 25 Mt/y.

Mt Tom Price: Pilbara mainstay

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routes for the two main ore types - pisolite and Marra Mamba - that it handles. Pisolite ore from Mesa J is crushed and screened to produce fines and lump ore for shipping, while West Angelas ore only requires final blending in the stockyard before shipping. A second ship-loader was added to the terminal in 2001, ready for the increased throughput when West Angelas came on stream.

US company’s Yilgarn targetAt the beginning of January, the US company, Cleveland-Cliffs Inc., made a A$605 million offer for WA’s third-largest iron-ore producer, Portman Ltd. If the deal goes through, and it has the backing of Portman’s Board, it would mark Cleveland-Cliffs’ return to WA after an absence of several decades.

The rationale for Cleveland-Cliffs’ move is fairly straight-forward: diversification away from its reliance on the US domestic market for its products. As the US’s leading iron-ore pellet producer, with operations based on six mines in Minnesota, Michigan and Newfoundland, the company sees the acquisition of Portman as a means of getting access to the booming markets in the Far East.

In this context, Portman is well-placed as an acquisition target, with around three-quarters of its annual output being sold into China and the remainder going to Japanese steel mills. Where the company differs from the other major WA producers, though, is that its principal operation, Koolyanobbing, is in the state’s Yilgarn region, 425 km east of Perth, with a subsidiary mine further north on the coast at Cockatoo Island, where BHP had its initial production centre.

Portman began mining at Koolyan-obbing in 1994. Its production has grown substantially in recent years, from 1.9 Mt in 2000 to 4.9 Mt in 2003 and 5.2 Mt last year. In October 2004, meanwhile, Portman committed the A$55 million investment needed to increase production at Koolyanobbing to 8 Mt/y, centred on capacity increases to its crushing and screening capacity and on the railway infrastructure that carries ore to the company’s outlet at Esperance, 578 km south of the mine on WA’s south coast. Aside from the main Koolyanobbing orebody, a year ago Portman commissioned operations at its Mt Jackson and Windarling deposits, around 100 km to the north, with ore being trucked to the existing

processing plant at Koolyanobbing. Exploration in the district is continuing to increase the company’s resource base there, with the most recent estimates totalling reserves of 95 Mt within a 150 Mt resource. The mineralisation here is mainly BIF-hosted haematite and goethite with a 62.5-63.5% iron content.

Portman resumed mining at Cockatoo Island in 2000, working deposits that had previously been sterilised beneath BHP’s former mine infrastructure. The operation, a joint venture with the mining contractor, Henry Walker Eltin, produced 620,000 t of high-grade ore last year, with a target production this year of 1.2 Mt. Although the operation is based on a very limited reserve, now standing at around 2 Mt grading 68% Fe, and is reliant on constructing sea-retention walls to access the remaining ore, Portman believes that there is exploration potential at Cockatoo Island that could extend the operation’s life.

Staged development in the MidWestAside from the massive resources in the Pilbara, there is clearly production potential from some of the smaller ore zones that occur in various areas of WA, a point that has clearly been appreciated by Mt Gibson Iron Ltd. The company brought its Tallering Peak deposit, which it bought from Kingstream Steel (now Midwest Corp.) in mid-2002, on stream at the beginning of last year, with plans to ramp production up from an initial 1.8 Mt/y to 2.5 Mt/y of direct-shipping haematite ore.

Tallering Peak is one of the company’s four properties that lie in WA’s MidWest, to east of the port of Geraldton. Of the others, the Mount Gibson deposits contain both haematite and magnetite, while both Koolanooka South and Wolla Wolla are magnetite resources. Infrastructure for these involves moving output by both road and rail to Geraldton for export to China.

Having established its operations around haematite production, the second phase of Mt Gibson Iron’s development plans centre on its agreement with Hong Kong-based Asia Iron Holdings to supply up to 10 Mt/y of magnetite concentrate to feed five new pellet plants, four to be built at Longtan in China and one at Geraldton. Under its agreement, Mount Gibson will take a 30% equity holding in Asia Iron, and will manage the operation of up to four magnetite mines in the MidWest region. The first of these, at Koolanooka South, is scheduled for start-up in 2006 at a rate of 2.5 Mt/y of concentrate.

Mt Gibson Iron has sales agreements

Robe River’s flagship operation, West Angelas was commissioned

in 2002 following a four-year develop-ment schedule. Its initial capacity of 7 Mt/y was quickly increased to 20 Mt. The operation’s four pits exploit enriched Marra Mamba deposits, producing lump and fine ore with a significantly higher iron content than Robe’s Mesa J mine. Reserves are currently estimated at 440 Mt, with the potential for significant additional re-sources. Ore production in 2004 was 23 Mt, requiring the removal of 64 Mt of waste.

West Angelas uses four Ingersoll Rand and Reedrill blasthole rigs, with Dyno-Nobel Anfo for blasting. In addition to four Hitachi hydraulic shovels, the mine uses three wheel loaders, two LeTourneau L1350s and a Komatsu WA1200, with ore and waste haulage by a fleet of nine Komatsu 830Es and 13 Komatsu 730Es. Haul distances vary according to the relative position of the pits, ore dumps and waste-storage areas.

Run-of-mine ore is subjected to

two-stage crushing and screening to produce minus-6.3 mm fines and plus-6.3/minus-31.5 mm lump ore, with the output being in the proportion 40% lump to 60% fines.

The mine is operated on a fly-in, fly-out basis and is serviced by a stand-alone village that can accommodate 250 people. Mine personnel work 12-hour shifts on a 2:1 roster (seven days, seven nights and seven days off). Construction is currently under way to lift West Angelas’ output to 25 Mt/y.

As at Mt Tom Price, dust is generally controlled at West Angelas by the application of water sourced from mine dewatering or dedicated borefields, or other collected water. Post-mining rehabilitation focuses on stabilising the surface, applying topsoil that has been stockpiled or has come from run-of-mine activity, and then ripping on contour to minimise erosion and maximise water retention for plant growth. Areas are occasionally seeded using tailored provenance seed mixes (gathered from the immediate area) to ensure the same genetic seed stock.

West Angelas: 21st Century operation

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Features

Mining & Quarry World March 2005

with Chinese customers covering 1.6 Mt/y from Tallering Peak for the life of the mine, with any excess production being sold on spot markets. The company has measured and indicated haematite resources totalling 32.3 Mt at Tallering Peak and Mount Gibson, and a further 231 Mt of magnetite resources at Mount Gibson, in which it has a 54% holding.

Also in this part of the state, Midwest Corp. has its own development plans for its Koolanooka/Blue Hills and Weld Range deposits. High-grade ore was mined at Koolanooka in the late 1960s, and Midwest is now looking at producing 1 Mt/y of direct-shipping ore initially as a means of generating cash flow, while continuing to evaluate the potential for pellet production based on the deposit’s magnetite ores. The company is also evaluating an existing fine-ore stockpile at Koolanooka, which it acquired in mid-2004, and the direct-shipping ore potential at Weld Range.

Hope springs eternal ...Of the other iron-ore projects still in the development stage in WA, probably the longest-lived is Hancock Prospecting’s Hope Downs. Located some 75 km northwest of Newman, the deposit contains a reserve of 800 Mt of Brockman and Marra Mamba-type ores, and would cost some A$1,700 million to develop as a 25 Mt/y operation, assuming that a dedicated railway would have to be built.

However, moves are currently under way to gain access to BHPB’s existing rail line for Hope Downs and other independent potential producers, which would cut development costs significantly. In recent years, Hope Downs has been under evaluation by a joint venture between Hancock Prospecting and South Africa’s Kumba Resources, but Anglo American’s acquisition of a 66.6% controlling holding in Kumba provoked Hancock to claim pre-emptive rights over Kumba’s share in the joint venture. The parties took their dispute to arbitration, with a ruling given late last year in Hancock’s favour, although the position has yet to be finally resolved. Should Hancock buy out Kumba’s share, it could have Hope Downs in production by 2007.

Also seeking access to BHPB’s rail system, but with other options available, Fortescue Metals Group (FMG) has estimated that some A$1,850 million will be needed to bring its own Christmas Creek prospect into production. While FMG has already signed an agreement with the Chinese construction group, CREC, to build a 520 km-long railway from the area to Port Hedland, its

attempt to have BHPB’s rail system opened to third-party use concerns the separate development of its Mindy Mindy prospect, nearer to Newman. The company’s proposal for a new open-use railway and port terminal has received ‘major project facilitation’ status from the WA government.

Further north, meanwhile, Aztec Resources is in the process of evaluating the residual resource at Koolan Island, another of BHP’s former operations. By the end of last year, the company had outlined sufficient high-grade resources to support a 2 Mt/y operation for 15 years, with only crushing and screening needed in order to create a marketable product. The company plans to have a feasibility study completed before mid-2005.

What all of these projects - and the others currently being commissioned by BHPB, Rio Tinto, Portman, Mt Gibson and Midwest - have in common is that they are supported by long-term offtake agreements, mainly with Chinese or Japanese customers. Most of the recent development momentum has been fuelled by Chinese demand, with

Chinese steelmakers not only buying WA’s iron ore, but following the lead given by their Japanese counterparts in the 1970s and 80s in investing directly in production capacity though joint-venture participation.

Neither is the WA state government holding back on its support for further developments. Its commitment to spend A$225 million in upgrading port facilities at Esperance and Geraldton, providing better facilities for Portman, Mt Gibson and others to export their products is evidence of this. Royalty payments of over A$250 million a year certainly provide the government with an incentive to assist, to which must be added both direct and indirect tax and other income from the industry.

According to the 2003 edition of Western Australian Iron Ore Industry, published by the state’s Department of Industry and Resources, WA’s iron-ore expansion potential could boost output to around 320 Mt/y, depending on whether sufficient new rail capacity is built. Given current expansion plans, even that target might prove to be an underestimate.

Ship loading at East Intercourse Island (Hamersley Iron).Photo courtesy of Pilbara Iron.