Digging & Drilling

AustrAlAsIA’s Monthly oIl, GAs & MInInG MAGAzIne

BRISBANE • PERTH • MELBOURNE • SYDNEY • ADELAIDE

July 2012 • Issue 1

DIGGING&DRILLINGAUSTRALASIA

WOODSIDE LIftS PrODuctIOn

IcHtHYS: A JOInt VEnturE fOr tHE GrEAtEr GOODInPeX and totAl reach agreement transfer a 6% of the Ichthys lnG Project equity interest to totAl group companies

targetrecord numbers point to style of Africa

2 DIGGING & DRILLING MAGAZINE | JULY 2012

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JULY 2012 DIGGING & DRILLING MAGAZINE 3

To Our ReadersWelcome to the inaugural edition of Digging & Drilling Australasia print and

on-line magazine. the Australian resource sector is vitally important to our wonderful country and for our future prosperity. It is for this reason that in the twenty years I have worked in publishing and broadcast media, I have never felt more proud or privileged to be associated with a publication, as I feel managing Digging & Drilling Australasia magazine. D&D Australasia print and on-line magazine will report current and interesting oil, Gas and Mining news and events in a format that is interesting to industry executives and the FIFo workforce. our articles cover major energy, exploration and resource projects, machinery, safety, recruiting and other industry related innovations and events. We will also regularly feature high profile oil, Gas and Mining industry executives. We have launched this magazine with 5,000 print copies which have been bulk-distributed free, to over 300 Australian oil, Gas and Mining companies and to commercial and charter, airport and helicopter terminals servicing Mining sites and off-shore, oil and Gas platforms. We have also posted and emailed D&D Australasia direct to over 500 resource sector executives and purchasing officers. our content contributors and advertisers have also been offered print copies to distribute to their clients and employees. Initially, D&D Australasia will be published bi-monthly and we plan to become a monthly magazine in the last quarter of 2012. We are always looking for up-to-date industry news and I am happy to make an open invitation to the Australasian resource sector to contact me personally with potential content material. I would like to take this opportunity to thank my Co-Founder, emmanuel solomon, our Designer, elvin Wong and our devoted team for their tireless efforts in producing this print and on-line publication. I hope you enjoy reading this inaugural edition and I look forward to your feedback.

Best regards

MANAGING EDITORDigging & Drilling Australasia

LEn frEtWELL

4 DIGGING & DRILLING MAGAZINE JULY 2012

IN THIs Issue

06

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Disclaimer: reasonable care is taken to ensure that Digging & Drilling Magazine articles and other information are up-to-date and accurate as possible, as of the time of publication, but no responsibility can be taken for any errors or omissions contained herein. the opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. the publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.

tO Our rEADErS

In brIEf: MInInG neWs hIGhlIGhts For the Month

In brIEf: oIl & GAs neWs hIGhlIGhts For the Month

fEAturE ArtIcLE: IChthys - A JoInt venture For the GreAter GooD

PrOJEct POStcArD

fEAturE ArtIcLE: MInInG - AFrICA DoWnunDer

fEAturE ArtIcLE: oIl & GAs - WooDsIDe lIFts ProDuCtIon

Sub fEAturE: MInInG InDABA

Sub fEAturE : PosCo, MAruBenI Pour $3.6 BIllIon Into AustrAlIA Iron ore ProJeCt

030810121821

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WHAT’S IN THIS ISSUE »

S A N F R A N C I S C O PA R I S S H A N G H A I S I N G A P O R E J A K A R TA S Y D N E Y D E L H I O V E R 6 0 M A J O R C I T I E S

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Moments


event: AABC BeyonD MInInG

MOMENTS IN PICS »


event: InDABA 2012

The pulse of progress.Introducing the innovative new Audi A4. It’s a model of progressive performance. A new and improved expression of a car already a leader in its class – with sophisticated new design highlights, leading edge driving dynamics and next generation driver assist and infotainment systems. A model so advanced, one of its powerfully efficient engines – the 3.0 TDI multitronic® – is acknowledged as Australia’s most efficient 6-cylinder diesel*. This is the pulse of progress. This is the new Audi A4.

To experience the pulse of progress for yourself, visit your preferred Audi Dealer or audi.com.au

*ADR 81/02 fuel consumption combined cycle - Source: JATO, 5 June 2012. Overseas model shown. AUDI5424/A4/D&D/FPC/2007

AUDI5424_A4PI_D&D_FPC_278x215_0.1.indd 1 17/07/12 5:16 PM


rIo tInto to DroP €1Bn PortuGAl ProJeCt

MIners ChAse A slICe oF ChInA’s GroWth

LISbOn – Mining giant Rio Tinto is set to pull out of a planned iron-ore project worth over €1-billion ($1.23-billion) in Portugal.

“The Moncorvo mines project will go ahead, but most likely without Rio Tinto,” said one of the sources, adding that although formally the talks with the Anglo-Australian miner have not ended yet, the result was practically clear. “Rio Tinto is choosing to give up smaller projects and Moncorvo should be one of them.”

Moncorvo, in northern Portugal, holds one of the largest iron-ore deposits in Europe.

IN BRIEF »

nEW YOrk - China’s need for raw materials to feed its fast-growing economy will result in more tie-ups with large, international mining houses, senior industry executives said at Reuters Mining Summit this week.

MININg NEWS HIgHlIgHTS FOR THE MONTH:

lACK oF GooD ProJeCts Puts MInInG BooM At rIsK After years of suffering, the mining industry is finally somewhat bullish on its own prospects. But senior executives at the Reuters Mining Summit this week reported a pronounced lack of good new projects of the kind that last for decades and make a company’s fortune.

GolD shInes As ornAMent AnD InvestMent nEW YOrk - Gold’s allure shows no sign of waning as Asian consumers don more jewelry, investors spurn currencies and Swiss vaults bulge with the alternative investment, top gold executives said at the Reuters Mining Summit this week.

eXChAnGe trADeD FunDs GooD For GolD PrICes-PlACer nEW YOrk - Recently introduced Exchange Traded Funds in gold have helped generate demand in the precious metal, keeping prices high, the head of the world’s fifth biggest gold miner said on Thursday at the Reuters Mining Summit in New York.

GolD heDGInG seen losInG PArIAh stAtus nEW YOrk - Hedging is no longer the black mark against a gold producer’s name that it was a year or two ago as hedged companies have not gone bankrupt and investors have shifted their gaze to other pressing industry concerns, two prominent gold industry participants said.

MetAl MIners eye reForM In InDonesIA nEW YOrk - Indonesia’s mineral riches are tempting miners keen to profit from sizzling metal prices, but the country must do more to attract large-scale foreign investment, top executives active in the country said.

rusAl GoAl to Be toP AluMInuM MAKer on trACK nEW YOrk - Russia’s RUSAL, the No. 3 primary aluminum producer, has said it aims to be the world’s No. 1, and the head of its American arm told Reuters’ Mining Summit on Thursday that the company’s plans are on track.

The pulse of progress.Introducing the innovative new Audi A4. It’s a model of progressive performance. A new and improved expression of a car already a leader in its class – with sophisticated new design highlights, leading edge driving dynamics and next generation driver assist and infotainment systems. A model so advanced, one of its powerfully efficient engines – the 3.0 TDI multitronic® – is acknowledged as Australia’s most efficient 6-cylinder diesel*. This is the pulse of progress. This is the new Audi A4.

To experience the pulse of progress for yourself, visit your preferred Audi Dealer or audi.com.au

*ADR 81/02 fuel consumption combined cycle - Source: JATO, 5 June 2012. Overseas model shown. AUDI5424/A4/D&D/FPC/2007

AUDI5424_A4PI_D&D_FPC_278x215_0.1.indd 1 17/07/12 5:16 PM

AP0139 eng 27.8x21.5.indd 1 11/07/2012 9:49:24 AM


IN BRIEF »OIl & gAS NEWS HIgHlIgHTS FOR THE MONTH:

stAtoIl to eXPlore shAle GAs In AustrAlIA

AustrAlIA’s WooD-sIDe not looKInG to Buy BACK shell

OSLO, June 20 (reuters) - Norwegian oil and gas firm Statoil has entered into partnership with PetroFrontier Corp to explore for shale gas in Australia, the company said on Wednesday.Statoil said the partners could drill 10-20 wells by 2017, with Statoil committing $25 million for the first phase of the exploration programme in Autralia’s Northern Territories.

Petrofrontier will operate the first phase of the programme while Statoil has secured options to operate from the second exploration phase in addition to increase ownership interests from 25 to 65 percent of PetroFrontier’s interests, it added.

Woodside Petroleum (WPL.AX), Australia’s largest oil and Gas Company, said it is not considering buying back Royal Dutch Shell’s (RDSa.L) 24 percent stake in the company, despite a recent share price drop. (Reporting by Reuters)

totAl eyes oPerAtor role In neW AustrAlIA GAs, oIl ProJeCtsADELAIDE, may 14 (reuters) - French oil firm Total is looking for oil and unconventional gas projects in Australia in which it could take a role as operator, the company’s chief executive said on Monday.

Australia is on its way to becoming the world’s largest liquefied natural gas (LNG) exporter, with around $170 billion in projects under construction. Total already has minority stakes in two of those projects, and is looking to expand, Christophe de Margerie said.

“There are opportunities around unconventional gas and oil,” he told reporters on the sidelines of an industry event in Australia.

“We are interested in the opportunities to develop our own activity, I mean by operating.”

Total owns a 24 percent stake in the Ichthys LNG project. It has agreed to raise that stake to 30 percent, and the deal should get final agreement within a few weeks, he said. Total also owns 27.5 percent of the Gladstone LNG project.

De Margerie will meet Australia Prime Minister Julia Gillard on Tuesday and would discuss the possibility of Total taking a bigger role in Australia’s oil and gas sector then, he said.

Labour costs in Australia were high but not enough to dissuade Total from investing in more projects, de Margerie said.

The most recent cost estimate for the Ichthys project is $34 billion, from an original estimate of $20 billion made in 2008. Simultaneous work on a swathe of energy and mining projects

has driven up costs across the country.

Still, Australia’s access to fast-growing Asian energy markets and its operating environment made it a good target for investment, de Margerie said.

Projects in Australia helped balance Total’s portfolio, he added, which was otherwise skewed toward investment in developing countries.

Recent weak Chinese economic data had led to no pull back for Total in projects focused on Asia’s energy market, de Margerie said.

“We are a long-term industry. We don’t do things based on one-day this, one-day that,” he said. “We know that in the long term Asia will need a lot of additional oil and gas to cover demand. China and others in the region will still need more energy.”

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INPEX CORPORATION (INPEX) Is PlEAsEd TO ANNOuNCE TOdAy ThAT IN-PEX ANd TOTAl s.A. (TOTAl) hAvE REAChEd AgREEmENT fOR INPEX ICh-Thys PTy lTd ANd OThER PROjECT gROuP COmPANIEs TO TRANsfER A 6% Of ThE IChThys lNg PROjECT EquITy INTEREsT(*) TO TOTAl gROuP COmPANIEs

IcHtHYS - A JOInt VEnturE fOr tHE GrEAtEr GOOD

By Stephen DawSon

Image: courtesy Woodside


FEATUREARTIClE»

InPEX cOrPOrAtIOn (InPEX) is pleased to announce today that InPeX and totAl s.A. (totAl) have reached agreement for InPeX Ichthys Pty ltd and other project group companies to transfer a 6% of the Ichthys lnG Project equity interest to totAl group companies.

the Ichthys lnG Project equity interest includes the following elements:

1. Participating interest in production licenses WA-50-l (Ichthys gas-condensate field) and WA-51-l

2. Participating interest in exploration permit WA-285-P (adjacent to WA-50-l)

3. shares of Ichthys lnG Pty ltd (a downstream company which owns lnG facilities, liquefies natural gas and does marketing lnG and liquids)

InPeX and totAl have enjoyed a good long-term partnership through collaboration on a number of oil and natural gas projects globally, including the offshore Mahakam Block in Indonesia, which is one of InPeX’s core assets. totAl joined the Ichthys lnG Project in 2006 with a 24% participating interest. since then, totAl has made a large contribution by bringing its expertise and experience in designing and executing large offshore developments and lnG projects. totAl’s increased level of participation reinforces its commitment to the Ichthys lnG Project while the partnership of the two companies will be further expanded. After the completion of the transfer of the 6% of the Ichthys lnG Project equity interest to total, the joint venture partners for the Ichthys lnG Project will be as follows:


INPEX 66.070% TOTAL 30.000% Tokyo Gas 1.575% Osaka Gas 1.200% Chubu 0.735% Electric (subject to approval of the

Australian government)

Toho Gas 0.420%

the Ichthys lnG Project Joint venture participants appreciate the continued support from the local communities, the governments of Australia, Western Australia and northern territory, as well as support from other stakeholders for timely delivery of the Ichthys lnG Project.

the Ichthys lnG Project is a Joint venture between InPeX group companies (the operator), totAl group companies and other participants. Gas from the Ichthys field, in the Browse Basin offshore Western Australia, will undergo preliminary processing offshore to remove water and raw liquids, including some condensate. the gas will then be exported to the onshore liquefaction plant in Darwin via an 889km subsea pipeline. the Ichthys lnG Project is expected to produce 8.4 million tonnes of lnG and 1.6 million tonnes of lPG per annum, along with approximately 100,000 barrels of condensate per day at peak.

Images: courtesy Resource News



Westsea solutionsWa-based company Westsea Marine is working with saipem-leighton Consortium(slC) to supply vessels and barges for the Chevron-operated Gorgon project.Westsea is a trusted partner, acknowledged and depended upon for our experience and capabilities. Combining a dedicated and highly skilled team with innovative

technologies and a modern fleet of vessels, we are the preferred provider of offshore support vessels in the oil and gas industry.

Our know-how, expertise and marine experience delivers innovative and cost effective solutions to our clients across the oceans in the most challenging offshore environments.

Westsea Marine is supplying 28 vessels comprising of Work Barges, Anchor Handling Tow Tugs and Support Vessels, to support the construction of the 2.1km LNG jetty and marine structures at Barrow Island, off the north coast of WA.

ProvidinG tuGs & BarGes for Marine solutions.

Deployment of Westsea Marine vessels on the Gorgon Project, utilizing the Westsea Anne Marie, Westsea Kestrel, Westsea Hawk, Westsea 3006 off Barrow island WA.

Westsea solutionsThe total value of the contract is in excess of $100 million, with the first phase of vessel deliveries already being completed earlier this year. The SLC contract includes the construction of the LNG Loading Jetty, Heavy-Lift Facility and Tug Pens at Barrow Island to facilitate the transport of LNG to international markets.

Westsea Marine has been involved in providing offshore marine solutions and vessels in Australia since it was established in 2002. The company is proud to continue being a part of the Gorgon project, and is already providing quality marine equipment for Preliminary Works and the Materials Offload Facility Wharf Construction phases.

Westsea Marine started its operations in Perth, WA, providing specialised offshore marine solutions to serve its Australian-based clients with a nationally compliant fleet of ocean going towing tugs, anchor handlers and work barges.

The Gorgon Project is a joint venture between the Australian subsidiaries of Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas, and Chubu Electric Power.

For more information, visit:

www.westseamarine.com

ProvidinG tuGs & BarGes for Marine solutions.

Deployment of Westsea Marine vessels on the Gorgon Project, utilizing the Westsea Anne Marie, Westsea Kestrel, Westsea Hawk, Westsea 3006 off Barrow island WA.

Westsea Gail mobilising Westsea 79 - 300ft Rock Barge For Gorgon LNG Jetty Construction Project

My AfRICA: Kenyar


POSTCARD PROJECT»

ProJeCt: Pluto reGIon: north West (BurruP PenInsulA) oPerAtor: WooDsIDe

PluTO lNG

Image: courtesy Woodside

DON0267_DigDrillAust_2tc.indd 1 16/07/12 12:01 PM

FEATUREARTIClE»

AFrICAn DoWn unDer:AfrIcA-AuStrALIA’S mOSt ImPOrtAnt EVEnt

now in its 10th year, Africa Down under has grown from niche event to one of the most important and well-attended forums on the Australian resources calendar.

this year’s conference, to be held once again at the Pan Pacific Perth and novotel langley Plaza, is set to break the attendance records which were set in 2011.

some 90 speakers will give their accounts of the African resources sector while 175 exhibition booths will keep the expected 2,500 delegates fully engaged throughout the three-day event.

the forum will be opened by Australian Minister for Foreign Affairs, Bob Carr, and will also be addressed by Federal resources Minister Martin Ferguson. A number of other leading Government and opposition figures will be in attendance, as well Western Australian state Government cabinet members.

From Africa, the conference organisers are set to welcome more than a dozen senior African ministers as well as delegations from across the continent, cementing Africa Down

under’s position as the largest African resources show outside of the African continent.

In 2011, the event attracted ministerial delegations from; zimbabwe, south Africa, sierra leone, senegal, Mali, namibia, Mozambique, liberia, Ghana, Burkina Faso, Angola, Botswana and the newly independent south sudan.

the level of engagement between the Australian mining industry and the African continent has grown remarkably in recent years. there are now more than 200 Australian companies with projects in 43 African countries, from Mauritania in the north-west to Mozambique in the south-east. In addition, some 250 mining services companies are expanding their scope across the continent.

Although difficult to gauge, it is believed that total Australian investment in African resources projects has now reached beyond $20 billion.

Conference organiser and Paydirt Media executive chairman Bill repard said he had been “bowled over” by the level of interest created by this year’s conference.

“We are delighted with the enthusiasm this year’s event is being received with,” repard said. “From humble beginnings, Africa Down under has grown into a vital part of the always busy international resources calendar. We will be welcoming visitors from across the African continent as well as from Britain, europe and north

America.”

As well as company and government presentations, the conference will showcase some of the many community and social development initiatives Australian companies have launched in their host communities.

Junior and mid-tier Australian mining companies are gaining a reputation across Africa for being good corporate citizens, supporting community development by initiating training and skills programmes, building infrastructure and assisting in the establishment of sustainable, locally-owned businesses.

the increasing scope of the conference will see this year’s activities span the entire week with the African research Forum and International Mining for Development Centre holding complementary seminars leading up to the main event. these seminars will look at the way Australian-African relations are developing and how Australia can provide assistance in building capacity in the emerging nations of Africa, particularly in regards to the industries of mining, agriculture and education.

sponsorship opportunities for the event are all but closed however delegate spaces remain. For more information please contact tammy Caldwell on +61 8 9321 0355 or [email protected].

Courtesy: Paydirt Media

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24 DIGGING & DRILLING MAGAZINE JULY 2012Image: courtesy Woodside

Woodside recorded a 43% increase in production compared to the prior quarter, due to the successful ramp up of the pluto lnG plant and hiGh reliability from the foundation business.

Woodside CEO Peter Coleman said that following commissioning in March the Pluto LNG Plant had achieved superior performance compared to the expected ramp-up.

“This quarter saw continued strong performance from the foundation business further enhanced by Pluto production, which has exceeded expectations with the delivery of eight LNG cargoes,” Mr Coleman said.

“This performance is testament to the capabilities of our operations team and, together with higher planned utilisation in the second half, has resulted in an increase to our 2012 production target from a range of 73 to 81 Million Barrels of Oil Equivalent (MMboe) to a higher range of 77 to 83 MMboe.

“The balance sheet will also be strengthened by the sale of a minority portion of Woodside’s interest in the proposed Browse LNG Development to Japan Australia LNG (MIMI Browse) Pty Ltd (MIMI) for $2 billion. The sale is expected to be completed in the second half of 2012.”

kEY POIntS: • Production was 43% higher than the previous quarter, predominantly due to start-up of the Pluto LNG Plant and better reliability from the Vincent oil field. In addition, Q1 2012 had been negatively impacted by higher than expected cyclone activity and North Rankin Redevelopment activities. The Q2 2012 increase was partially offset by lower availability at the North West Shelf (NWS) from planned maintenance shut-downs of LNG Train 4 and the Trunkline

Onshore Terminal.

• While the produced volume for the quarter was 20.1 MMboe the sales volume of 18.6 MMboe was 1.5 MMboe lower due to timing of cargo liftings and delivery. Sales volumes were 28% higher than the previous quarter, while revenue was 20% higher with the second quarter experiencing lower realised prices.

• Production volumes were 23% higher compared to the previous corresponding period, while the revenue increase was 14% as a result of the timing of cargo liftings and lower realised prices. The average Brent price for the quarter was $108.76/bbl, down 7% from $116.99/bbl in the previous corresponding period.Page 2 of 9

AcHIEVEmEntS: • Pluto LNG: First LNG production was achieved on 29 April and the first LNG cargo departed 12 May.

• From start-up to the end of June 2012, Pluto LNG produced 599,564 tonnes of LNG and 513,038 barrels of condensate (100% project). Capacity utilisation for the first two months of operation was forecast to be 36% however an actual capacity utilisation of 80% was achieved.

• Ramp-up has progressed better than expected, resulting in excess production beyond contracted volumes. This has allowed the sale of three spot cargoes during the quarter. Production in the second half 2012 is expected to more closely align with the annual delivery plan.

WOODSIDE LIftS PrODuctIOn tArGEt


The Woodside Donaldson LNG vessel departed the Pluto LNG Park with the first Pluto LNG cargo on 12 May 2012.

• North Rankin Redevelopment Project: The North Rankin B topsides were successf ully set down on the jacket on 1 April 2012. During the quarter the permanent living quarters on North Rankin B were commissioned. The project remains on budget and on schedule for completion in 2013.

• Greater Western Flank Phase 1 Project: Engineering, procurement and fabrication activities are progressing to plan with first production targeted in early 2016. Drilling

activities will commence in Q3 2012 with offshore pipelay planned in the first half of 2013.

• Vincent Oil Field: Tieback of the VNB-H7 infill well was completed, enhancing production by approximately 11,000 bbl/day (Woodside share 6,600 bbl/day).

• Browse LNG: In May Woodside accepted an offer from MIMI to purchase an estimated 14.7% interest in the Browse LNG Development for $2 billion.

The receipt and evaluation of tender bids for the engineering, procurement and construction of the Browse facilities continued during the quarter. The evaluation and assurance process for offshore bids has begun. Final downstream bids are due in Q3 2012.

Engineering and environment studies also continued at the proposed Browse LNG Precinct and offshore.

Subsequent to the end the quarter, the Environmental Protection Agency recommended conditional approval of the Western Australian Government’s proposed Browse LNG Precinct south of James Price.

Images: courtesy Woodside

FCMAUS51034_FCm_Advertorial_D&D_Mag.indd 2 25/05/12 10:23 AM


FEATUREARTIClE»


FEATURE ARTIClE »

MInInG InDABA

RecoRd numbeRs

A record 7,020 delegates arrived in Cape Town for African mining’s biggest event with representatives from mining, suppliers, services, banking, investment and financial media circles.

POINT TO sTyle Of AfrIcA


rEcOrD numbErS POInt tO StYLE Of AfrIcA

FEATURE ARTIClE »

While the northern hemisphere shivered under snow and dire financial outlooks, Australia and Africa further cemented their growing relationship during this year’s Mining Indaba and where better to do it than south Africa’s Mother City, Cape town.

A record 7,020 delegates arrived in Cape town for African mining’s biggest event with representatives from mining, suppliers, services, banking, investment and financial media circles.

In what has been widely touted for some time as the century of the developing world, Africa is still the continent with most promise, and furthest to go.

And while for those from the uK, europe and north America it could be seen as an excuse to spend a few days in the sun, the massive contingent from down under proved once again that Australia is becoming the partner of choice when it comes to African mining projects.

the four day conference saw presentations from over 90 companies, a commodity outlook forum covering everything from antimony to zircon, a full-day sustainability session and a series of ministerial forums. the importance of the conference to developing nations was summed up by the large and visible presence of the Afghanistan ministry of mines, a country that can in no way claim to be African.

A record 7,020 delegAtes Arrived in cApe town for AfricAn min-ing’s biggest event with representAtives from mining, suppliers, services, bAnking, investment And finAnciAl mediA circles.



While scepticism is always present, there remains a feeling that Africa’s time is coming. As democracy spreads throughout the continent and governments realise that bribery and corruption are not sustainable, so the investment opportunities increase.

For the host nation, it is an opportunity to remind the world of just how important south Africa has been to the history of mining. After several years of despondency, the announcement by Minister of Mines, susan shabangu, that a policy of nationalisation would not be adopted has given new impetus to the industry, even if other problems remain.

In all, the event proved just how much opportunity is on offer in Africa in the 21st Century and with Australian companies so well respected by host communities and governments, the bond that has been forged across the ocean is certain to continue.

Courtesy: Paydirt

“In all, the event proved just how much opportunity is on offer in Africa in the 21st Century and with Australian companies so well respected by host communities and governments, the bond that has been forged across the ocean is certain to continue.”

Some members of the Aussie contingent at this year’s Mining Indaba in Cape Town



the roy hill project, owned by Australia’s richest woman hancock Prospecting and located in the Pilbara iron belt, plans to start shipping ore in 2014, with production expected to peak at 55 million metric tonnes (60.68 million tons) a year.

At that rate, the mine would match the current production rates of Australia’s no. 3 producer Fortescue Metals. Industry experts have said the price the Asian companies were paying was high, possibly as much as 15-20 percent more than other iron ore deals, and was affecting the view of the valuation of other iron ore assets.

“It shows how undervalued Fortescue is,” Fortescue Chief executive nev Power told reporters last week when asked to comment on the price PosCo had agreed in January for its portion of the deal that Marubeni announced on Friday.

however, some industry executives and a banker not involved in the deal told reuters the higher price was justified as the project, expected to cost A$9.5 billion to build, has one of the last remaining high quality iron ore lodes.

they also highlighted it has already won state approvals for a rail line and port berths, a big stumbling block for many other projects.

the investment will provide the consortium with a combined 16.5 million metric tonnes of iron per year from the mine.

“We are pleased to finalize this strategic alliance with companies whose countries need our iron ore and with the mutual determination to make this project a success,” rinehart, chairwoman of privately-held hancock, said in a statement.

A key component of the project is a dedicated 342-km railway that connects the mine to export terminals in Port hedland.

trading house Marubeni will buy 12.5 percent of the project for A$1.5 billion, while PosCo will get 15 percent for A$1.7 billion and stX 2.5 percent for A$300 million, the Japanese company said.

rating agency standard & Poor’s said it expects the project’s mining cost to reach A$9.5 billion and that Marubeni will fund most of its share via a project finance loan. Its BBB/stable ratings on Marubeni would not be affected by the investment, s&P said.

By yuko Inoue and James regan

PosCo, MAruBenI Pour $3.6 BIllIon Into AustrAlIA Iron ore ProJeCtJapan’s Marubeni, steelMaker and shipbuilder stX Corp will buy 30 perCent of an australian iron ore proJeCt for a$3.5 bil-lion ($3.6 billion), the latest in a series of investMents by asian firMs in the Country’s iron ore seCtor.

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the investment is Marubeni’s first in iron ore, adding to a long list of Asian companies that have taken direct stakes in Australia’s iron ore lodes to feed steel demand which is expected to remain strong for many years ahead given rapid urbanization.

Marubeni, strong in copper and grain investments, had made it a top priority to acquire iron ore assets.

PosCo first bought into the roy hill project in January 2010, taking a 3.25 percent stake with an option to increase it to 15 percent once the project completed a feasibility study.

roy hill has indicated reserves of more than 2.4 billion tonnes of iron ore, according to the company.

excluding the hancock project, Australian iron ore miners collectively have earmarked $35 billion for growth plans.

Fortescue this month launched a $1 billion bond offering in unsecured notes to help fund its plans to nearly triple annual production to 155 million metric tonnes by the middle of next year.

rio tinto is spending heavily to boost output to 283 million metric tonnes a year by the second half of 2013 from 225 million metric tonnes now.

BhP Billiton last week said it was sticking with its $10 billion iron ore expansion plan and was mining ore at a rate of 165 million to 170 million metric tonnes per year.

Commodities forecasters are divided on whether such a surge in supply coinciding with a Chinese economic cool-off will finally push the global seaborne market for iron ore into oversupply over the next 12 months or so, after three years of heady growth. China accounts for about 60 percent of world trade in iron ore.

hancock, controlled by rinehart, the world’s 29th richest person based on Forbes magazine’s latest rich list, is also developing a smaller iron ore mine in the Pilbara with rio tinto, slated to yield 15 million tonnes per year starting in mid-2013. ($1 = 0.9685 Australian dollars)

Courtesy: reuters

Photo credit: Industry Leaders Magazine

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