IRON ORE What is the Future for Magnetite Projects in Australia and Why Have Some of the New Projects Been so Problematic?

Transcription

1 IRON ORE 2015 What is the Future for Magnetite Projects in Australia and Why Have Some of the New Projects Been so Problematic? A division of Midas Engineering Group > M i n e r a l P r o c e s s i n g > E n g i n e e r i n g D e s i g n > T r a i n i n g > S p e c i a l i s t S e r v i c e s

2 DISCLAIMER With respect to all the information contained herein, neither Mineral Engineering Technical Services, nor any officer, servant, employee, agent or consultant thereof make any representations or give any warranties, expressed or implied, as to the accuracy, reliability or completeness of the information contained herein, including but not limited to opinions, information or advice which may be provided to users of the document. No responsibility is accepted to users of this document for any consequence of relying on the contents hereof. COPYRIGHT Passing of this document to a third party, duplication or re-use of this document, in whole or part, electronically or otherwise, is not permitted without the expressed written consent of Mineral Engineering Technical Services. ACKNOWLEDGEMENTS This document is a dynamic record of the knowledge and experience of personnel at Mineral Engineering Technical Services. As such it has been built upon over the years and is a collaborative effort by all those involved. We are thankful for the material supplied by and referenced from various equipment manufacturers, vendors, industry research and project partners.

3 Key Attributes Working globally since 1988 Dynamic and innovative niche consultancy Dedicated team providing customised service Specialist in Mineral Processing & Engineering Projects Unique solution finder A division of Midas Engineering Group

4 Introduction Australia s history is one of DSO of high grade hematite ores such as Mt Tom price and Mt Newman Magnetite ore processing requires much higher OPEX and CAPEX compared to Direct Shipping Ores (DSO) Magnetite projects presented are Savage River, Project Magnet, Sino Iron and Karara Some new projects have been highly problematic-why is this? Overseas projects have been successfully processing magnetite ores for long periods of time Does magnetite processing have a future in Australia?

5 Iron Ore Price

6 Savage River Project Started operation 1966 in Tasmania 70 kms north west of Burnie Mine and beneficiation plant at Savage River Slurry pipeline from the mine to Port Latta Fully integrated pellet plant Currently coming under tight cost pressures CAPEX depreciated long ago

7 Open Pits

8 Savage River

9 Operations

10 Product Prices

11 Operations Mining Open pits 100 to 150m deep Hydraulic excavators and conventional dump trucks Grade control from drill blast holes Processing 54/74 Primary gyratory to 200 mm, 100 t stockpile 2 by Hardinge 9.75m by 3.66m autogenous grinding mills 2 Nordberg 8.84m by 3.96m ball mills Magnetic separation Slurry Pipeline 83 kms through 229mm steel pipe 50% w/w, 14 hours transport time Pellet Plant Green pellets formed on balling disks with bentonite 5 Midland Ross shaft pellet furnaces 4.5 hrs heat induction, diesel fired Fines screened out Pellets stockpiled for shipment

12 Project Performance Well established operation with a track record Highly efficient operation, many improvements over time Fully integrated to sell high value good quality pellets Energy is a major cost in producing pellets Small producer- 2.5 Mtpa on a global scale Current cost $86.50/tonne and sale price $118.8/tonne (falling) Current low iron ore prices are putting enormous pressure on the project

13 Project Magnet Long established hematite DSO operation, pellet plant and steelworks Changed Whyalla steelworks from hematite to magnetite $400M project Operational in 2007 with early commissioning problems Mine, concentrator and slurry pipeline Integrated to produce pellets and steel

14 Project Magnet

15 Project Magnet Flowsheet

16 Operations

17 Project Performance Early processing problems overcome Exceeding design by 15%, CAPEX was modest Achieving < 4.5% silica in concentrate No reverse flotation or screening All of the concentrate going to pellet production and blast furnaces, fully integrated project Successful project although low prices are squeezing margins Local shipment advantage - rail infrastructure

18 Located near Dampier in the Pilbara region of Western Australia. Citic Pacific Magnetite project (Pilbara region of WA) sources process water from a seawater desalination plant Massive $A11BN project Citic Pacific-Sino Iron-Magnetite Project

19 Citic Pacific Project Large open cut 80 Mtpa magnetite ore - massive projects 24 Mtpa magnetite concentrate 40 GLpa desalination plant 600 MW combined cycle power station Co-disposal tailings rapid water recovery Typical BIF magnetite core

20 Sino Iron Project

21 Large Scale Sino Iron CITIC Pacific Mining

22 Process Flowsheet

23 Process Flowsheet HPGR to 3mm Coarse cobbing Primary grind P80 55 µm Intermediate magnetic separation Final magnetic separation Reverse flotation reduce silica <5% Filtration concentrate to 9% moisture Tailings flocculated co-disposal

24 Large Scale - Sino Iron CITIC Pacific Mining Not just the largest but perhaps the highest?!

25 Predicted OPEX Magnetite

26 Sea water feed-little choice Reverse Osmosis Supply & Water Balance Area of Use Annual Activity Water Usage Rate Water Consumption (GLpa) Energy recovery by recuperators Mining Dust Supression Water in concentrate exiting the filter plant 160Mtpa total movement in the mine 3% of material moved Mtpa produced 9% 2.2 Producing 40 GLpa (GL=1X10 9 and ML=1X10 6 ) Water in screened and filtered coarse tailings leaving the plant Additional water for discharge of fine tailing 56Mtpa 15% Mtpa 28% 15.7 Evaporation in the plant 10% of water used in plant 2.0 Pellet Plant 14Mtpa 8% of pellets produced 1.1 Port Stockyard 24Mtpa 3% of material handled 0.7 Power Station 450MW for 7800 hrs 1.28m 3 /MWh, mostly evaporated in cooling tower 4.5 Camp 4000 people 0.4m 3 /day 0.6 Total 40.0

27 Project Performance Citic as China s largest conglomerate, its businesses include financial services, resources and energy, manufacturing, real estate and infrastructure, engineering contracting, and other businesses in China and overseas. Eight years to develop the project Plagued with delays and cost over runs All infrastructure - power, water and port had to be established Cultural language issues, issues with contractors Painful learning process Long life project so important to Chinese steel mills

28 Karara Magnetite Project 225 km east of Geraldton, WA JV Gindalbie Metals Ltd & Ansteel Group - $1.8BN to $2.5BN 20 Mtpa raw feed to produce 8 Mtpa concentrate 68% Fe Water supply from Tathra bore-field 140 kms Dry stacked tailings 80 km rail spur for concentrates to Geraldton

29 Gindalbie Project Project Review Magnetite Project Gindalbie Metals Ltd High quality magnetite concentrate produced approximately 8 Mtpa Products: Mass Recovery: 41% with high Fe grade of 68.8% Proposes three-stage grinding followed by magnetic separation Proposes High Pressure Grinding Roll (HPGR) in the comminution circuit and magnetic separation in the beneficiation steps Proposed Start of Operations: 2010

30 Gindalbie Magnetite

31 Gindalbie Magnetite (cont.)

32 Gindalbie Metals Flowsheet

33 Gindalbie Metals Flowsheet (cont.)

34 Cost Differential

35 Project Performance Plant bottlenecks based on ASX announcements Ore body not well understood CAPEX blowout OPEX higher than predicted Low iron ore prices have exacerbated the issues Ansteel has been a solid backer of the project ASX announcements highlight the difficult situation the company finds itself in

36 Conclusions Infrastructure cost for greenfield projects can be significant impediment for the development of magnetite projects Savage River had power, water and was also depreciated years ago, coming under cost pressure. Project Magnetite is an integrated project and has been a success although margins are being squeezed Karara has struggled and survived because of Ansteel solid support Citic Pacific has struggled and has been a very difficult project from a delivery and operation perspective Current low iron ore price is a problem. Falling energy and labour costs will help Lower returns will be accepted in line with falling interest rates

37 Conclusions With the exception of FMG s Iron Bridge North Star magnetite project all other magnetite projects are on hold High grade DSO ores are being depleted and the future resources are magnetite ores The characteristics of magnetite ores varies widely in hardness, liberation size and silica levels achievable NPV & IRR for magnetite projects are currently problematic

38 Attendee Outcomes What did you get out of this presentation? Please share your thoughts in an informal discussion Questions?

39 Acknowledgement Thanks to AusIMM for the opportunity to present Thanks to various companies, colleagues, engineers METS staff and consultants

40 References Grange Resources, Southdown Magnetite Proposal. Albany Iron Ore Project Public Environmental Review. Gindalbie Metals Ltd, Karara Mining Ltd, Anshan Iron and Steel Corporation, Karara Iron Ore Project Public Environmental Review. Gindalbie Metals Ltd. Arrium Mining & Materials. Citic Pacific Mining.

41 THANK YOU