#Official Mining Thread

[Waewick]

honestly, lock them up and throw away the key......

ensuring the lockup is right next to nice shiny new Nuclear Power plant...

[Ben]

Interesting article with a bit of tongue in cheek at the end.

From AFR:

Kloppers’ captive workforce

PRINT EDITION: 27 Jul 2012

BHP Billiton has found itself a fertile recruiting ground for the Olympic Dam mine, and it’s the South Australian prison system.

Low-security inmates at Port Augusta Prison are sent to Roxby Downs for job training and, upon their release, are able to take up employment at Olympic Dam.

“This is actually one of those programs that’s good for everyone, particularly in that it provides incarcerated individuals with an opportunity to help rebuild their lives,” a BHP spokesman told Rear Window.

Some inmates have even asked to stay in prison longer in order to complete the program.

But there’s no sign of a spike in Adelaide robberies by ne’er-do-wells seeking a shortcut into a lucrative six-figure career as a Caterpillar driver.

And the former jailbirds are obviously fitting in nicely – their retention rate is 64 per cent, suggesting it’s not such a jump from low-security prison to Marius Kloppers’ regime.

Rear Window wonders if senior BHP executives have been lobbying Immigration Minister Chris Bowen to reopen the Woomera detention centre –- just a two-hour drive from Port Augusta – so they can supplement Olympic Dam’s ex-criminal staff with boat people.

[Wayno]

The bad news is it appears BHP will defer the ODX expansion decision, probably by 2 years. No fault from SA perspective - global uncertainties have simply trumped us. There remains a chance of approval by December, but it's getting slimmer by the week.

The good news is overburden removal is expected to proceed as part of the agreement BHP has with the SA Govt. The agreement included a compulsory $1.2b spend on mine preparation (a mixture of purchasing equipment & preparatory works).

The open question is how fast BHP will work at removing all that dirt (approx 2.5 times the area of Adelaide CBD & Parklands, to a depth of 300 metres - a new lowest for SA ). If they hit it hard then in 2 years a significant percentage will be gone (maybe 40%) enabling a quicker start to operations once final approval is given. Of course the overburden must be removed regardless, so whether the 'expansion decision' happens now or 2014, or even 2016, is at least partially irrelevant.

Weatherill can borrow the above speech if he wants.

[Waewick]

hardly suprising.

I'll await the formal announcement.

[Ben]

From InDaily:

Monday, 30 July 2012
Investors and analysts expect Olympic Dam delay

EXPECTATIONS of a possible delay of BHP Billiton’s expansion plans for Olympic Dam are rising as the industry dissects the latest comments to surface from the global mining giant.

The Weekend Australian revealed BHP chief executive Marius Kloppers recently told staff an environment of high costs and falling commodities prices would probably not end soon, China’s growth continued to be slower than expected and development spending would suffer as a result.

Iron ore prices, which slid to a 2 1/2-year low on Friday, below $US120 a tonne, are an example of factors hampering BHP’s ability to build massive expansion projects like Olympic Dam.

If iron ore prices, which averaged about $US150 a tonne in 2011-12, average $US120 a tonne this financial year, it would represent about a $US3bn ($2.9bn) hit to BHP’s annual net profit.

When read alongside Kloppers’ comments earlier this year that major capital projects might be revisited, South Australia’s business sector and State Government will be looking for something positive to come from BHP.

Responding to the weekend reports, the State Government said it hadn’t received any requests from BHP to delay the project.

Minerals Council of Australia chief Mitch Hooke, who represents the nation’s big miners, said any shelving of Olympic Dam’s expansion would be a blow to the South Australian and national economies. “If those investments . . . don’t materialise, then we will have lost the opportunity to lock in the benefits of this boom, because once that investment goes, it goes somewhere else offshore (and) it won’t come back here,” he told SkyTV’s.

“Olympic Dam is the world’s largest uranium deposit. It has a huge impact on the economy of South Australia and ultimately the economy of Australia.”

A major BHP investor has backed the prospects of a delay.

Australian Foundation Investment Co. (AFI), a fund owning shares in BHP Billiton Ltd. (BHP) and Rio Tinto Group, said it would encourage companies to cut back on investments in new operations as commodity prices fall.

Ross Barker, chief executive officer of the listed Melbourne-based fund with a market value of A$4.5 billion ($4.7 billion), told the ABC’s Inside Business program yesterday that a delay in costly expansion projects would be prudent.

“That is obviously something we would encourage because we don’t want to spend large amounts of money and not get good returns.”

[Wayno]

It's official. 2 year ODX expansion 'decision' delay. Conditions identical to my post in this thread from 2 days ago - quoted below. It'll hit the media in the next hour or so.

The bad news is it appears BHP will defer the ODX expansion decision, probably by 2 years. No fault from SA perspective - global uncertainties have simply trumped us. There remains a chance of approval by December, but it's getting slimmer by the week.

The good news is overburden removal is expected to proceed as part of the agreement BHP has with the SA Govt. The agreement included a compulsory $1.2b spend on mine preparation (a mixture of purchasing equipment & preparatory works).

The open question is how fast BHP will work at removing all that dirt (approx 2.5 times the area of Adelaide CBD & Parklands, to a depth of 300 metres - a new lowest for SA ). If they hit it hard then in 2 years a significant percentage will be gone (maybe 40%) enabling a quicker start to operations once final approval is given. Of course the overburden must be removed regardless, so whether the 'expansion decision' happens now or 2014, or even 2016, is at least partially irrelevant.

Weatherill can borrow the above speech if he wants.

[Waewick]

well it will be interesting how the State reacts to this.

probably the worst kept secret, but still quite possibly the worst time for such bad news in a while - it will be interesting to see if the SA economy can get any worse.

[Wayno]

lol - seems i was premature . Final decision was not announced yesterday, but the essence of my commentary remains valid. Waiting waiting...

[Waewick]

lol - seems i was premature . Final decision was not announced yesterday, but the essence of my commentary remains valid. Waiting waiting...

forgone conclusion I would think

given all the media coverage and the "input" from unhelpful shareholders

[Wayno]

Media coverage is speculation personified. Must fill & sell those papers - everyday. Actually BHP is still trickle feeding info to the market. Latest being a timeline breakdown of expansion costs which should act to settle shareholder angst.

Remove overburden: $5b over 5-7 years. BHP should be able to sell/justify this expense to the market. There's no lump sum expense - it's spread over many years and can be throttled up/down as required. I'm still betting this goes ahead irregardless of the broader positive or negative decision later this year.

Setup the mine: Post-overburden removal is when the BIG expense starts to kicks in. Something like $2-3b per year for 6-8 years. This is a harder sell to those shareholders focused on the next quarterly results.

On another note the media's recent boom over in 2 years' mantra is misleading. It misquotes a Deloittes study. Refer to monotonehell's recent thread on how a headline grabs your attention (pope steals $1m). The Deloittes study simply indicates that the rate of mining expansion has slowed - nothing more. This could actually work in SAs & ODXs favor as employment pressures may ease - we're going to need a whole bunch of skilled workers once the ODX overburden is gone.

[Wayno]

Iron Road

Here's another monster sized mine in SA. Iron ore. Construction expected to start in 2014 and operation by 2015. This open cut mine will be 6km long, 1km wide and 550m deep. It will require a desal plant & new rail line. Read more about it here.

CentralEyre.jpg (275.22 KiB) Viewed 3319 times

Here's the typical new mine lifecycle. This Iron Road project is currently in the middle stage (feasibility study). Confidence is high and the below adelaidenow article is about raising more funds to quickly get through the study. Click here if you want to learn more about the mining lifecycle.

lifecycle.jpg (36.63 KiB) Viewed 3319 times

A project touted as the State's second biggest resources development has received a $40 million shot in the arm.

Iron Road has announced it will raise the money from its shareholders to progress its Central Eyre Iron Project (CEIP).

The money will be used to progress the definitive feasibility study (DFS) for CEIP, as well as continue work on the company's Gawler project, further north in South Australia.

This smaller project could possibly be brought into production first, providing early cash flow, the company said.

Iron Road has previously released positive pre-feasibility study results showing that a $1.74 billion, 12.4 million tonne per year iron ore export operation would be viable.

The company's managing director Andrew Stocks said the DFS would examine whether cost savings could be made by expanding the size to 20 million tonnes per year.

"Progress on the CEIP has been significant and our decision to seek an expanded level of production has evolved the project considerably over the last year," he said. "We are now working to open a new iron ore province in South Australia, with the potential to become a key player in the Australian iron ore industry. Realising the potential of CEIP requires a sustained, determined effort. Iron Road also has supportive major shareholders who likewise see the need to continue our progress if we are to successfully develop CEIP."

Land acquisitions related to CEIP would also be initiated following the capital raising.

The company said the larger size of the 20 million tonne project "potentially offers significant improvements over the already strong PFS case".

"The larger base offers the potential for a further reduction in operating costs due to more efficient use of infrastructure as well as lowering the unit cost per installed tonne of export capacity."

The company is also continuing to drill, and expects a mineral resource upgrade by the end of the year.

[Waewick]

http://www.adelaidenow.com.au/news/sout ... 6441467793

MORE than 100 jobs will be created over the next five years through a planned $65 million expansion of Para Hills mining manufacturing firm Liebherr-Australia.

Given the products they provide to the state....good signs

[Ben]

Hasn't been called as yet.

Monday, 6 August 2012
No reason to doubt Olympic Dam deal Premier
Kevin Naughton

PREMIER Jay Weatherill has moved to calm concerns about the likelihood of a delay in BHP Billiton’s expansion plans for Olympic Dam.

Bumping his mining minister Tom Koutsantonis from a scheduled radio interview this morning, Weatherill said he had no reason to be concerned, despite media reports and speculation the global resources giant would step back from the project.

“Right at the moment there is a lot of speculation.”

“The company has made it clear that if there is material change in circumstances it will communicate those changes to the State Government and the Opposition first,” he said.

“That hasn’t happened.”

The interview followed comments made by former deputy premier Kevin Foley in the Sunday Mail yesterday, where he suggested the government play hard-ball with BHP Billiton if they seek an extension of the Indenture Agreement that frames regulatory approvals and conditions of the project.

Staff from the Premier’s office told 891 ABC’s breakfast program that while Mineral Resources and Energy Minister Tom Koutsantonis had agreed to respond to the comments, it would be the Premier who would be responding.

“BHP have not sought an extension of the Indenture Agreement,” he said.

“We are sticking to the Agreement – it is enshrined in law.

“We have sent some very clear signals to BHP and we are not going to trumpet that from the rooftops.”

December 15 looms as the deadline for BHP’s board to make a decision on the project, estimated to be worth $30 billion.

That date is the end of the twelve months since assent of state laws that enshrined the Indenture Agreement, which included a provision that BHP must have begun work on the project or the indenture agreements become void.

Koutsantonis can grant an extension or begin the process again.

The Indenture includes a key provision that locks in a generous 45-year deal on royalty rates.

[skyliner]

This is when I'll be listening - when it comes out of the state goverrnment.

SA - GREAT STATE MATE

[Wayno]

This is a big step forward for another big mining operation. 10 million barrel-per-year open cut mine and a 560-megawatt power plant. Close to ODX which could be one of their larger customers.

From The Australian

Chinese-backed Altona Energy gets approval to start drill at Arckaringa in SA

CHINESE-BACKED minnow Altona Energy has received the final regulatory approval to start drilling for its South Australian coal-to-liquids power project.

The firm's environmental plan had been extended by six months to November by the South Australian Department of Manufacturing, Innovation, Trade, Resources and Energy, the company said.

Altona's Arckaringa project in the north of South Australia aims to produce fuel-for-power generation, including base-load power and diesel. Coal-to-liquid technology is the process of converting coal into gas and synthetic fuels to replace oil.

Chinese state-owned oil giant China National Offshore Oil Corporation threw its weight behind the ambitious $3 billion project last August. It is also an investor in BG Group's Curtis LNG project. The Arckaringa project includes a 10 million-barrel-a-year open-cut mine and a 560-megawatt power plant.

From Altona's website

The Company’s flagship Arckaringa Project ticks all the boxes as a major Australian development project for the 21st century.
* A modern, combined-cycle power station adding 560Mw to the national grid
* A resource equivalent to 7.8 billion barrels of clean-burning fuel for Australia and the world
* Feedstock for the production of many high-value products ranging from fertilisers to plastics
* Thousands of jobs in the construction stage and a permanent workforce of nearly 800 in production
* Potential water supply to open up the vast northern tracts of South Australia to industry and agriculture
* Infrastructure and power to support the coming northern mining boom
* The opportunity to create a world-leading Carbon Capture and Storage (CCS) facility for the management of greenhouse gases.