#Official Mining Thread

[Ho Really]

good news,

the Engineers Australia magazine published a volume this month about SA resources. The World mining congress in Toronto (Canada) said there was huge interest in SA with the Fraser Intstitue (canada) ranking SA with the world's best geoscience database, 3rd most resource industry friendly government and 4th in explorarion potential (up from 32 a few years ago). It also runs through major infrustructure projects e.g. free way projects, underpass projects, tram extension projects, etc

I don't get why shit like in the Advertiser has articles that say 'Don't bank on the mining boom' July 21st. Where do these people get there sources from. It's like they are trying to be negative on purpose.

Yes, it looks like good news has to come from abroad. Unfortunately when it comes to the media here (The Advertiser), negative news makes more impact...

Cheers

[Howie]

I don't get why shit like in the Advertiser has articles that say 'Don't bank on the mining boom' July 21st. Where do these people get there sources from. It's like they are trying to be negative on purpose.

I think it's time we dissected that Access Economics report. There's most likely more to the story than what the Advertiser reports. I believe they're saying that a high aussie dollar will hurt our economy and we're unlikely to realise a boom like the one in WA. But it's difficult at the moment to say whether or not the Chinese economy will slow down - most sources are saying that GDP growth will slow in China but the boom is far from over for China when you consider they have entire cities being built almost overnight. One of my best mates recently told me the shopping strip (roughly the size of rundle mall and rundle street) in his home town in china was only 10 years old, yet now abandoned and relocated 50kms from where it was, all within a year. Another mate had recently shifted his business from building scrapers in China to building highways... each highway is about 300kms in length. The modernization of china is simply amazing, we're still playing a strong role there and probably will for another generation at least.

[Wayno]

I don't get why shit like in the Advertiser has articles that say 'Don't bank on the mining boom' July 21st. Where do these people get there sources from. It's like they are trying to be negative on purpose.

It's much easier to write a story with negative spin than do real research and write a substantiated good news story. I think the Advertiser Journalist gene pool could do with a dose of chlorine!

[UrbanSG]

Access Economics are ALWAYS extremely negative about South Australia. I never pay any attention to them anymore. This latest report is actually one of the most positive I have ever heard from them. Also it contradicts itself on the one hand we are not heavily burdened by interest rates but then our economy is based heavily on it, hmmmm :wank:

The South Australian economy is definately moving forward. Comparisions to Western Australia do get a bit annoying because we may never reach that level or if we do it is a long way off, but we are moving forward and that is the main thing. Olympic Dam will be the big one. If that gets developed to its maximum potential then we may not know ourselves here once the boom takes hold. Hopefully it all goes according to plan.

[Wayno]

The South Australian economy is definately moving forward. Comparisions to Western Australia do get a bit annoying because we may never reach that level or if we do it is a long way off, but we are moving forward and that is the main thing. Olympic Dam will be the big one. If that gets developed to its maximum potential then we may not know ourselves here once the boom takes hold. Hopefully it all goes according to plan.

Only ~10 weeks til October when the OD expansion plans will be made public! tick tick tick...

[UrbanSG]

From adelaidenow:

OneSteel May Double Iron Ore Exports from Whyalla

CAMERON ENGLAND, CHIEF BUSINESS REPORTER
July 23, 2008 10:30am

ONESTEEL is understood to be looking at doubling its iron ore exports from Whyalla.

A feasibility study into increasing hematite exports from four million tonnes to eight million tonnes a year is under way, a source close to the company said.

General manager, investor relations and external affairs, Steve Ashe would not comment.

He referred The Advertiser to the company's half-year results statement which says "optimisation of the export stream infrastructure has commenced to establish the opportunity to increase available capacity''.

"Additionally, a program has commenced with the aim of increasing reserves,'' the statement said.
OneSteel aims to sell about 40 million tonnes of hematite from its mines in the Middleback Ranges over 10 years, starting from last year.

The extra tonnage could be a financial boon for OneSteel, following recent rises of 79.88 per cent and 96.5 per cent for two types of ore secured by BHP Billiton in July.

These bring the iron ore prices to $147.77 a tonne and $205.98 a tonne respectively.

Under Project Magnet, which was completed last year, OneSteel converted its Whyalla blast furnace to magnetite feed, freeing up the more lucrative hematite ore for export.

The company loads the hematite on to barges, which ferry it about 8km into Spencer Gulf to a transhipment barge, which then loads it on to ships for export.

OneSteel late last year shelved talks with iron ore explorer Western Plains Resources to allow it access to its port for exports.

OneSteel put similar discussions with South Australian iron ore junior Centrex Metals on hold in February.

Western Plains and Centrex went on to join the Port Bonython Bulk Users Group, which also includes IMX Resources and Iron Clad Mining. This group is pushing for the development of a bulk commodities port at Port Bonython, 25km northeast of Whyalla.

Eight companies have registered their interest in developing Port Bonython, with the State Government expected to make a decision soon on the expressions of interest it has received.

This facility would be developed to handle at least 7 to 13 million tonnes of commodities a year.

[UrbanSG]

From the Australian:

Altona and BP Australia extend agreement for SA project
July 23, 2008

ENERGY group Altona Resources has extended an agreement with BP Australia to develop a project in South Australia.

The pair have extended a non-binding agreement to work together to evaluate development opportunities for Altona's Arckaringa coal-to-liquids and power project in the state to the end of June 2009.

The agreement includes the evaluation of coal-to-liquids developments and market potential for coal-to-liquids fuel products, Altona said in a statement.

Altona, a UK-listed Australian company, earlier this month said it planned to list on the Australian Securities Exchange in the December quarter of this year, subject to market conditions.

Bell Potter Securities is advising Altona, which is listed on the UK AIM market, on its proposed Australian listing.

Altona's primary focus is the completion of a bankable feasibility study for its wholly owned Arckaringa Project for an integrated 10 million barrel per year coal-to-liquid plant with a 560 megawatt co-generation power facility.

[UrbanSG]

This is why BHP needs to provide that update in October and no later.There is too much speculation going around at the moment and it is starting to turn slightly negative. From ABN Newswire:

BHP's Copper Dilemma

Sydney, July 25, 2008

A major dilemma is taking shape for BHP Billiton as two vital, major copper expansion projects compete for the board's attention

Both are important to the long term viability of existing businesses, but it would seem that from the publicity BHP has given the new deposit outlined at Escondida in Chile, this could have the inside running over the more costly and technically difficult Olympic Downs expansion in South Australia

For all BHP's huge cash flows and undoubted resources, the risks of expanding both copper mining businesses at the one stage, will be huge and logic says that only one will happen.

Olympic Dam does have the virtues of the extra gold and uranium that will be produced, but it will be a copper expansion at heart.

Both will involve the spending of billions of dollars, but with Escondida suffering a sharper than expected drop in output from next year because of lower mining grades, it's felt the Escondida expansion will end up being preferred.

In fact BHP had a lot to say about the new prospect in this week's yearly production report.

"Total copper production at Escondida is expected to decline by approximately 10 to 15 per cent in the 2009 financial year compared to the 2008 financial year levels due to lower ore grade.

"Production is then expected to continue at similar levels to the 2009 financial year.

"The Escondida resource base presents numerous options for delivering production growth in future years, which are currently under study.

"Exciting results from exploration of the Escondida mining lease are being obtained in areas close to existing infrastructure and processing facilities, including the new Pampa Escondida prospect.

"The Escondida resource base presents numerous options for delivering production growth in future years that are currently under study.

"These studies, including the addition of a third concentrator, are at various stages of development, and are focused on increasing copper production in the face of declining ore grades, either through improved copper recovery or increased production rates.

"Extensive exploration of the Escondida mining lease has been underway in recent years; with the knowledge that additional reserves will enhance the investment in further concentrator capacity.

"Exciting results are being obtained in several areas close to existing infrastructure and processing facilities, including the new Pampa Escondida prospect. Drilling to date suggests that Pampa Escondida contains at least 1 billion metric tonnes of porphyry style mineralisation.

"In order to properly and rapidly evaluate identified exploration targets, decisions were recently made to aggressively expand the exploration and development drilling program.

"The drilling program will be ramping up from 11 drill rigs that completed 94,351 metres in the 12 months ended 30 June 2008 to 25 drill rigs estimated to complete 320,000 metres in the 12 months ending 30 June 2009, maintaining the capability of completing over 300,000 metres annually.

"Over the next five years, Escondida will invest an estimated US$327 million (US$188 million BHP Billiton share) in drilling, assaying, and metallurgical testwork across the entire mining lease.

"This work will be directed at the delineation and expansion of three specific projects (including Pampa Escondida), along with the continued exploration of additional targets based on new geological models of mineralisation from the recent work."

In contrast there was nothing in the BHP report, or the quarterly development and exploration reports about the future expansion of Olympic Dam.

"More is known from various publications in the past three years, but suddenly the Pampa Escondida prospect has emerged out of nowhere and is now a contender for BHP's billions.

A billion tonnes of low grade ore is a huge deposit: Olympic Dam has uranium and gold as well to sweeten the returns, but it will be the largest hardrock mining project ever undertaken in Australia.

There are water, power and carbon emission issues with Olympic Dam, as there will be with expanding Escondida.

But Olympic Dam is profitable now and will grow more profitable as the future for uranium is as much a driver for this mine as copper.

But BHP and its partners at Escondida, which include its takeover target, Rio Tinto, and Mitsubishi, have invested billions at the huge Chile mine and if they have a chance of keeping output at a more profitable level then they will spend money on the expansion.

To give you an idea of just how important the expansion at the new prospect is, look at the following figures. BHP and its partners will spend $US327 million working at proving up the project over the next five years. BHP is spending around $US650 million a year on mineral exploration.

In the year to June BHP said it spent US$658 million on minerals exploration, of which US$547 million was expensed.

Assuming now further increase over the next five years BHP will spend more than $US3 billion on exploration for minerals, and 10% alone will be spent at Pampa Escondida. Around 25 rigs will be on site, compared to a maximum of 17 at Olympic Dam.

BHP will look to exploit the prospect, if it's economic to do so, via a third concentrator at Escondida, but that would not be built until 2013 at the earliest. Work is supposed to have started on Olympic Dam by then.

In fact we might get a very good idea of BHP's priorities around October when an update on Olympic Dam is due.

At the same time the company is deciding if it can expand Olympic Dam in South Australia, or commit to a dramatic new project next to its huge Escondida mine in Chile. The company will be looking to spend heavily in bringing the new 50% owned the New Saraji Project coking coal mine in Queensland into production.

BHP and its partner, Mitsubishi, have just spent $2.5 billion buying the new Saraji project from New Hope Collieries.

It's a 10 million tonne a year high quality Bowen Basin coking coal mine with approved export capacity. The irony is BHP and Mitsubishi owned the area but let it go around six years or so ago because of the poor outlook for the global iron and steel industry.

A full 10 million tonne a year mine would be worth around $US3 billion or more at current prices for hard coking coal of approximately $US300 a tonne.

Capital costs are unknown, but would be over $A1.5 billion because of the savings being located next to the existing Saraji mine in the Bowen Basin.

And strangely, Rio Tinto didn't refer to the looming fall in output from Escondida in its half yearly production report last week.

Here's what it said: "Mined copper for the quarter improved by 22 per cent compared with the corresponding period of 2007, attributable to higher volumes of leachate material. Production at Escondida has been impacted by haul truck and shovel maintenance and availability issues".

BHP is the operator, so responsibility falls to them for major announcements, but this is an issue of great importance to both companies, and the value of Rio Tinto in the takeover.

Escondida is the world's largest copper mine, producing more than 1.4 million tonnes of copper last year - nearly 10% of the world's supply. And copper is the highest margin commodity for both companies.

BHP shares fell sharply yesterday, down $1.13 to $37.55. Rio Fell 4% to $115.20. The BHP 3.4 share offer for Rio was valued at $127.67

[Will]

It appears that the evidence is becoming overwhelming that there will be no mining boom. As such I think the state government has placed too many eggs in the mining basket. A basket, which according to the recent evidence will not deliver for SA. The state government should divert the money it is investing in this phantom and mystical mining boom to diversify the state economy. The state should instead focus its attention in investing in start up companies in high-technology future companies such as those producing electric cars, bio-medical research etc.

[Wayno]

It appears that the evidence is becoming overwhelming that there will be no mining boom. As such I think the state government has placed too many eggs in the mining basket. A basket, which according to the recent evidence will not deliver for SA. The state government should divert the money it is investing in this phantom and mystical mining boom to diversify the state economy. The state should instead focus its attention in investing in start up companies in high-technology future companies such as those producing electric cars, bio-medical research etc.

sigh below is a repost of one of my earlier contributions to this thread. Sure, our 'boom' might not be of the scale in QLD & WA, but it is underway already. That fact is immutable.

Establishing mines is not like erecting a building - there is very little visible progress until the mines "actually start production"!!

Those unfamiliar with the intricacies of mining tend to overly focus on Olympic Dam (oh yes, it's the holy grail ), and if it was cancelled we would still be in the midst of a boom. Just chill for a while and re-examine your negative post in ~24-36 months time (yes it will take that long for many more mines to ramp up...patience is a virtue).

Look below, there are plenty of new mines in existence today compared to 12months ago, and HEAPS more starting production soon - more than enough to generate 1000's of extra jobs, and fund all the "sexy new trams/trains/buses/roads" discussed in every other thread on this website.

Highlights from Issue 48 of the MESA journal has been released by the Dept of P.I.R.

• * Figure 1 - mineral exploration targets blast through the $100m per annum target!
  * Figure 2 - hopefully we will exceed the $4b target line (in red) way before 2013/14.
  * Figure 3 - shows value of mineral production per resource
  * Table 3 - Govt royalties has nearly tripled in 5 years to $78m per annum. All being well it should reach $200-300m per year by 2013/14 (my personal extrapolation judgement)

mesa-journal-48_image1.JPG (115.99 KiB) Viewed 2064 times

The pyramid below shows active mines (top), work in progress mines (middle), and prospective mines (bottom). The potential is amazing...

mesa-journal-48_image3.JPG (46.75 KiB) Viewed 2064 times

Lots more goodies in the full report here ==>
http://www.pir.sa.gov.au/minerals/publi ... urnal_-_48

[Wayno]

Prominent Hill starts production in 4-5months time!

http://www.news.com.au/adelaidenow/stor ... 55,00.html
This is a moderate sized mine with production starting very soon. Royalty Payments to the SA Govt will start at $30-50m for 2009. We should expect annual production rates to expand over several years.

CONSTRUCTION at Oz Minerals' Prominent Hill copper and gold mine 130km southeast of Coober Pedy is 72 per cent complete, with production to start in the final quarter of this year.

prom-hill.jpg (36.22 KiB) Viewed 2055 times

Oz Minerals, formed out of the merger of former Prominent Hill owner Oxiana and Zinifex, yesterday said pre-strip mining and the construction of the process plant were proceeding according to plan.

"Civil work is essentially complete,'' the company, led by managing director Andrew Michelmore, said in its quarterly report yesterday.

"Overall construction of the process plant and infrastructure was 72 per cent complete to end June, 2008.

"Production guidance for 2008 remains at 10,000 tonnes of copper and 6000 ounces of gold and production for 2009 predicted to be 110,000t to 120,000t of copper and 75,000oz to 85,000oz of gold.''

[Will]

It appears that the evidence is becoming overwhelming that there will be no mining boom. As such I think the state government has placed too many eggs in the mining basket. A basket, which according to the recent evidence will not deliver for SA. The state government should divert the money it is investing in this phantom and mystical mining boom to diversify the state economy. The state should instead focus its attention in investing in start up companies in high-technology future companies such as those producing electric cars, bio-medical research etc.

sigh below is a repost of one of my earlier contributions to this thread. Sure, our 'boom' might not be of the scale in QLD & WA, but it is underway already. That fact is immutable.

Establishing mines is not like erecting a building - there is very little visible progress until the mines "actually start production"!!

Those unfamiliar with the intricacies of mining tend to overly focus on Olympic Dam (oh yes, it's the holy grail ), and if it was cancelled we would still be in the midst of a boom. Just chill for a while and re-examine your negative post in ~24-36 months time (yes it will take that long for many more mines to ramp up...patience is a virtue).

Look below, there are plenty of new mines in existence today compared to 12months ago, and HEAPS more starting production soon - more than enough to generate 1000's of extra jobs, and fund all the "sexy new trams/trains/buses/roads" discussed in every other thread on this website.

Highlights from Issue 48 of the MESA journal has been released by the Dept of P.I.R.

• * Figure 1 - mineral exploration targets blast through the $100m per annum target!
  * Figure 2 - hopefully we will exceed the $4b target line (in red) way before 2013/14.
  * Figure 3 - shows value of mineral production per resource
  * Table 3 - Govt royalties has nearly tripled in 5 years to $78m per annum. All being well it should reach $200-300m per year by 2013/14 (my personal extrapolation judgement)

mesa-journal-48_image1.JPG

The pyramid below shows active mines (top), work in progress mines (middle), and prospective mines (bottom). The potential is amazing...

mesa-journal-48_image3.JPG

Lots more goodies in the full report here ==>
http://www.pir.sa.gov.au/minerals/publi ... urnal_-_48

Wayno, the fact that you mention that our 'boom' will not be of a scale of WA or QLD confirms what I am saying. There are many people in this forum and in the wider community who have been lead to believe that SA was in store to get a WA or QLD style boom (i.e. economic growth of 8-10% per annum). I am not saying that there will be no new mining, but they will definately not amount to a boom. Most of the new mines reported in this thread are small scale operations which will employ 100 or so people and contribute less than $10 million to the state in royalties. This is why the state treasury is predicting a modest 2.75% growth for 2012.

Most of my negativity does indeed come from the litany of negative news regarding Olympic Dam which was to be the Holy Grail. No other mine in whatever stage of development comes close to the scale of Olympic Dam. Olympic Dam was supposed to turn SA into the Saudi Arabia of the south!

[AG]

Keeping in mind that the article about BHP that UrbanSG posted is just pure speculation and shouldn't really be used to judge BHP's decisions. How much of SA's future productive capacity would BHP's expansion of Olympic Dam contribute if all of the projects currently under planning or under development were to become mining operations?

[Wayno]

Wayno, the fact that you mention that our 'boom' will not be of a scale of WA or QLD confirms what I am saying. There are many people in this forum and in the wider community who have been lead to believe that SA was in store to get a WA or QLD style boom (i.e. economic growth of 8-10% per annum). I am not saying that there will be no new mining, but they will definately not amount to a boom. Most of the new mines reported in this thread are small scale operations which will employ 100 or so people and contribute less than $10 million to the state in royalties. This is why the state treasury is predicting a modest 2.75% growth for 2012.

Most of my negativity does indeed come from the litany of negative news regarding Olympic Dam which was to be the Holy Grail. No other mine in whatever stage of development comes close to the scale of Olympic Dam. Olympic Dam was supposed to turn SA into the Saudi Arabia of the south!

I understand what you are saying. A boom implies instant and huge overnight success, and makes people draw comparisons to other states.

Independent of what happens with Olympic Dam, the SA mining industry is experiencing a steadily increasing "rumble" that will grow to a reasonable sized "roar" in a few years . The apparent slow rate of progress is actually quite normal, but it's too slow for many observers to handle, especially journalists who rely on a continuous flow of sensationalism to survive. AG quite rightly says the article is speculation - i tend to only put faith into news that comes direct from the mining companies themselves.

Here's an example of the impact the mining "roar" will have on SA (again without OD included). The average annual royalties in the last 10years has been something like $50m (a pittance). The next 5 years should be ~$200-250m per year, and the 5 years after that we should be close to $500-$1b per year. We can achieve a hell of a lot with this sort of cash.

By the way, the recent Treasury estimates of 2.75% til 2012 excludes any impact of Olympic Dam, so there is further scope for tremendous upside to the $$$ I state above.

Also don't forget there are HEAPS of new mining exploration initiatives just getting underway that are not yet included in any royalty estimates (see the 3rd layer in the pyramid pikkie provided in my previous posting), many have a very good chance of finding massive mineral deposits - SA is a big place with lots of unexplored land...

[AG]

Mining sector requires additional 87,000 new workers
Florence Chong | July 28, 2008
WITH the global resources super cycle expected to continue for a decade or more, Australia's mining industry will require an additional 87,000 workers, according to research commissioned by the Minerals Council of Australia.

This figure represents a 68 per cent increase on the current workforce in the sector.

Council education and training director Chris Fraser said the research highlighted a challenge for the minerals sector.

"That challenge is to attract, train and retain workers in occupations that are in decline in the economy more generally," Mr Fraser said.

It would place added pressure on an already tight labour market for minerals sector tradespeople and professionals in remote areas.

"The labour market is already running at capacity and this extra demand will mean it is even more critical that Australia's chronic skills shortages are addressed."

New workers would require considerable training to maintain safety and productivity standards.

The Minerals Council welcomed federal Government initiatives to increase skills training and streamline temporary visa applications for skilled migrants.

More was needed to expand and reform the vocational education and training system and lift funding for earth science courses in the higher education sector, he said.

The research shows Western Australia will require the largest increase, projected at 48,000 people -- or an 86 per cent increase in demand.

WA will represent 55 per cent of the total national increase in labour demand.

Queensland's demand is projected to rise by 23,035 workers.

The most rapid increase in labour demand will be in South Australia, with a 100 per cent rise.

The study says this figure is "conservative" given the planned expansion of Olympic Dam.

The authors write: "The potential for increased demand for labour at Olympic Dam is still uncertain at this point and if this mine is expanded, copper and uranium demand for labour will increase."

The study, by the National Institute of Labour Studies at Flinders University, projects the labour demand for nine major commodities from 2007 to 2020.

The increases are projected to be in iron ore (21,000 people) and coal (19,000).

The biggest increase in the demand for labour in absolute terms by occupational category is projected to be in the trades and semi-skilled worker categories. The study says these two categories represent a total of 61,000 people.