#Official Mining Thread

[UrbanSG]

Twiggy joins rush for our minerals
by: Sarah Martin
From: The Advertiser October 14, 2011 12:00AM

ANDREW Forrest has joined the rush on SA's resources with Fortescue applying for almost a dozen tenements.

The move comes as BHP Billiton signs off on an agreement to advance the multi-billion-dollar Olympic Dam expansion and rival Rio Tinto signs up to exploration rights with junior explorer Tasman.

Fortescue Metals' tenements are near BHP Billiton's Olympic Dam mine and in the Woomera Protected Area. A spokesperson said the tenements were part of Fortescue's commitment to ensure maximum return to shareholders.

Mineral Resources Minister Tom Koutsantonis said a State Government advertising blitz in Western Australia had pushed the state's low royalty rate.

[mattblack]

$350m in royalties from ODX alone... now can we get a pre-commitment on keeping the Keith Hospital open, and repaying our state debt?

Not quite on track with royalties Shuz (reason below) but check out these figures,

BENEFITS of the Olympic Dam project will add up to $8.6 billion a year to the state's economy, the State Government says.

This is based on the amount of expenditure on construction and other site works to be done, the purchase of materials such as trucks and other special equipment, the new spending generated by workers at the mine and the mine's expanded operating capacity.

Former Treasurer Kevin Foley said the spending would turbo charge the state's economy.

A Government spokesman said BHP Billiton estimated the project would lead to improved living standards through increased employment, higher levels of household income and consumption with those benefits concentrated in SA.

Mr Foley said there would be direct expenditure in SA by BHP Billiton of at least $2 billion to $3 billion every year for the next 15 years.

Mr Foley said while $350 million a year in royalties would eventually be paid into the state Treasury, when working out GST payments to the states, the Commonwealth averaged state revenue over three years, which ensured any amount SA earned above its population share was shared with the other states.

This puts SA in the same situation as resource-rich states WA and Queensland where high royalty payments result in reductions in their GST share.

Under the horizontal fiscal equalisation formula, SA will keep about 7 per cent of royalties - around $24.5 million.

Asked to put a dollar figure on the total benefits to SA from the mine, Mr Foley said: "We aren't able to put a finite figure on that. This mine will be giving somewhere between three and four times the extra expenditure and economic activity into this state."

He said the project's contribution would be around $8.6 billion a year to the state's Gross State Product.

"It is an enormous contribution to the wealth of this state which will trickle down to every South Australian," he said. "Where the real turbo charge . . . will occur, and that is almost instant with the $1.2 billion in expenditure already approved, is we are going to have at least $2 billion to $3 billion of direct expenditure by BHP Billiton in SA every year for the next 15 years.

"Net value to our economy will rise from $1.7 billion a year to somewhere closer to $8 billion a year.

"It will be the single largest injection of economic activity we have ever witnessed and will propel our state into one of the serious mining giants not only in Australia but globally."

Opposition Leader Isobel Redmond agreed the project would be a huge boost.

[Will]

I just hope we don't drop the ball with other sectors of the economy, just because mining will play a bigger role in our future.

We cannot be complacent with other sectors such as education, defence, agriculture, manufacturing, wine etc....

[mattblack]

I just hope we don't drop the ball with other sectors of the economy, just because mining will play a bigger role in our future.

We cannot be complacent with other sectors such as education, defence, agriculture, manufacturing, wine etc....

Like this government or not we have seen a huge change of diversification within the SA economy over the last decade from its traditional manufacturing base, Im pretty sure they're not willing to throw all the hard work they have done on sectors such as defence, international students, renewable energy or even further mining prospects out the window.

Enter a new age for SA.

[skyliner]

Some time ago I saw a doco on TV about the plight of SA and they said SA will have to re invent itself to keep going economically and competitively. This is occurring big time (as some of you have pointed out) and seems destined to make us a major player as well - up in the big league - a huge mindset change!

SA - GREAT STATE MATE!

[Wayno]

Under the horizontal fiscal equalisation formula, SA will keep about 7 per cent of royalties - around $24.5 million

HFE applies to GST, not royalties. Royalty dollars raised in WA stay in WA - as evidenced by all their snazzy infrastructure. The HFE applies to GST dollars raised in that state, of which they receive less than 70 cents in the dollar.

A proof point of how the states keep royalties is WA's threat to erode the MRRT by raising their royalty percentages. This has a nett zero affect on the mining companies, but acts to retain the cash in WA.

Or am i wrong?

[Wayno]

i spoke with a couple of accountancy mates, who advised that SA will receive the $350m royalties direct into our coffers, not the 7% ($24.5m) as stated in that previous article.

[mattblack]

Happy days indeed.

[Waewick]

the question is, how do we get our stupid leaders to save some of this rather than blow it on crap.

I would like to see $50m p.a of those royalties set aside for the life of the mine - build a reserve that can ensure the sucess of the state for ever.

initially a portion goes to debt reduction - maybe even funding workcovers unfunded liability

would happily see it made a law and that the funds can only ever be put in nil risk assets (or gold)

[Wayno]

I would like to see $50m p.a of those royalties set aside for the life of the mine - build a reserve that can ensure the sucess of the state for ever.

I was thinking along similar lines. Even placing 10% of royalties ($35m of $350m) in an 'SA future fund' would be superb. Assuming 100 years for ODX = $3.5b. Invested conservatively this would deliver steady cashflow year over year, plus modest capital growth - forever. Now there's a legacy...

[Waewick]

I would like to see $50m p.a of those royalties set aside for the life of the mine - build a reserve that can ensure the sucess of the state for ever.

I was thinking along similar lines. Even placing 10% of royalties ($35m of $350m) in an 'SA future fund' would be superb. Assuming 100 years for ODX = $3.5b. Invested conservatively this would deliver steady cashflow year over year, plus modest capital growth - forever. Now there's a legacy...

yes it is.

just imagine if we had politicans that were capable of delivering that

[UrbanSG]

Mining investment to rise 66pc to $83.3 billion by 2015, says BIS Shrapnel
by: MEREDITH BOOTH
From: AdelaideNow October 24, 2011 12:30AM

ANNUAL investment in Australia's mining sector will soar 66 per cent to $83.3 billion by 2015 researcher BIS Shrapnel says.

The lift comes as huge Liquified Natural Gas (LNG) projects come on stream in Western Australia and Queensland and Olympic Dam's expansion gets underway, the Mining In Australia 2011-2026 Report released today said.

Investment, now at $50.1 billion for money spent on exploration, construction, machinery and computer software related in the mining sector, however, will have less impact on Australia's economy as products and expertise are sourced overseas.

"The multiplier affect will be weaker ... we won't get as much economic bang for our buck," BIS Shrapnel infrastructure and mining senior manager Adrian Hart said.

While mining booms over the next five years, Australian manufacturers will see almost no benefits as the high Australian dollar kills competitiveness and mining companies "offshore" steelwork fabrication and structures in Asia and source overseas-based workers during the construction phase.

" ... it is also discouraging to see how little work Australian manufacturers and suppliers are getting on some of the very large projects," Mr Hart said.

South Australia will be swept up in the boom once expansion of Olympic Dam begins beyond June 2012, he said. Money spent on engineering and construction in South Australia, currently at $1-$2 billion a year, is to rise to $4 billion a year as the need for roads, rail, harbours, water and electricity to furnish the Olympic Dam expansion filter through.

"As well as the main development itself there's huge economic impact from that," Mr Hart said. "The strongest economic growth is going to come through from Queensland and SA into the middle of the decade. Western Australia has already boomed in a sense between 2003 and 2008."

He said while the global economy remained "very patchy", industrial development in China and India still was driving long-term demand for key commodities.

"Clearly, mining companies are not overly perturbed by current global economic conditions or the prospect of new Australian taxes on resource profits or carbon," he said.

Meanwhile, pipeline builders would invest $20 billion in gas pipelines in tandem with expansion of Australia's Coal Seam Gas (CSG) and LNG projects in Western Australia, Queensland and the Northern Territory, the industry said yesterday.

"This is an unprecedented level of activity in the pipeline sector which will continue in line with the increased use of gas," Australian Pipeline Industry Association (APIA) president Peter Cox said.

"The future of the pipeline industry is very closely linked to the future of the gas industry, and the increase in both domestic gas use and LNG exports has a proportional increase in the number of pipelines that have to be designed, built and operated in Australia."

[Wayno]

While most eyes are on ODX, there's a steady flow of activity happening in the small to mid operator range, especially in the newly opened woomera defence area. Here's an example:

From AdelaideNow

Apollo gets permit for Woomera exploration

Explorer Apollo Minerals has been granted permission by the Defence Department to start work on its Commonwealth Hill prospect in the Woomera Defence Area.

The region recently was opened for exploration and mining after a Federal Government review.

Commonwealth Hill is just north of Tarcoola and considered highly prospective for iron ore.

Apollo Minerals will start an exploration and development program next year and plans to move swiftly to a working mine.

[ml69]

While most eyes are on ODX, there's a steady flow of activity happening in the small to mid operator range, especially in the newly opened woomera defence area. Here's an example:

From AdelaideNow

Apollo gets permit for Woomera exploration

Explorer Apollo Minerals has been granted permission by the Defence Department to start work on its Commonwealth Hill prospect in the Woomera Defence Area.

The region recently was opened for exploration and mining after a Federal Government review.

Commonwealth Hill is just north of Tarcoola and considered highly prospective for iron ore.

Apollo Minerals will start an exploration and development program next year and plans to move swiftly to a working mine.

I have absolutely no science to backup this claim, but I believe that the Woomera area is going to yield an absolute motherload of minerals yet to be discovered. Why else would giants Rio and Fortescue be interested in exploring the area, and so close to the colossal mineral deposits of Olympic Dam. Only a matter of time before another massive discovery.

[Wayno]

I have absolutely no science to backup this claim, but I believe that the Woomera area is going to yield an absolute motherload of minerals yet to be discovered. Why else would giants Rio and Fortescue be interested in exploring the area, and so close to the colossal mineral deposits of Olympic Dam. Only a matter of time before another massive discovery.

Well ml69 the good news is there exists substantial science to support your claim . The woomera range is believed to hold ~60+% of australia's copper reserves alone. We have the SA Govt's PACE program to thank for all this science - not to mention the enthusiasm it has generated at the big end of the mining industry.