#Official Mining Thread

[rhino]

Page 16 in today's 'Tiser:

Iluka's mineral sands mine officially opened
Cameron England February 09, 2010 5:27PM

THE Eucla Basin, in the state's far west, could be home to a string of massive zircon deposits, Iluka Resources managing director David Robb said.
At the official opening of the Jacinth-Ambrosia mineral sands mine, northwest of Ceduna, Mr Robb said the company was confident there were more large finds to be made in the region.
"We are spending the bulk of our exploration budget on exploration within this region," he said. "We are certainly of the view that Jacinth-Ambrosia is the first of hopefully a series of discoveries, which means that this becomes truly a multi-decade province for mineral sands, rather than a one-off discovery and a one-off mine."
The mine, which has been in production since November 15, is the richest zircon deposit yet discovered globally, comprising about 25 per cent of world's supply.
"It will be the largest single source of zircon for the next 10 years or more," Mr Robb said.
Premier Mike Rann, who officially opened the mine yesterday, said there had already been other mineral sands deposits discovered in the Eucla Basin.
"For mining, the Eucla's future prospects are extremely promising, which is great news for this regional economy," Mr Rann said.
"Of the total expenditure, 84 per cent of the spending on services . . . was spent in South Australia."
Mr Rann said the deposit was discovered in 2004 and the mine developed in just five years, a record for South Australia. He said SA's mineral production for the previous financial year was $2.87 billion, almost treble the value of five years earlier.,
The mine employs about 100 people, with 20 per cent of its employees from the indigenous community
The deposit includes combined resources of 9.5 million tonnes of heavy mineral sands with more than 4 million tonnes of zircon.

[rhino]

From today's Adelaide Now:

Four-year wait for Olympic Dam mine work
Christopher Russell, Business Editor February 10, 2010 10:47AM

THE Liberal Party has been told work on expansion of the Olympic Dam mine will not begin before 2014 at the earliest.
"Our information, direct from BHP, is that it is unlikely to happen during the next term of government," Opposition Leader Isobel Redmond says.
"And I'm hoping to be the government, of course."
Mineral Resources Minister Paul Holloway said "for some extraordinary reason, Ms Redmond and the Liberals are pitching themselves against this mega-project".
Assessing the proposal would take time to properly scrutinise.
"On current forecasts, the expansion could be underway by 2012," he said.
Ms Redmond said she had still not met BHP representatives to discuss the expansion, but would do so if invited to a briefing.
However, she said BHP had said no expansion was slated before 2014. In a press release yesterday, she stated this had been conveyed to the State Government.
"I personally didn't know that bit of information myself, but what I can personally tell you is that BHP have told me as much," she said.
"I don't know whether they've actually said that to the Government, but I do know that's how long they've (BHP) indicated to me it's likely to take."
Ms Redmond could not immediately recall the source in BHP of her information, but said: "I've had an email telling me what their timetable is and how long it's going to take."
Submissions to the draft environmental impact statement on expanding the copper, uranium and gold mine closed in August last year. BHP Billiton is now working on its response to issues raised in the submissions. It has made no announcements to the stock exchange on its timetable.
Ms Redmond said she wanted the expansion to go ahead but criticised Premier Mike Rann for "outrageous grandstanding" over job creation claims.
She criticised Treasurer Kevin Foley for not ruling out considering a resources rent tax understood to be among likely Henry tax review recommendations.
"BHP, we understand, is saying that if that were to come in, it absolutely puts paid to this (Olympic Dam) project," she said.
She would not rule out considering the resource rent tax if she were elected premier. "I haven't looked at it sufficiently," she said.
BHP Billiton could not be contacted yesterday.



This doesn't strike me as being good news. I thought things were going to start happening sooner than 2014

[rhino]

From yesterday's Adelaide now:

Linc Energy to test Arckaringa Basin oil potential
Cameron England February 09, 2010 11:52AM

THE oil potential of the Arckaringa Basin will be tested after Linc Energy encountered hydrocarbons in a recent drilling program.
The Brisbane-based company came across oil while drilling for coal seams to underpin its underground coal gasification (UCG) project near Orroroo in the Flinders Ranges recently.
The company will now reprocess its existing seismic exploration data and acquire new seismic and gravity data "in order to better understand the distribution and thickness of the older pre-Permian sediments that are believed to be the origin of oil found in Maglia-1, as well as identifying potential structural traps''.
"Based on that work, a targeted exploration program is planned,'' the company said in a statement.
"The oil show at Maglia-1 is interpreted to be residual in nature but represents the most significant find in the history of the Arckaringa Basin, in which Linc Energy holds over 74,000 sq/km with a 100 per cent interest.
"Continued evaluation and appraisal of the Mount Toondina coal measures for underground coal gasification (UCG) and coal seam gas will occur in parallel with this program as part of Linc Energy's UCG exploration program.''
Linc chief executive Peter Bond said the oil show was "extremely exciting''.
"It takes the prospectivity of this basin for petroleum to the next level; one where the existence of an active petroleum system is now proven,'' he said.
"We will progress our plans with increased confidence and vigour as a result of this important discovery.
"I believe this is just the first of many exciting announcements concerning Linc Energy's traditional oil and gas assets.''
Six wells were drilled during the exploration program, with all but one intersecting multiple coal seams.
Linc plans to build the world's first commercial underground coal gasification (UCG) plant near Orroroo and could start work on the project in the next year and a half.
Shares in the company were 4.6 per cent higher at $1.47 in noon trading.



The Arckaringa Basin surrounds Coober Pedy, so it's some way from the Cooper Basin where Beach and Stuart are drilling.

[Wayno]

Another Uranium mine - trialing begins

These types of in-situ leaching mines tend to start production very quickly (within 1year) - if the trial proves fruitful...

Curnamona Energy to conduct mining trial at Oban uranium project in March

CURNAMONA Energy expects to start a mining trial at its Oban uranium project in the state's east next month. The Adelaide company has signed a contract for the construction of a well house to be used in an in-situ leach mining trial. Construction would take one month, after which the trial would start.

The well house unit will be used to pump acidified solution into four injector wells, after which it will be extracted via a central extraction well.

"Use of the well house unit will allow collection of key information concerning the flow rates of solution through the sands, the amount of uranium that can be extracted...using acidified local water, and the levels of other contaminant elements that are dissolved in the process that must be separated from the uranium at a later stage,'' the company said.

"From this data it will be possible to estimate the uranium recovery factor from the mineralised sands, which is critical in evaluating the project economics.

"The derived uranium-bearing solutions will be suitable for further test work necessary to finalise processing plant design and costing.''

In situ leach mining involves pumping acidic solutions into uranium-bearing sands to dissolve the mineral, then extracting the uranium from the solution after it is pumped back to the surface.

Curnamona announced last year it had an inferred resource of 2100 tonnes of uranium at the Oban project.

[rhino]

Curnamona Energy to conduct mining trial at Oban uranium project in March

The Oban project is located about 90km north of the Honeymoon project.

Any idea how many people are employed at an in-situ leaching process mine?

How long do they run for?

With Oban, Honeymoon and East Kalkaroo all quite close to each other, would there be any possibility of a town evolving, or Cockburn developing? Or is it more likely to be fly in fly out, to work camps?

[Wayno]

Any idea how many people are employed at an in-situ leaching process mine?

How long do they run for?

i'd estimate 30-80 jobs for 7 years (based on Honeymoon & Beverley).

With Oban, Honeymoon and East Kalkaroo all quite close to each other, would there be any possibility of a town evolving, or Cockburn developing? Or is it more likely to be fly in fly out, to work camps?

FIFO would be my guess.

[Wayno]

This would be a bonanza!

Me thinks the world's largest mining companies have been colluding, err i mean working independently to set industry pricing benchmarks that equitably reflect production costs.

A doubling of iron ore price (from $60 to $120 per tonne) would increase exports from $34b to $68b, and also double royalty payments!

From The Australian:

CHINESE steel mills could be hit with a record jump in iron ore prices this year, as BHP Billiton chief executive Marius Kloppers continues to flag the rising spot price as the best indicator for where this year's talks are headed.

Mr Kloppers' comments on the ABC's Inside Business program yesterday came as reports out of China suggested that BHP had reached an interim price deal with some Chinese steel mills for a 40 per cent increase over 2009-10 iron ore benchmark prices.

The reports cited Hu Kai, a senior analyst with Chinese steel industry research house UC361, as saying that the deals were "short-term contracts" and did not represent a final agreement on the 2010-11 benchmark.

A BHP spokeswoman yesterday declined to comment on the market speculation, but the chief executive of the world's largest miner continued to talk up the expectation of a significant rise in prices this year.

"For iron ore, coking coal, the prices that we get today were settled at the depth of the economic crisis so I think there's probably a good chance that they will go up from where they are today," he said.

Mr Kloppers said the market price was what the benchmark price was supposed to reflect.

"So, I don't know what the price settlement will be when we get to that point. What I do know is that today's price is almost double last year's benchmark, which was set in the depth of the financial crisis," he said.

The benchmark price is about $US60 a tonne -- down from the 2008-09 record of $US90 a tonne -- while the spot price is currently sitting above $US125 a tonne.

A contract price of $US125 a tonne would more than double the value of Australia's iron ore exports, currently $34 billion a year.

Mr Kloppers' push to end the benchmark system received a boost last week from Brazilian rival Vale, the world's biggest iron ore miner, which joined calls for a shake-up of the system.

Vale iron ore boss Jose Carlos Martins said last week that customers who wanted the benchmark had to accept a price closer to the level of spot price.

He said the increase in the size of the spot market, which accounted for about 50 per cent of the seaborne iron ore trade, meant the spot price should be seen as the market price. With Vale ready to play hardball on price negotiations and BHP selling ore into a mix of short-term reference pricing contracts, the reports out of China of a 40 per cent increase seem doubtful. Experts expect a much bigger rise.

Macquarie analysts, led by Colin Hamilton, said Vale would play hardball in the 2010-11 negotiations and would accept nothing too far from the prevailing spot. "Given this situation, and the strong prevailing spot price, there is almost immediate upside potential to realised contract iron ore prices for 2010," he said.

Mr Hamilton added that Australian producers were "sitting pretty at the present time" because poor production and exports from Brazil had benefited local producers.

[monotonehell]

Ah all you jolly auslanders are such fun! Ve here at BHP Billiton like your kleine jokes.

[mattblack]

What is the price and royalties from uranium?

[Wayno]

What is the price and royalties from uranium?

i think the production gate spot price for uranium is approx $US50 per pound. Royalty rates range from 1.5% to 3.5% depending upon various factors.

I remember reading that ODX & Beverley mines exported a combined $900m worth of uranium in 2009 - which means royalty payments in the vicinity of $20-30m. That doesn't take into account the newly emerging mines (honeymoon, Oban, some others emerging too) nor the fact that ODX continues to ramp up it's rate of extraction.

I suspect SA will be receiving ~$50-80m per annum from Uranium within 2-3 years. These are my guestimates.

[Waewick]

my biggest problem with mining in this state is the finite life it has.

Sure the government in power today can get the royalties and spend it on, whatever they like but Ranns obsession with mining and defence handouts from the feds means we are not only losing sustainable industries but we aren't getting any new ones either.

With modern mining we not only miss out on the population boom traditionally seen with mining booms in the past but we miss out on the long term benefits these booms produce.

[skyliner]

my biggest problem with mining in this state is the finite life it has.

Sure the government in power today can get the royalties and spend it on, whatever they like but Ranns obsession with mining and defence handouts from the feds means we are not only losing sustainable industries but we aren't getting any new ones either.

With modern mining we not only miss out on the population boom traditionally seen with mining booms in the past but we miss out on the long term benefits these booms produce.

In answer to the bold section - so this is what happened in WA and QLD with their mines?

SA - STATE ON THE MOVE

[Aidan]

my biggest problem with mining in this state is the finite life it has.

Sure the government in power today can get the royalties and spend it on, whatever they like but Ranns obsession with mining and defence handouts from the feds means we are not only losing sustainable industries but we aren't getting any new ones either.

With modern mining we not only miss out on the population boom traditionally seen with mining booms in the past but we miss out on the long term benefits these booms produce.

WA still seem to be having a population boom. Does this mean their mining isn't modern

Just what sustainable industries do you imagine we're losing? The mining and defence industries bring money into SA, and that's more likely to attract other industries than repel them. It's not as if we're attracting them at the expense of everyone else (like Dean Brown did with the IT industry).

As for the finite life, it's likely to be a very long life for many mines - and in the future it's likely to be economic to mine some of the stuff that isn't economic to mine now.

[Waewick]

QLD population boom was helped by the mining boom but it didn't create it.

WA well maybe I could conceed the point, but I still believe that their proximity to the rest of the world and away from the eastern seaboard has once again done them a great service.

SA won't get the benefits that either of these two areas get due to their proximity to the eastern seaboard and well we aren't QLD.


You refer to Dean brown with the IT but I would suggest that Mr Rann has been more focused on the mining sector. Its not necessarily what we lose but what we don't gain that is the issue. I must admit my evidence is purely in discussion with people who are leaving Adelaide pr aren't setting up with Adelaide because economic conditions and government support is greater in the Eastern seaboard (these people aren't big named people btw but still people who could end up employing a few hundred people ) and they seem to suggest that many people are in the same boat, a cheap house isn't that big of a deal.

[Aidan]

QLD population boom was helped by the mining boom but it didn't create it.

WA well maybe I could conceed the point, but I still believe that their proximity to the rest of the world and away from the eastern seaboard has once again done them a great service.

SA won't get the benefits that either of these two areas get due to their proximity to the eastern seaboard and well we aren't QLD.

I really don't understand your reasoning. What possible advantage could there be to lack of proximity to the eastern seaboard?

You refer to Dean brown with the IT but I would suggest that Mr Rann has been more focused on the mining sector.

You misunderstand - the problem wasn't focus, the problem was supporting it at the expense of everyone else. 'Tis what the Americans refer to as corporate welfare - they paid corporations to locate their operations in SA, instead of trying to get conditions that were genuinely better for business. Admittedly it was targetted corporate welfare (trying to achieve economies of agglomeration) which is not as bad for the economy as random corporate welfare - but it was still a bad policy and ultimately a failure.

Its not necessarily what we lose but what we don't gain that is the issue. I must admit my evidence is purely in discussion with people who are leaving Adelaide pr aren't setting up with Adelaide because economic conditions and government support is greater in the Eastern seaboard (these people aren't big named people btw but still people who could end up employing a few hundred people ) and they seem to suggest that many people are in the same boat,

What kind of support are they getting from eastern states governments that they couldn't here?

a cheap house isn't that big of a deal.

Cheap housing is something that SA has historically relied on, as it meant that wages didn't have to be so high. More recently, availability of relatively cheap land is said to be a major factor in Melbourne's high growth rate, and I'm sure it's had a lot to do with the success of the Gold and Sunshine coasts. But economic success is something that drives up land prices, so its contribution to stimulating development is self limiting.