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A division of Midas Engineering Group

IRON ORE 2015

What is the Future for Magnetite Projects in Australia and Why Have Some

of the New Projects Been so Problematic?

ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE

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• 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.

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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

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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?

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Iron Ore Price

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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

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Open Pits

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Savage River

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Operations

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Product Prices

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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

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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

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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

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Project Magnet

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Project Magnet Flowsheet

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Operations

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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

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Citic Pacific-Sino Iron-Magnetite

Project

• 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

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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

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Sino Iron Project

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Large Scale – Sino Iron CITIC

Pacific Mining

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Process Flowsheet

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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

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Large Scale - Sino Iron CITIC

Pacific Mining

• Not just the largest but perhaps the

highest?!

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Predicted OPEX Magnetite

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Reverse Osmosis Supply & Water

Balance • Sea water feed-little choice

• Energy recovery by recuperators

• Producing 40 GLpa

• (GL=1X109 and ML=1X106)

Area of Use Annual

Activity Water Usage Rate

Water

Consumption (GLpa)

Mining Dust Supression 160Mtpa total movement in the mine

3% of material moved 4.8

Water in concentrate exiting the filter plant

24Mtpa produced 9% 2.2

Water in screened and filtered coarse tailings leaving the plant

56Mtpa 15% 8.4

Additional water for discharge of fine tailing

56Mtpa 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 1.28m3/MWh, mostly

evaporated in cooling tower 4.5

Camp 4000 people 0.4m3/day 0.6

Total 40.0

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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

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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

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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

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Gindalbie Magnetite

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Gindalbie Magnetite (cont.)

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Gindalbie Metals Flowsheet

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Gindalbie Metals Flowsheet (cont.)

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Cost Differential

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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

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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

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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

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What did you get out of this presentation?

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Acknowledgement

• Thanks to AusIMM for the opportunity to present

• Thanks to various companies, colleagues, engineers

• METS staff and consultants

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References

• Grange Resources, 2007. Southdown Magnetite Proposal. Albany Iron

Ore Project Public Environmental Review.

• Gindalbie Metals Ltd, Karara Mining Ltd, Anshan Iron and Steel

Corporation, 2008. Karara Iron Ore Project Public Environmental

Review. Gindalbie Metals Ltd. www.gindalbie.com.au

• Arrium Mining & Materials. www.arrium.com

• Citic Pacific Mining. www.citicpacificmining.com

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