Noordin Mengal speaks about Balochistan in an interview with the Canadian magazine, International...
-
Upload
tarek-fatah -
Category
Documents
-
view
674 -
download
5
description
Transcript of Noordin Mengal speaks about Balochistan in an interview with the Canadian magazine, International...
112 ASIA Seeds of distrust
)RFXVRQ$IULFD$VLD
JULY 2012 Volume 4 Issue 7 www.irjonline.com
THE INTERNATIONAL
ResouRce JouRnalIN THIS ISSUE ɼ ExclusivE intErviEw
with MaplEcroft’s JaMEs sMithEr
wEst africa Mining
Mongolia and KazaKhstan
113JULY 2012 The International Resource Journal
Seeds of distrust
asia
112Noordin Mengal is an activist in pursuit of independence for Balochistan, a mineral rich province in southwestern Pakistan bordering Iran and Afghanistan.
the acRiMonious Relationship between leadership in Balochistan and
Pakistan’s ruling establishment in Punjab province and government centre,
Islamabad, goes back for generations. Mengal claims that members of his
family, many who occupied various senior roles in the Balochistan govern-
ment since the province was absorbed into Pakistan in 1948, have faced
harassment, imprisonment and duplicity.
Moreover, the human rights situation in Balochistan is becoming in-
creasingly violent as abuses intensify. Academics, politicians and other civil
society leaders have been found murdered with evidence of torture after
being detained by Pakistan’s military.
Amnesty International has urged the Pakistan government to investi-
gate these crimes against Baloch civilians, particularly as the human rights
violations take place against a backdrop of political unrest and Pakistan
army operations in the province.
114 ASIA Seeds of distrust
The situation has also prompted a US Repub-
lican-led House Committee earlier this year to
DIÀUP%DORFKLVWDQ·VKLVWRULFULJKWWRVHOIGHWHUPL-
nation amid vehement opposition from Pakistan.
Why is everybody so interested in this underde-
veloped region, one of the poorest in South Asia?
Mengal explains it is because of the re-
gion’s natural resources and strategic geo-
political location.
IRJ talks to Mengal to gain greater insight
into the underlying mechanisms that feed dis-
trust between a region, its government and
neighbours, and how those mechanisms under-
pin opposition to natural resource development.
iRJ: Can you tell me a bit more about your role
in bringing attention to the challenges facing
Balochistan?
nooRdin MenGal: My role has been primarily
to create awareness about the worsening hu-
man rights situation in Balochistan, not just the
human rights violations being carried out by
Pakistan’s military but also the sinister role it is
playing in causing terrorism by promoting and
abetting radical elements in the region as the
military’s own strategic assets, to ultimately reap
the rewards of the unrest. Pakistan is currently
FRQGXFWLQJLWVÀIWKPLOLWDU\RSHUDWLRQDJDLQVWWKH
Baloch since 1948. We have highlighted these is-
sues at the UN Human Rights Council, in Geneva,
the European Parliament, British Parliament, at
universities, whatever forum is available to us.
iRJ: The Pakistan government has said that the
US House Committee’s encouragement of an
independent Balochistan is meddling into affairs
that the US does not understand, how do you
respond to that?
MenGal: If anyone has meddled into anyone’s
affairs or violated any country’s sovereignty, it is
Pakistan itself. We were an independent state
that was forcibly occupied on March 27, 1948.
Before then, the proposal that Balochistan join
Pakistan on the basis of Islam was rejected in
both upper and lower houses and nine months
after we gained our independent status, we were
forcibly occupied by the Punjabis and incorporat-
ed into what is today known as Pakistan. Now we
DUHLQDVWDWHRIFRQÁLFWDQGÀJKWIRURXUVXUYLYDO
and independence. Pakistan, and Punjab in par-
ticular, have no right to deal with anybody with re-
gards to our natural resources or decide our fate.
Human rights are not an internal matter. Ironi-
cally, when the Shah of Iran, who also oppressed
115JULY 2012 The International Resource Journal
the Baloch in Iranian-occupied Balochistan,
SURYLGHGÀQDQFLDODQGPLOLWDU\DVVLVWDQFHLQFOXG-
ing direct air support to Pakistan in the military
operation against the Balochs in 1970s, no
Pakistani saw it as foreign interference, but when
someone speaks out for the rights of the down-
trodden Baloch, Pakistan calls it interference in
its internal affairs.
iRJ: The most recent Constitutional amend-
ments in Pakistan have given the authority
over natural resource development to the pro-
vincial governments, does this not give Balo-
chistan enough control over which companies
it does business with?
MenGal: The Baloch remain disempowered and
dispossessed. If we look at the human rights
situation, there is an oppressive military opera-
tion ongoing and the powerless chief minister of
Balochistan says he does not have the mandate to
change this and says that the Frontier Corps has
established a parallel government. Recently when
a senior provincial minister, Sadiq Umrani, held the
FC responsible for disappearances and extrajudi-
cial killings, his younger brother was abducted to
silence him. If the provincial government cannot
safeguard itself, what do they have authority over?
All state institutions, including the parlia-
ment, judiciary and presidency, are subservient
to the military. The incumbent so-called demo-
cratically elected civilian government is an epito-
me of politically impotent administrations that is
at the mercy of the Pakistani army. The military
holds the levers of power and are the declared
rulers of Pakistan since the country’s unfortu-
nate creation.
Pakistan has occupied our land and has
been systematically carrying out the social, politi-
cal, cultural, physical and economic genocide
of the Baloch nation. Companies need to know
that any deal they make on Balochistan’s natural
resources with this government is not meant to
last. Every successive government reverses the
decisions of its predecessor, it’s a failed state
and many factors indicate that it clearly has no
future. The basic problem is that the future of the
Baloch people is not secure within Pakistan. No
matter how good a deal might sound, we simply
won’t buy it anymore. We have constantly been
deceived by the Pakistanis since the past 64
years. We just want them to leave us alone.
Companies that cut a deal with the central
government over Balochistan’s resources need
to realise that there are no guarantees to them
for as long as there is no peace and stability. Any
116 ASIA Seeds of distrust
attempt to indulge will be seen with strong nega-
tivity by the population. They will also be seen as
exploiters adding to our miseries. Such compa-
nies may get the deal on the condition that they
remain silent on the oppressive policies of the
state against the Baloch, as have the Chinese.
Why do you think Pakistan is more pleased
with China’s political establishment? Why is it
happier to let MCC [China Metallurgical Group Cor-
poration] work on the projects? If you look at Reko
Diq, Pakistan wouldn’t be in favour of the western-
based Tethyan Copper [Antofagasta and Barrick
Gold joint venture], they would be more comfort-
able with the Chinese because they are content
with Pakistan carrying out atrocities against the
Baloch as they themselves are the immoral mas-
ters of plundering and have no problem with others
adopting the same illegal methods. There is an old
relationship there, Pakistan has been the concu-
bine of China, that is how I would put it.
iRJ: Companies that develop natural resources
often bring much-needed development such as
schools, hospitals and infrastructure, would Balo-
FKLVWDQQRWEHQHÀWIURPVXFKGHYHORSPHQW"
MenGal: We have heard the word “development”
most of our lives. There is a difference between
development and exploitation. When Pakistan
says it wants to bring development, what they
really mean is they want to exploit. A prime exam-
SOHLV6XLJDVÀHOGWKHELJJHVWLQ3DNLVWDQRSHU-
ated by a state-run company. Gas was discovered
in 1952 and today there are only a couple of dis-
PHOTO COURTESY OF BALOCHVOICE.COM
117JULY 2012 The International Resource Journal
tricts in Balochistan that have access to gas. The
capital [of Balochistan], Quetta, received gas in
1986, 34 years after it was discovered, and that
too only after a military garrison was stationed
WKHUHZKHUHDV3XQMDEKDVEHHQWKHPDLQEHQHÀ-
ciary with all its major cities receiving household
and commercial gasiby 1964.
It is the Punjabi military that has been given
the most priority, Balochistan consumes 12 per
cent of its own production though it is the largest
province accounting for 47 percent of Pakistan’s
total land mass What did the Baloch people
gain from the gas? What have the people of the
district that pumps gas to the whole of Pakistan
gained? They still burn wood. All the dividends
from the sale of Baloch gas are usurped by Pun-
jab. There is no shining precedent of the Baloch
EHQHÀWWLQJIURPWKHLURZQUHVRXUFHV
The military has already been working directly
on the Chamalang coals mines, said to be one of
WKHODUJHVWFRDOÀHOGVLQ$VLDDQGKDYHEHHQWU\LQJWR
get a hold of Reko-Diq by backing D. Samar Mubara-
kmand. In 2009, when the provincial secretary for
mines and minerals opposed granting an exploration
lease for the Chamalang mines to military, he was
critically injured in an assassination attempt soon
DIWHUEHLQJWKUHDWHQHGE\DPLOLWDU\RIÀFHU
Instead of schools, hospitals and basic in-
frastructure, the state’s version of development
is constructing massive military garrisons, para-
military bases, naval bases, air bases, several
hundred checkposts, illegal detention and inter-
rogation facilities and nuclear testing sites in
Balochistan with US and European taxpayers’
money and revenue generated from our land.
Their other sham developments have been to
construct roads for billions to inaccessible areas
and penetrate into our system to facilitate the mo-
bilisation and stationing of troops in order to forcibly
tap oil and gas and establish garrisons to further
subjugate the Baloch and promote fundamental-
ists and the construction of madrassahs, to counter
the secular Baloch movement and build a breeding
ground and safe haven for radical mullahs.
Another crime they committed in the name of
development was the nuclear tests conducted on
our land on 28 May 1998, which has caused count-
less diseases among the inhabitants of Chaghai
due to the radiation. When my uncle’s government,
which wasn’t even consulted, protested against the
tests on Baloch soil, his government was systemati-
cally toppled on June 15 1998.
The time for reconciliation is over, now our
demands are for nothing short of independence.
We have absolutely no future in Pakistan.
118 ASIA Seeds of distrust
iRJ: Some would point to a lack of skilled labour
among the Baloch population to work on these
projects as part of the problem, for example, the
deep sea port in Gwadar on the Arabian Sea, a
highly strategic asset and one that could boost
the economy of the region considerably. What
do you say to companies that require skills and
expertise to handle mega-projects like this?
MenGal: I would say hold your horses, the Baloch
require more than skills and technical expertise,
they need empowerment and the freedom to
decide their fate. Just like other projects, outsid-
ers have come, the staff and labour is from other
parts of Pakistan, locals are not allowed access to
schools and hospitals, which are reserved just for
employees, and no efforts have been made to set
up training facilities, polytechnic institutes or vo-
cational centres so that locals attain the required
skills. Gwadar port was a project pushed for many
years by the Baloch but the project was taken
over by the Pakistan establishment and then they
painted an absurd picture that Baloch nationalists
oppose development. It is the Pakistani establish-
ment that is not only a threat to the Baloch national
identity but also an impediment to peace, stability,
security and “genuine” development in the region.
If the French had better skills for deep sea
drilling, would that give them an unquestionable
right to explore North Sea oil or the Hibernia oil
ÀHOGVZLWKRXWWKHFRQVHQWRILWVULJKWIXORZQHUV"
The Baloch fear that the port will cause a
ELJLQÁX[RIRSSXUWXQLVW3XQMDELVDQG0XKDMLUV
encouraged by the government to migrate to
Balochistan for employment and will be used to
create a demographic imbalance and convert
the Baloch into a minority in their own homeland,
given the Baloch’s small population – less than
10 million compared to Punjab’s 91 million.
China’s political establishment has collabo-
rated with Pakistan’s government in the con-
VWUXFWLRQRIWKHSRUWWKH\KDYHÀQDQFHGLW7KH\
too have contributed to our plight and alienation.
We would have welcomed the building of a port
but China did not take the Baloch national in-
terest into consideration, they did not take the
%DORFKLQFRQÀGHQFHEHIRUHWKHVHSURMHFWVZHUH
announced and dealt with Punjab and its civil-
military establishment directly.
Before Gwadar port’s construction, those
people who had land [in the area] had their
DQFHVWUDOODQGVFRQÀVFDWHGRUZHUHERXJKWRII
cheaply by force. However, most of the land was
allotted to military generals who subsequently
sold them in the open market, to fellow Punjabis
and Muhajirs and earned billions.
119JULY 2012 The International Resource Journal
7KHSURMHFWDOVRUHTXLUHGDELJLQÁX[RI
people and we opposed it because we knew
WKDWWKRVHZKRZRXOGEHQHÀWZRXOGEHRXWVLG-
ers and they would be given the right to vote
and elect non-Balochs had we allowed Paki-
stan to operate freely in Gwadar.
iRJ: What message do you want to send compa-
nies that are thinking of setting up shop?
MenGal: It is not the time. They need to under-
stand our concern and insecurity. At this point,
they will be fuelling human rights violations
against the Baloch and would be similar to the
case of blood diamonds. They would strengthen
the hands of the oppressor and would also be
indirectly funding radical elements patronized by
the Pakistani ISI[Inter-services intelligence agen-
cy] who are a menace for regional and global
peace and security. They should not try to ben-
HÀWRQWKHSOLJKWDQGPLVHULHVRIWKH%DORFKDQG
must not collaborate with oppressive and corrupt
regimes in carrying out crimes against humanity.
Multinational companies should not see our pre-
dicament as an opportunity to make a buck. They
can wait and we expect them to act more respon-
sibly. We will be willing to talk to them when the
situation is conducive for business.
As long as it is occupied territory and as long as
we don’t have our rights and are facing the situa-
tion that we are, we would oppose not just multina-
tionals but also anyone else in Pakistan coming in
to extract our natural resources. Pakistan is steal-
ing revenue from our own soil that is then being
used to fund actions against us. Baloch national
assets, including Gwadar, Sui, Reko-diq and Cha-
malang coal, have all been to exploit and expropri-
ate the Baloch of their wealth and advance Paki-
stan’s sinister agendas against the Baloch nation.
The Baloch are struggling for the protection of their
national identity, for their survival. That is what is
at stake for us. For as long as Balochistan remains
occupied and Punjab’s hegemony continues, the
Baloch will be in the grip of the Stone Age.
The issue of natural resources is one the
Baloch are deeply sensitive about. It must be
noted that it was this bone of contention that
WULJJHUHGWKHRQJRLQJEORRG\FRQÁLFW$Q\DWWHPSW
WRÀVKLQWURXEOHGZDWHUVZLOORQO\H[DFHUEDWHWKH
situation. No one wants that.
Now, there is the Iran-Pakistan pipeline being
constructed without the Baloch nation’s consent.
The Baloch will not sit as silent spectators as
they are trampled upon and there will undoubt-
edly be strong political resistance to allow it
through our homeland.
120 SECTION Seeds of distrust
1666 Mir Ahmed Khan of Kambarani tribe
start Ahmedzai dynasty
1749-1794 Reign of Nasir Khan and region
named Balochistan
1839 British incursion
1854 Nasir Khan’s successors defeated
by British and treaty formed with
Khan of Kalat to defend territories
from Central Asian or Iranian
invasions
1860s -70s Growing British interest to pre-
empt potential advance of Russia. A
period known as the “Great Game”.
1905 Demarcation of boundary between
British India-Iran and British India-
Afghanistan effectively divides
Balochistan among three states –
British India, Iran and Afghanistan
1934 Armed struggle for liberation and
unification of Balochistan begins
under Magsi, head of Baloch
national movement
1947 Pakistan becomes heir to British
rule, Kalat state [Princely state
of Balochistan] proclaims
independence. Pakistan
recognises Kalat’s sovereignty and
congratulates Baloch.
1948 In opposition to decision of Balochi
legislature, Pakistan forces Kalat
to be ruled by an agent of the
Pakistani state. Troops enter the
capital and forcibly incorporate
Balochistan into Pakistan. Balochi
nationalist defence continues under
Abdul Karim Khan until 1950. He
spends 16 of his remaining 22 years
in Pakistani prisons on charges of
sedition
1952 Pakistan’s first oil field discovered
near Sui
Balochistan Union States
established
1955 Princely states in Balochistan
(Kalat, Kharan, Las Bela, Makran)
abolished
1958 Second uprising and retaliatory
military operation
1962 Third uprising and military
operation, which ended when
a BRieF histoRy
121JULY 2012 The International Resource Journal
Pakistan’s army took an oath on the
Quran not to harm rebels and their
90-year old leader while promising
amnesty and to accept demands.
Imprisonments and executions
followed.
1970 Within Pakistan, Balochistan
province established
1971 East Pakistan breaks away,
Bangladesh created
1972 First elections won by Nationalist
Party led by Sardar Attaulah
Mengal, first chief minister of
Balochistan
1973 – 1977 Large scale Baloch rebellion led by
Marri and Mengal tribes suppressed
by Pakistani forces with the help of
the Shah of Iran
1978 General Zia ul Haq comes into
power through coup, withdraws
troops from Balochistan and
releases Baloch leaders of
Nationalist Party from prison.
Baloch leaders Marri and Mengal
go into self-imposed exile.
1993 - 1997 BHP negotiates Chaghai Hills
Exploration Joint Venture Agreement
(CHEJVA) with Balochistan province
and discovers significant copper-
gold deposits near Reko Diq
1995 National Mineral Policy
Saindak copper-gold project trial
production begins with operations
handed over to Pakistani state-
backed company Saindak Metals.
Bureaucratic squabbling delays the
project.
1998 Nuclear tests were carried out
despite protests of ruling nationalist
party in bal headed by Akhtar
Mengal leading to the dissolution
of the legislature in 18 days
1999 General Pervez Musharraf takes
power in bloodless coup
2000 Tethyan Copper Co. established after
project taken over from BHP and
China approached by Musharraf to
fund Gwadar deep water port
Septuagenarian Baloch leader Nawab
Marri imprisoned, but released a year
and a half later
122 ASIA Seeds of distrust
2002 -Implementation of National Mineral
Policy and formulation of Balochistan
Mineral Rules
-China Metallurgical Group
Corporation (MCC) gets 10-year
lease. 50 per cent of proceeds
retained by MCC, 48 per cent by
Pakistan’s government and 2 per
cent by Balochistan’s government
2004 Car bomb kills three Chinese
engineers on their way to Gwadar.
2005 Gwadar port completed on
schedule
2006 -Antofagasta and Barrick Gold form
a joint venture acquiring 100 per
cent of Tethyan Copper Co.
-Chamalang coal mine agreement
signed by Pro-government/
establishment Baloch Senator Mir
Mohabbat Khan Marri, elders of
Luni Pakhtun tribe and Government
of Balochistan
-Thousands of Baloch flee villages
attacked by Pakistani fighter jets
and helicopter gun-ships. Large-
scale, government-organised
kidnappings and disappearances
followed.
-Pakistani army kills Baloch leader
Nawab Akbar Khan Bugti, Balochistan
National Party resigns from
parliament in protest BNP president
-Akhtar Mengal imprisoned in
Karachi, released in 2008 soon after
Pakistan Peoples Party comes into
power and drops charges
2007 PSA International of Singapore gets
40-year contract to run Gwadar port
2010 -18th amendment to the constitution
signed into law by President Asif
Ali Zardari grants greater provincial
rights of exploration and production
of natural resources, including oil,
gas, metals and minerals
123JULY 2012 The International Resource Journal
-Baloch nationalist leader and
head of the Marri tribe Nawab
Khair Baksh Marri resists sharing
coal reserves in tribal domain with
rival Pakhtun tribe and provincial
government. Claims that Khan Marri
was not empowered to sign the
accord as a competent authority.
2011 -MCC gets lease extension for
Saindak for another five years
from 2012. The lease was granted
one year ahead of schedule and
renegotiated terms would see
MCC receive 45 per cent of mine
proceeds, bumping Balochistan’s
stake up 5 per cent.
-Tethyan files arbitration
proceedings with the International
Chamber of Commerce (ICC)
in London after the Balochistan
government rejected its mining-
lease application
2012 -US Congressman Dana
Rohrabacher, who chairs the
US House of Foreign Affairs
Subcommittee on Oversight and
Investigations, calls upon Pakistan
to recognise the Baloch right to self
determination
-Pakistani media reports that
Balochistan chief minister Aslam
Raisani stated the provincial
government itself would run the
Reko Diq copper-gold project in
Chaghai and had allocated Rs7
billion ($73.6 million) as well as
announced infrastructure reforms
for Gwadar port access
124 ASIA Pawn or potential queen?
125JULY 2012 The International Resource Journal
aFGhanistan: Pawn or potential queen?
asia
124
It took decades for an agreement to get reached on the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline but commitment to bring the project to life in the spirit of what is written on paper is going to be a tougher test yet. Regional actors such as China, Iran, Russian and Pakistan may not see TAPI !tting their strategy in the region and therefore may work to engineer its collapse against a backdrop of geostrategic competition, writes Javed Noorani.
126 ASIA Pawn or potential queen?
the tapi Gas pipeline is an ambitious project
which is set to connect the religiously and ethni-
cally diverse geographies of South Asia with Cen-
tral Asia, propelling them into gas-fuelled econo-
mies. At one end of the pipeline is Turkmenistan,
a former Cold War era Soviet bloc still heavily
LQÁXHQFHGE\5XVVLDDQGDWWKHRWKHUHQGRIWKH
project is emerging regional power, India, an at-
tractive market for gas.
Pakistan is undergoing economic expansion
and to continue this trajectory, it requires suf-
ÀFLHQWDQGVXVWDLQHGHQHUJ\+RZHYHUFRQFHUQV
have been raised due to availability amid rising
global demand for energy.
Robert Looney in his essay for the Woodrow
Wilson International Centre for Scholars says that
Pakistan’s rather static oil, hydroelectric power
and gas reserves have raised serious concerns
as to the sustainability of the current economic
expansion, as well as future economic growth.
The gap between Pakistan’s energy use and the
country’s ability to produce energy has widened
in an alarming way in recent years.
Games and playersThe politick around the region’s gas reserves in
general and the TAPI pipeline in particular have
both local and global actors gate-crashing to shop
for the commodity and vie for associated projects.
6HFXULW\HQHUJ\VHHPVWRFRQVWDQWO\ÀQGD
prominent place within the NATO strategic dis-
course. As NATO continues its transition from a
Cold War military alliance, energy security is play-
ing an increasingly important role. NATO states,
being the most developed countries with strong
industrial bases, would continue to have the larg-
est demand for oil and gas to sustain their eco-
nomic engines. Saudi, a traditional oil supplier
to NATO countries, still has 20 trillion barrel of oil.
NATO states, which consume 43 per cent
of total oil and 42 per cent of gas production,
will undoubtedly continue to receive oil from the
Middle East but a sense of energy security also
dictates its shopping excursion into the huge
JAVED NOORANI
127JULY 2012 The International Resource Journal
Caspian gas reserves to keep alternative energy
sources. However, the Caspian region is still seen
DVD5XVVLDQVSKHUHRILQÁXHQFH
The four Caucasus and Central Asian states,
namely Azerbaijan, Kazakhstan, Turkmenistan
and Uzbekistan, produced 4.7 trillion cubic feet
of gas, representing four per cent of the world’s
total production in 2010. The Russian federation
possesses 24 per cent of the gas reserves and
largely dominates the gas market in the Caspian
region to maintain its hegemony and thus use it
as a diplomatic tool.
Despite over-committing itself to various gas
exports - such as a deal to supply 30 billion cubic
feet of gas to China, some to Iran and export to
Kazakhstan though Russia - Turkmenistan has
committed itself to pipeline some gas to Euro-
pean Union too. Not surprisingly, the US and
European Union support Turkmenistan’s policy of
multiple export routes.
China, India, Pakistan and Iran are locked
into energy competition due to their industrial
needs. China and India have growing economies
which make energy an important element of their
strategic imaginations. Pakistan’s energy needs
are increasing by 10-12 per cent annually.
The country’s reserves appear to run
the gamut of mineral types. The north
has proven fields of coal, oil, gas, gold,
copper, precious and semi-precious gems;
the border with Pakistan in the east is
likewise dotted with troves of emerald,
ruby, aquamarine, kunzite, quartz, marble
and lithium. The central provinces
enjoy iron, chromites and lithium (the
latter a mineral with a significant new
potential market, due to its use in high-
end batteries); while the southwest has
potentially significant oil, gas, gold,
uranium and onyx deposits. The southern
part of the country, meanwhile, is said to
have copper and gold veins that run for
dozens of kilometres, estimated to be
worth some USD 200-400 billion at today’s
market prices. There are also gold- and
nickel-bearing areas sprinkled across the
hinterland.
Source: Integrity Watch Afghanistan
Integrity Watch Afghanistan (IWA) was
created in October 2005 and established
itself as an independent civil society
organisation in 2006 with the aim of
evolving into a reference actor committed
to understanding, analysing and
acting in the interests of transparency,
DFFRXQWDELOLW\DQGDQWLFRUUXSWLRQ
128 ASIA Pawn or potential queen?
Isolated Iran is the third largest importer
of gas despite and has the second largest gas
reserves. Now, cash-strapped, it urgently needs
DQLQÁRZRIPRQH\WRFRQWLQXHZLWKLWVQXFOHDU
programme as the country’s political establish-
ment seeks regional power status. As a result,
the country’s leadership has desperately been
trying to showcase Iran, Pakistan and India (IPI
) gas pipeline as a more economical and viable
alternative to TAPI. Iran has already completed
over 80 per cent of the work on the IPI pipeline
running through its territory and has even offered
WRÀQDQFHWKH3DNLVWDQLVLGHRIWKHSLSHOLQH
,V,UDQLDQLQYHVWPHQWDQGFRQÀGHQFHLQ
the (IPI) pipeline underpinned by Russian and
Companies developing
Afghanistan’s resources:
China’s MCC at Aynak copper mine
Kilo Goldmines and Indian-led
steel company consortium at
Hajigak iron ore deposit
China National Petroleum at Amu
Darya oil and gas basin
Western-backed consortium led by
Kulczyk Investments and facilitated
by JP Morgan developing gold
project in Baghlan province
Chinese assurance to the country? It is hard to
imagine that it would otherwise invest so much
money in a pipeline that still does not have a con-
ÀUPHGGHVWLQDWLRQ+RZHYHUDQREVWDFOHH[LVWV
if India, the other buyer Iran is trying to attract,
opts out of the project under heavy US pressure
underpinned by the Indo-US nuclear deal.
This leaves China, which has already made
ELJIRRWSULQWVLQ,UDQLDQRLODQGJDVÀHOGVLQWKH
shadow of the US-led Western isolation of Iran.
Dr. Christian Lin, visiting scholar at SAIS Cen-
tre For Transatlantic Relations, The John Hopkins
University, writing about China’s silk road strate-
gy in Afghanistan-Pakistan, states that China has
invested over US$25 billion in the last decades
LQYDULRXV,UDQLDQRLODQGJDVÀHOGGHYHORSPHQW
projects such as onshore Azadagan and Yada-
varn and offshore South Pars, with the clear
intention of increasing its oil and gas supply with
OLTXHÀHGQDWXUDOJDV/1*LQLWLDOO\DQGHYHQWXDOO\
piped gas imports from Iran. So, if Pakistan agrees
to the Iran-Pakistan gas pipeline project, then it ef-
IHFWLYHO\ÀQGVDEX\HULQHQHUJ\KXQJU\&KLQD
Check and blockTAPI is promoted by the US to stop IPI and potentially
IPC [Iran Pakistan China pipeline] if China is looped
in as an end consumer for Iranian gas. This, along
with other economic sanctions, may synergise to
129JULY 2012 The International Resource Journal
throttle the Iranian nuclear program and engineer
the collapse of the Iranian regime internally. And
WKHUHLVWKHDGGHGEHQHÀWRIGLPLQLVKLQJD5XVVLDQ
monopoly over Caspian gas while ensuring sustained
energy for US investment in India - considered a
strategic partner in a new world order.
7KHVHJHRSROLWLFDOUHDOLWLHVDUHUHÁHFWHGLQ
the polarisation of the international structure
itself. Recent US and Pakistani disputes over
NATO attacks on Pakistani army posts at the
border of Afghanistan often lead to suspension
of transit facilities to NATO trucks transporting
goods through Pakistan for international military
forces. There have been consistent voices in the
US Congress against partnership with Pakistan in
LWVÀJKWDJDLQVWWKH´:DURQ7HUURUµ3DNLVWDQKDV
desperately been trying to cling to China and is
ready to twist itself to keep its friendship intact to
survive and sustain.
It is possible that Pakistan’s heightened
needs for energy security and its isolation by the
US will push the country closer to IP gas pipeline
which may eventually become Iran-Pakistan-China
(IPC) pipeline. Iran joining Pakistan and China will
effectively lead China to navigate around India
and thus, not only complete the triangle but allow
Iran to emerge as an actor with greater strength to
threaten the world with a blockade in the Strait of
Hormuz. It is a powerful bargaining chip.
China’s energy needs are driven by its rapid
ReGional status
Pakistan has been eyeball to eyeball with
India over territorial disputes for six
decades, prompting an arms race which
takes important resources away from the
countries impoverished citizens even as it
stays armed to the teeth.
Meanwhile, Afghanistan is in the firm grip
of political instability and insecurity but
will be a key facilitator for the pipeline
through 730km of its territory.
The regional aspiration of India and its
energy needs magnify the importance
of sustained supply of gas for its large
industrial consumptions.
Turkmenistan has 21.2 trillion cubic feet of
recoverable gas and India offers the Turkmen
gas a sustainable market and an opportunity
to loosen Russia’s monopoly grip.
130 ASIA Pawn or potential queen?
economic growth. “The principle concern over en-
ergy security in China is the perception that the
Chinese economy is highly dependent on a stable
supply of energy and cannot tolerate the slightest
interruption or shortfall,” writes Zha Daojiong, an
associate professor of international relations and
chair of the Department of International Political
Economy at Renmin University of China.
1RZDIWHUWKHJOREDOÀQDQFLDOFULVLVDQG
LQDQHQYLURQPHQWRIÀHUFHFRPSHWLWLRQIRUWKH
world’s natural resources, this situation is inten-
sifying. China has put its stamp in Sudan against
the wishes of Western countries and it has so far
turned a deaf ear to international concerns over
Iran’s nuclear programme.
86JRYHUQPHQWRIÀFLDOVKDYHYRLFHGFRQFHUQV
about China’s indifference and stated that China has
appeared even more reluctant than Russia to take
action against Iran on its shrouded nuclear program.
86RIÀFLDOVVDLGWKH\DUHSDUWLFXODUO\FRQFHUQHG
that China has blocked their efforts to target freight-
forwarding companies based in Hong Kong that
reship goods, including prohibited weaponry, to Iran,
according to media reports. As such, US efforts to
promote TAPI based on its geo-strategies will be met
with suspicion by global superpower China.
TAPI checkmate?The odds in the current scenario are against the
development of TAPI. Afghanistan is not secure
which could be used as an argument by some
of the countries participating in the project to
withdraw altogether. The Iranian political estab-
lishment may magnify insecurity in Afghanistan
to expedite this withdrawal of participating coun-
tries in TAPI and open itself to sell its own gas or
be a transit country.
There is suspicion of Iranian agents active
in the areas of Afghanistan demarcated for TAPI
natuRal Gas pRoVed ReseRVes (2009)
Quatar13%
Central Asia7%
Saudi Arabia 4%
US 4%
United Arab Emirates 3%
Venezuela 3%
Nigeria 3%
131JULY 2012 The International Resource Journal
pipelines. Sources in Afghanistan’s south have
on numerous occasions reported that senior
members of Sepah Passdaran (The Iranian Revo-
lutionary Guards) have visited some provinces
along planned pipeline routes. There has been
evidence of Iranian weapons seized by interna-
tional militaries based in Afghanistan, though it
VKRXOGEHQRWHGWKDWZHDSRQVIURP1$72DIÀOLDW-
ed countries are ubiquitous.
China, in its aggressive campaign to reach
Africa, Asia and Latin America, may not like its main
FKDOOHQJHUWKH86WRLQÁXHQFHLWVQHLJKERXUVDF-
cording to US self-interest. China may play to stop
India its rival from accessing gas through TAPI. It
will be able to buy extra gas from Turkmenistan to
address its energy insecurity cost-effectively and
supply some of it to its xingjaing province, with
some rebellious Muslim population thus stabilising
the region through industrialisation and connect-
ing it to the Silk Road. To this end, Kashgar, part
of xingjaing, is one of those areas where a Special
Economic Zone is being established.
Pakistan, in the light of its long term interest
and fear of dependence on Afghanistan, may opt
for the Iranian pipeline to have access to reliable
gas supply and earn some money in transit.
Besides this, the Iran-Pakistan gas pipeline
will give the two countries cover to suppress the
people of Balochistan, who have roots in and
disputes with both countries. TAPI will collapse in
such a situation where all the major regional ac-
tors excluding India team up together against it.
Such an event will rob Afghanistan of the chance
for the project to contribute to the country’s sta-
bility through investment.
At stakeAfghan hydrocarbon experts from the 1980s
pointed out that Afghanistan’s northern geology
natuRal Gas pRoVed ReseRVes (2009)
Russian Federation24%
Iran16%
Nigeria 3% Source: BP Statistical Review of World Energy 2010
132 ASIA Pawn or potential queen?
EHDUVVLPLODUFRQVWUXFWVDVWKHJDVULFKÀHOGVLQ
Turkmenistan. There is every likelihood that Af-
ghanistan’s gas reserves will compare and even
rival Turkmenistan’s resources.
The United States Geological Survey (USGS)
carried out two surveys to identify the mineral
resources of Afghanistan with the second
identifying 12 potential sites. The Afghan-
Tajik basin was subjected to intense seismic
surveys using latest technologies to peep into
underground formations. Reliable sources
following the survey, shared on condition of
anonymity, say that the early sign from the
seismic survey show presence of huge gas
deposits in Afghanistan. Another source said
that Afghanistan could have better reserves than
inteRnational eneRGy outlook 2011
China and India together will consume 31
per cent of the world’s energy in 2035, up
from 21 per cent in 2008.
By 2035, China’s projected energy
consumption is 68 per cent higher than US
energy consumption.
Global energy consumption grows 53 per
cent between 2008 and 2035, representing
an average annual growth rate of 1.6 per
cent
Sidebox:
A Soviet survey of gas in Afghanistan
compiled the following deposits of gas in
the country. However it needs to be borne
in mind that the figures show only the
minimum reserve potential.
The proven gas deposits in Afghanistan
S.No
1
2
3
4
5
6
Kind of Energy
Gas
Gas
Gas
Gas
Gas
Gas
Region
Aqcha
Umalik (Char Bolak )
Elikrabt (Aqcha)
Shakhi Bel and Shamala Andkhoy
Ashraf and Darwaz Qader
Shakhmala
Quality Billion Cubic Feet
300
500
500
500
1000
500
Engineer Sadiq Niazi)
133JULY 2012 The International Resource Journal
300
500
500
500
1000
500
Turkmenistan. No doubt, the discovery of the
gas in Afghan-Tajik Basin will rekindle hopes of
stability and security once again. Some sources,
on condition of anonymity, said that the USGS
had estimated gas reserves in Afghanistan’s
north to be 25 trillion cubic feet. Moreover, the
country may be home to reserves in Katawaz
basin in the southeast.
With these kinds of deposits, Afghanistan
can turn into a regional gas-bazaar and qualify to
join the elite gas suppliers club. Chevron’s inter-
est in the Afghan-Tajik basin and China’s Nation-
al Petroleum Company’s eye-catching contractual
terms in favour of the Afghanistan government
for the Amu Darya oil deposits in the north of the
country are clear signals that there is more to
ÀQG7KHVHFRPSDQLHVDUHWRRELJWRFRPHDQG
invest in a mere 87 million barrels of oil. Some
sources say Tajikistan has already been using
diplomatic channels to bid for Afghan gas.
Failure of TAPI will amount to US failure in
Afghanistan. One of the reasons for the US to
put boots on the ground was to ensure the TAPI
pipeline was made possible; US-based Unocal
was competing with Bridas, a Brazil-based oil
FRPSDQ\WREXLOGWKHSLSHOLQH8QRFDOWHVWLÀHG
to Congress and said that such a pipeline was
not possible unless an internationally recognised
government was put in place in Kabul, as stated
by Canadian energy economist John Foster
writing in the Energy Security Journal.
Pawn’s promotion?Pinning so much hope in TAPI without under-
standing the regional giants which will at all costs
seek to secure their interest is a giant misstep
and a potential tragedy for Afghanistan. Though
7$3,LVEHQHÀFLDOIRUWKHIRXUSDUWLFLSDWLQJFRXQ-
tries at the moment, the shifting geopolitics may
take regional actors away from the project.
A more prudent path for Afghanistan would be
to explore its own gas to supply to its households
and industries and encourage indigenous invest-
ment. Gas can also be used for electricity genera-
tion and presents tremendous export potential.
7KHUHLVQRWKLQJPRUHVWUDWHJLFDOO\EHQHÀFLDOIRU
Afghanistan than building its own mines and under-
standing its neighbours’ strategies, which is critical
to avoid being trapped into their game plans.
-DYHG1RRUDQLLVDUHVHDUFKHUZLWK,QWHJULW\
:DWFK$IJKDQLVWDQ+LVFXUUHQWDUHDRIIRFXVLVRQ
WKHH[WUDFWLYH,QGXVWU\LQ$IJKDQLVWDQ1RRUDQLKDV
0$LQ&RQÁLFW$QDO\VLVDQG3HDFHEXLOGLQJIURP
1HOVRQ0DQGHOD&HQWUHIRU3HDFHDQG&RQÁLFW
5HVROXWLRQ-0,1HZ'HOKL+LVUHVHDUFKLQWHUHVW
DOVRH[WHQGVLQWRVRFLDODQGVHFXULW\LVVXHVDVZHOO
7KHYLHZVH[SUHVVHGDUHKLVRZQ
With construction activity gearing up for full swing, Metals Exploration’s next step is to announce project !nancing to get its Runruno gold mine in the north Philippines into production
Full steaM aheadMetals Exploration
134
With construction activity gearing up for full swing, Metals Exploration’s next step is to announce project !nancing to get its Runruno gold mine in the north Philippines into production
Full steaM aheadMetals Exploration
asia
136 ASIA Metals Exploration
137JULY 2012 The International Resource Journal
Metals exploRation is going full steam ahead
into the construction phase of development,
KRZHYHUWKHRIÀFLDOJUHHQEXWWRQLVQ·WJHWWLQJ
pushed until a full funding package is in place,
which Ian Holzberger, chairman and project direc-
tor at Metals Exploration, expects to announce in
the coming weeks.
“As soon as the drawdown is available on
WKDWGHEWÀQDQFLQJZHZRXOGEHORRNLQJWRJHW
into full construction and the trigger on that is
really the construction of the processing plant,
which is ready to go and we have already started
construction for the plant pad,” Holzberger says.
Feasibility and optimisation studies show an
average annual production of 96,700 ounces
(oz) of gold over an initial mine life of 10.3 years
at an average operating cost of $477/oz while
the internal rate of return is expected to be 42
per cent at a $1,500/oz gold price.
The area is also home to some 25 million
pounds (Mlb) of molybdenum, which Holzberger
explains could be a future credit story though the
company’s key focus is getting gold into produc-
WLRQDQWLFLSDWHGIRUWKHÀUVWTXDUWHURI
“Because we are using biological leaching the
process becomes hydrometallurgical…lab work
suggests it will work for us to recover that moly, but
because it is a novel process, we don’t want to com-
promise the main game, which is gold,” he says.
Biox, the biological leaching process tech-
nology that Metals Exploration will be using
at its plant, is the intellectual property of a
subsidiary of South African miner Gold Fields
and is one of the many partners the company
is working with as it upgrades basic infrastruc-
tures in its operating region.
Improvement partners2QHRIWKHVSLQRIIEHQHÀWVWRRSHUDWLRQVLVLP-
provement in the local area, adds Holzberger.
“While there are roads and power already
available, it needs to be upgraded and part of our
development plan is leveraging off that to improve
it. This will cut our costs but also it will improve local
conditions so it is a double win for us,” he says.
Although Leighton is the primary contractor on
site tasked with building the processing plant, most
additional contractors are from the Philippines.
“"is project is on the cusp of being developed, there have been very few new programmes that have actually been !nanced so we are a stand out and we are going to kick that goal” – Ian Holzberger
138 ASIA Metals Exploration
www.gxdsupply.comGEOLOGICAL, EXPLORATION & DRILLING SUPPLIESAFP-RSBS Industrial Park, KM-12, East Service Road cor C-5, Taguig City, 1630 PhilippinesPh : 63 2 866 1033 | Fax : 63 2 866 1036
GXD was established in the Philippines to provide services to the Construction, Geological, Exploration and Mining industries. Since the conception of the company we have emphasized delivering quality and reliable services and materials to the industry. All the products and services that we provide have been the best available in the market and supplied directly to our clients from the manufacturer with the necessary backup the industry demands.
GEOLOGICAL, EXPLORATION AND DRILLING SUPPLIES
METALS ExPLORATION BAGGED THREE OF THE MOST COVETED AWARDS IN THE MINING INDUSTRY INCLUDING 2011 PRESIDENTIAL MINERAL INDUSTRY ENVIRONMENTAL AWARD
139JULY 2012 The International Resource Journal
“This project is on the cusp of being devel-
oped, there have been very few new programmes
WKDWKDYHDFWXDOO\EHHQÀQDQFHGVRZHDUHD
stand out and we are going to kick that goal,”
Holzberger says.
Broker’s viewAt its most recent AGM, the company lost one
of its non-executive directors, Jonathan Beard-
sworth, who did not stand for re-election. Though
this was unexpected, observers note that it may
not be too surprising since Beardsworth had a
IXOOWLPHSRVLWLRQZLWK&XWÀHOG)UHHPDQ&RDV
their managing director in Asia.
John Meyer, analyst at Fairfax noted that
Beardsworth’s commitments left little time for
other roles.
“The current challenge for Metals Exploration
LVWRJHWRYHUWKHSURMHFWÀQDQFHKXUGOHµ0H\HU
VD\V´:HORRNIRUZDUGWRQHZVRQWKHÀQDOLVDWLRQ
RIWKH5XQUXQRJROGPLQHÀQDQFLQJLQWKHQHDU
future and expect the team to be in the UK in the
next few weeks to report on the mine develop-
ment and exploration progress.”
Meyer adds that further exploration in the
area shows additional bulk mining opportunities
with good grades and near surface tonnage.
www.MetalsexploRation.coM
“We like to work with indigenous contrac-
tors that have the capacity and skill, so the
benefits are captured into the local and ex-
tended area rather than using offshore con-
tractors,” Holzberger adds.
Over and above that, Metals Exploration uses
several consulting groups as well such as Austra-
lian-based GHD Consulting.
Though it is likely that there will be further
permitting which will be required, major permits
and licences have been approved, which has
become one of the main concerns for operations
that are only beginning in the Philippines as the
JRYHUQPHQWGHEDWHVDQHZÀVFDOUHJLPH
METALS ExPLORATION BAGGED THREE OF THE MOST COVETED AWARDS IN THE MINING INDUSTRY INCLUDING 2011 PRESIDENTIAL MINERAL INDUSTRY ENVIRONMENTAL AWARD
news in ReViewclontaRF in talks on peRu oil and Gas
opeRations
iRJ - June 13 - UK-based oil and gas explorer Clon-
tarf is in talks with a number of joint venture and
strategic partners over its 100 per cent owned
exploration blocks in Peru.
One of the blocks in question - Block 188 - lies
DURXQGNPIURPWKHJLDQW&DPLVHDJDVÀHOG
which has a resource of 16 trillion cubic feet and
880 million barrels of oil (mmbbl).
Block 188 includes the Panguana well which
was drilled to a depth of 2,750m striking oil with
37api by Phillips Petroleum in 1999. The company
believed that Panguana’s Green Sandstone struc-
ture held 31mmbbl of oil.
Once a partner is secured, Clontarf plans to
re-enter the structure with an appraisal well to
FRQÀUPWKHUHVHUYHVWHVWRWKHUWDUJHWVDQGPRYH
to early development.
“Block 188 now looks much nearer to de-
velopment than we previously thought. Investor
attention had been on Ghana, where [Clontarf] is
DZDLWLQJUDWLÀFDWLRQRQLWVOLFHQFHEXWWKHNH\IR-
cus is now on Peru. The securing of a JV or strate-
gic partner on either Block 188 or 183 could lead
141AUGUST 2011 The African Business Journal
iew Emerging and frontier jurisdictions
WRDVLJQLÀFDQWERXQFHLQWKHVKDUHSULFHIURPLWV
current depressed lows. The market cap remains
at just £7m, which seems too low for an oil and
gas company that could be close to advancing a
sizeable asset,” said Jason Robertson, analyst at
Optiva Securities.
pRiVate equity Bets on oil exploRation
technoloGy
iRJ – June 12 –3ULYDWHHTXLW\ÀUP$SD[3DUWQHUV
and technology investment company JMI Equity
have agreed to buy software group Paradigm for
around $1 billion.
Paradigm, whose analytical technology is tar-
geted at oil and gas explorers and producers, was
last bought by US investment group Fox Paine for
around $100 million in 2002.
´3DUDGLJP«LVZHOOSODFHGWREHQHÀWIURP
strong tailwinds in the coming years as energy
companies look to drill in more challenging loca-
tions,” said Apax senior partner Ian Jones.
Apax was advised by Bank of America Merrill
Lynch and Simmons & Co; Paradigm was advised
E\-HIIHULHVDQGGHEWÀQDQFLQJLVEHLQJSURYLGHG
by UBS and Royal Bank of Canada.
142 SECTION Title
news in ReView
By the middle of 2013, the miner aims to
triple its current Pilbara production capacity of 55
million tonnes.
Bp consideRs oFFeR FoR Russian JV stake
iRJ - June 1 - BP will be pursuing a potential sale of
its shareholding in TNK-BP after receiving unso-
licited indications of interest. The company added
that there is no guarantee a transaction will take
place.
The Financial Times said a sale could fetch up
to $30 billion and cited an unnamed source who
said the offer had come “from one of the Russian
state companies”, but would not specify whether it
was Rosneft or Gazprom.
The equal joint venture with Russian oli-
garch consortium Alfa Access Renova, led by
0LNKDLO)ULGPDQKDVDKLVWRU\RIFRQÁLFWSXQF-
tuated by Fridman’s recent resignation as chief
executive of TNK-BP.
TNK-BP was formed in 2003 as the result of
the merger of the oil and gas assets of the two
partners. It is vertically integrated with a diversi-
ÀHGXSVWUHDPDQGGRZQVWUHDPSRUWIROLRLQ5XV-
143AUGUST 2011 The African Business Journal
news in ReView Emerging and frontier jurisdictions
sia and Ukraine and international interests in
Brazil, Venezuela and Vietnam.
kuwait to inVest $500M in uk noRth sea oil Field
iRJ - May 30 - Enquest will farm out a 35 per
FHQWLQWHUHVWLQLWV$OPDDQG*DOLDRLOÀHOGGHYHO-
opments to Kuwait Foreign Petroleum Explora-
tion Company (KUFPEC) for a total investment of
$500 million in cash.
7KH$OPDÀHOGSUHYLRXVO\NQRZQDVWKH$UJ\OO
ÀHOGZDVWKHÀUVWRLOÀHOGWREHGHYHORSHGLQWKH
UK North Sea. Alma was previously abandoned
because of high water content of output. First
production is anticipated in the fourth quarter of
2013, with peak gross production of over 20,000
ERHSGDQGWKHÀHOGLVHVWLPDWHGWRFRQWDLQ
million barrels of oil.
According to the Financial Times, Amjad
Bseisu, chief executive of EnQuest, said the talks
began last year with partners over investing in the
$1bn project but were held up until tax breaks
FRXOGEHFRQÀUPHGIURPWKH8.JRYHUQPHQW
Commenting on the deal, chief secretary
to the Treasury, Danny Alexander, said: “This is
good news for North East Scotland and the whole
of the UK…Today’s deal between EnQuest and
KUFPEC, bringing up to £300m of foreign invest-
ment into the North Sea, proves that the UK
continental shelf remains an attractive prospect.
The Government will continue working with the
industry in the North Sea to get the most of what
is a huge national asset.”
anGloGold takes Full owneRship oF BRazilian
Mine FoR $220M
iRJ - May 29 - AngloGold Ashanti is set to acquire
the remaining 50 per cent stake in Mineracao
Serra Grande in Brazil from Kinross for $220 mil-
lion. The transaction will be funded from existing
cash reserves and debt facilities.
To date, the Serra Grande mine has pro-
duced 3.4 million ounces (Moz) of gold. Last
year, the mine produced 134,000 ounces of gold
at a cash cost of $767 per ounce. Over the past
four years, more than 1Moz of mineral resources
have been added.
´7KLVGHDOIXUWKHUVLPSOLÀHVRXUSRUWIROLRDQG
gives us greater exposure to Brazil, where we’ve
KDGVLJQLÀFDQWVXFFHVVLQJURZLQJRXUSURGXFWLRQ
as well as our reserve and resource base,” Mark
144 SECTION Title
news in ReViewCutifani, AngloGold Ashanti’s chief executive, said.
“We see long-term, lower risk, potential from Serra
Grande, which is a key component of our strategy
to grow the contribution from the Americas.”
The operation comprises three under-
ground mines and one open pit mine as well
as a processing plant.
codelco chieF ResiGnation May sMooth
anGlo dispute
iRJ - May 25 - The resignation of Diego Hernández,
chief executive of Codelco, could be positive for
negotiations over the ownership of the Anglo Sur
copper division in Chile. Hernández cited “person-
al reasons” for his departure and there were ru-
mours that he had not been aligned with the rest
of the company’s board. Finance director Thomas
Keller will take on the chief executive role.
The move comes as Codelco and Anglo Ameri-
can agreed to restart talks over the ownership of
assets in Chile, including Anglo’s Los Bronces mine.
“Codelco’s previous stance taken very publi-
cally by their CEO was not particularly helpful
given the scale of investment being made by An-
glo into Los Bronces. Codelco need to grow their
copper production but so do Anglo and there
should be some middle ground in discussions,”
said John Meyer, analyst at Fairfax.
Los Bronces capex is $2.8 billion with pro-
duction expected to be at 278,000 tonnes of
copper per year and full production anticipated
in the third quarter this year. Codelco had tried
to exercise an option to purchase 49 per cent
of the Anglo Sur division, which includes the
Los Bronces mine, but the move was blocked by
Anglo American in an increasingly bitter dispute
between the two mining giants.
145AUGUST 2011 The African Business Journal
iew Emerging and frontier jurisdictions
oRe expoRt appRoVals MoVinG in indonesia
iRJ - May 23 -,QGRQHVLDKDVVHHQWKHÀUVWPLQHU-
al export approvals start with reports suggesting
WKDWRYHUFRPSDQLHVKDYHJDLQHGWKHÀUVW
of three approvals needed to export ore, reports
Standard Bank.
On May 6, Indonesia banned exports of 14 raw
minerals with an exception for miners that plan to
build local processing facilities. However, a tax rate
of 20 per cent will be applied to ore shipments.
“It will be interesting to see how long it takes
before exports resume properly. For the moment
however, some of the concerns regarding avail-
ability of raw materials from Indonesia appear to
have subsided for the moment,” said Leon West-
gate, analyst at Standard Bank in a note.
The announcement in May sent Japan and
China scrambling to secure alternative supplies of
raw materials, particularly bauxite and nickel ore.
Indonesia is also the world’s top exporter of tin.
GlencoRe take MaJoRity contRol oF dRc
coppeR Mine
iRJ – May 22 - Commodities trader Glencore said
today that it has taken majority control of its
Mutanda copper mine in Democratic Republic of
Congo by paying $340 million to acquire a fur-
ther 24.49 per cent in Samref Overseas, a hold-
ing company above Mutanda, and another 1 per
cent in Samref Congo, a second holding com-
pany, taking its whole equity interest in Mutanda
Mining to 60 per cent.
´7KHDFTXLVLWLRQUHSUHVHQWVDVLJQLÀFDQWÀUVW
step towards achieving Glencore’s previously an-
nounced intention to merge the Mutanda and Kan-
suki mining operations,” Glencore told Reuters.
Mutanda and Kansuki combined will produce
160,000 tonnes per year of copper cathodes and
146 SECTION Title
news in ReViewWRQQHVRIFREDOWLQK\GUR[LGHE\WKHÀUVW
half of 2013. Glencore’s plans have led it to also
acquire around $140 million of shareholder debts
as part of the deal.
The announcement comes in the midst of the
much anticipated $90 billion “GlenStrata merger
of equals”.
According to the Financial Times commodities
note, long only funds have been spotted buy-
LQJ*OHQFRUHZKLFKZLOOKDYHDIUHHÁRDWRI
per cent on May 24 when some 36 per cent of
shares come off lock-up. The implication is that
index linked tracker funds will be buying the Swiss
trader as it gains a greater weighting in the FTSE,
putting the company in a good position to see the
merger voted through.
idc Backs diaMondcoRp’s lace Mine with $33.6M
loan
iRJ - May 21 - DiamondCorp has signed a term
sheet with South African state-backed Industrial
Development Corporation (IDC) for a $33.6 mil-
lion loan to develop the Lace Mine in Free State
province.
7KHFRPSDQ\DQWLFLSDWHVWKDWWKHORDQÀQDQF-
ing agreement, which is for seven years at a bor-
rowing cost of 11 per cent, will be in place by the
end of July 2012.
“The mine plan shows a deeper level of min-
ing and longer development time – this is posi-
tively offset by block cave economics with longer
block cave life and higher grades providing for
EHWWHUSURMHFWFDVKÁRZVµVDLGEURNHU)DLUID[
adding that the technical mining and processing
plant have been subject to in-depth review by SRK
Consulting.
Maiden run of mine production is expected at
around 8 thousand carats (kcts) supplemented by
tailings reprocessing that is expected to produce
around 15kcts in 2012 and 30kcts in 2013. Lace
will reach full production by mid-2014 producing
300kcts from both tailing and run of mine produc-
tion, according to Northland Capital Partners.
DiamondCorp owns 74 per cent of the Lace
diamond mine with the remaining 26 per cent
held by the company’s Black Economic Empower-
ment (BEE) partners.
DiamondCorp CEO, Paul Loudon said: “The
key driver for management in seeking funding for
WKH/DFHPLQHGHYHORSPHQWKDVEHHQWRÀQGWKH
147AUGUST 2011 The African Business Journal
iew Emerging and frontier jurisdictions
RSWLPXPÀQDQFLQJPHWKRGZKLFKLVWKHOHDVWGLOX-
tive for shareholders of the company. Therefore,
we are delighted that we and our [BEE] partners
KDYHEHHQDEOHWRDJUHHLQSULQFLSOHDGHEWÀQDQF-
ing proposal from the IDC to provide over 98 per
cent of the estimated capital required to establish
a block cave development on the 47 level at the
/DFHPLQH7KLVLVDVLJQLÀFDQWPLOHVWRQHLQ'LD-
mondCorp’s transition from developer to producer
and we welcome the support of the IDC in funding
this potentially long-life diamond mine in the Free
State Province.”
nsl BecoMes FiRst FoReiGn iRon oRe pRoduceR
in india
iRJ – May 18 – Perth-based commodity company
16/&RQVROLGDWHGKDVVROGLWVÀUVWLURQRUHLQWR
the Indian domestic market, marking its transi-
tion into a producer.
It is now the only foreign company to own and
operate iron ore mines in India.
NSL managing director Cedric Goode said
EHFRPLQJWKHÀUVWIRUHLJQLURQRUHSURGXFHULQ
,QGLDZDVD´VLJQLÀFDQWPLOHVWRQHµIRUZKLFKWKH
company has had to overcome many challenges.
“Our journey is only just commencing as we
progress through completing phases 1 and 2, to
utilising our experience and actual performance to
lift NSL to its desired 1.5 million tonne per annum
(Mt/y) target by the end of 2014,” he continued.
“This target being possible through bolt-on
wet and dry separation plants to increase output,
together with sourcing additional ore feed through
strategic acquisitions and supply agreements.”
The company is currently constructing and
commissioning the Phase 1 Kurnool iron ore dry
separation plant, which will be capable of pro-
ducing up to 58 per cent Fe grade ore.
148 SECTION Title
news in ReViewNSL expects to begin gradually ramping up
production and sales tonnages towards Phase
1’s target production capacity of 200,000 tonnes
per annum (t/y) in the third quarter.
The dry separation circuit is expected to un-
GHUJRÀQDOFRPPLVVLRQLQJEHIRUH-XQH
Phase 2 of the project will comprise the
FRQVWUXFWLRQRIDZHWEHQHÀFLDWLRQSODQWFDSDEOH
RISURGXFLQJÀQDOSURGXFWJUDGHVRIEHWZHHQ
and 62 per cent Fe.
This plant is intended to double capacity to
400,000t/y and is scheduled for completion in
WKHÀUVWKDOIRI
“With the increase in funds being allocated
to infrastructure projects, Indian domestic steel
production is expected to increase from 77Mt to
200Mt by 2020,” Goode added.
“The company looks forward to making its
contribution as part of this growth.”
FiFth consecutiVe tanzania Gas discoVeRy
iRJ – May 17 - %**URXSKDVDQQRXQFHGLWVÀIWK
consecutive Tanzania gas discovery with the
Mzia-1 exploration well located in Block 1, off-
VKRUHVRXWKHUQ7DQ]DQLD0]LDLV%*·VÀUVWGLV-
covery within the deeper cretaceous section and
opens an extensive new play fairway within the
Group’s offshore acreage in Blocks 1, 3 and 4, to
complement the now proven Tertiary fairway.
Preliminary evaluation of the results indi-
cates 55m of natural gas pay in good quality
sands. An extensive logging programme has
been completed, including the acquisition of
pressure data and gas samples.
149AUGUST 2011 The African Business Journal
iew Emerging and frontier jurisdictions
6LJQLÀFDQWO\WKHZHOOKDVGHULVNHGDQXPEHU
of adjacent cretaceous prospects, which could
form part of a future Mzia hub. These prospects
are expected to be tested in a future appraisal
SURJUDPPHWREHGHÀQHGIROORZLQJLQFRUSRUDWLRQ
of data from this new well and 3D seismic.
The new resources proven by Mzia and the
potential of adjacent prospects are currently un-
der evaluation. Prior to drilling Mzia-1, BG had es-
timated mean total gross recoverable resources
approaching seven trillion cubic feet of gas from
the four previous discoveries drilled in Tanzania.
Mzia-1 is approximately 45km offshore south-
ern Tanzania in a water depth of 1,639m. It is some
23km from the Jodari-1 discovery and is part of the
2012 three-to-four well exploration programme.
Following the imminent completion of opera-
tions at Mzia, the Deepsea Metro-1 will relocate
to Block 3 for the drilling of the next exploration
prospect, Papa-1.
BG Group as operator has a 60 per cent
interest in Blocks 1, 3 and 4 offshore Tanzania,
with Ophir Energy holding 40 per cent.
150 LATIN AMERICA What went wrong with YPF
A risk management perspective of Argentina’s nationalisation of resources
Repsol’s forced divestment of its YPF subsidiary by the Argentine government is a perfect example of the kinds of factors which lead to forced nationalisation, writes Jorge Vrljicak, Buenos Aires-based analyst for Westside Consultants.
ypF’s FoRced nationalisation is a backlash against
its 1992 privatisation because the market reform
IDLOHGWRSURYLGHH[SHFWHGEHQHÀWVIRU$UJHQWLQD
In essence the end result is not very differ-
ent from BP’s Gulf oil spill case - the corporation
has only itself to blame for the outcome. Many
analysts tend to consider Argentina’s action as
arbitrary and a product of ‘resource nationalism’,
comparing it to Venezuela or Russia. However,
those same analysts forget Norway’s nationalisa-
tion of oil in 1972, among other cases.
That is not to say that a nationalistic compo-
nent is not a factor but Argentina’s history is well
known. YPF and the oil issue were at the centre
of 70 years of political storms in the country even
prior to the start of the 1990 privatisation pro-
FHVVLQFOXGLQJWKHFRXSG·pWDW
Meanwhile, there are still simmering tensions
over the image of “Spanish Conquistadors”, who
would grab and remit to Madrid anything they can lay
their hands on. This particular factor led to the un-
fortunate 2008 nationalisation of Argentina’s airline,
what went wRonG with ypF150
151JULY 2012 The International Resource Journal
Aerolineas Argentinas, owned by Spanish Marsans
Group, which was also privatised in the ‘90s.
Government faultNo doubt it was the government which made the
ÀUVWPLVWDNHV)RURQHLWGLGQ·WHVWDEOLVKFOHDU
obligations and goals for bidders outside of pay-
ing royalties. In addition, the government allowed
leveraged buy-outs, which led to asset stripping
DQGLQVXIÀFLHQWLQYHVWPHQW$QG5HSVROZDVDF-
cepted as a bidder though it had no prior experi-
ence in upstream operations.
5HSVROZDVDUHÀQHUDQGPXFKVPDOOHUWKDQ
YPF throwing into question the legitimacy of the bid-
ding process itself, with some factions pointing out
WKDWLWZDVQRWVXIÀFLHQWO\WUDQVSDUHQW7KHUHZDVD
ODVWLQJLPSUHVVLRQWKDWLQÁXHQWLDOSHRSOHJRWXQGH-
servedly rich in a short period of time.
It is true that the government didn’t have, nor
does it now have, an energy master plan. How-
ever, for anyone concerned, the thorns in the paw
of the lion are obvious - namely energy self-suf-
ÀFLHQF\MREFUHDWLRQSRVLWLYHWUDGHEDODQFHDQG
JRYHUQPHQWÀQDQFHV,QRWKHUZRUGVFXVWRPHU
and government satisfaction.
All this was irresponsible for Repsol to ignore
and disregard. There was never a satisfactory
OHYHORIFDSLWDOLQYHVWPHQWQHLWKHUÀQDQFLDOQRU
political. It was all a game of leverage as Spain
HQMR\HGKLJKÀQDQFLDOOLTXLGLW\DQGORZLQWHUHVW
UDWHV7KDWLVXQWLOWKHÀQDQFLDOFULVLV
6RZKHQWKHÀJXUHVZHUHUHOHDVHGDQG
what went wRonG with ypF
latin aMeRica
152 LATIN AMERICA What went wrong with YPF
showed YPF’s production declining 60 per cent,
petroleum and gas reserves down to one third
of peak levels, imports up by 100 per cent from
WKHSUHYLRXV\HDUZKLOHSURÀWVZHUHSHUFHQW
down from their peak - nobody was very happy.
But the real damage came when it became
widely known that Repsol intended to repatriate
WKHGLYLGHQGVDQGZDVWU\LQJWRÀQGDEX\HUIRU
its stake. Until that moment, Repsol had time
and dialogue with the government.
In short, Repsol didn’t serve its customers
properly. Which is why when Argentine president
Cristina Fernandez declared the government’s
intention to renationalise, no one shed a tear for
the Spanish parent. If anything, there was some
concern that the cure was no better than the
illness and may negatively impact foreign direct
investment into the country. Though this seems
unlikely as oil majors compete to pick up YPF
operations and the Argentine government sends
clear signals that it is willing to talk.
Expectations managementWas it possible for Repsol to better manage and
hedge its risks? Yes.
The company had plenty of chances and no re-
strictions making its mistakes conspicuously worse.
There was little evidence that Repsol cared
about upstream discovery and development –
ZKHWKHUWKDWZDVEHFDXVHLWZDVXQDEOHRUXQÀW
But the real shame was that the one thing that
the company should have had expertise in, the
downstream sector, was left neglected.
Storage capacity, for example, was not prop-
erly attended to which left supply vulnerable to
WKHVKRFNVRIVHDVRQDOFRQVXPSWLRQÁXFWXD-
tions. Gas-oil during planting and harvest sea-
sons became scarce causing inconveniences
to farmers. Tourist seasons and long weekends
proved to be a challenge for car travellers in
search of petrol. The manufacturing industry
consistently complained about the petroleum
and gas industry due to its continued fuel short-
ages. Moreover, households have priority for fuel
delivery during shortages, making matters worse
for manufacturers.
Storage facilities should have included tank
IDUPVIRUFUXGHDQGUHÀQHGSURGXFWVDVZHOODV
tank capacity at service stations. Doubling ca-
pacity at those points to account for two weeks
of consumption would have mitigated the risks of
frequent strike action by truckers.
Marketing innovation was non-existent other
than for petrol itself. Repsol was reluctant to create
or participate in a possible futures market, a move
that would have been welcomed by consumers and
153JULY 2012 The International Resource Journal
reduced YPF’s exposure to commodity price risk.
On top of that, human resources were not
valued nor were employees promoted properly.
Segregation of YPF staff from Repsol was pain-
fully obvious, even as the parent needed the best
of local ingenuity to run its operations. That local
LQJHQXLW\ZDVDIWHUDOODVLJQLÀFDQWIDFWRUZKLFK
helped Repsol’s endeavour in Alaska, among
RWKHUEHQHÀWV
The company’s interaction with local com-
munities, including provincial governments and
municipalities, was also defective. One wonders
what sort of rationale was behind expensive
company initiatives such as promoting football
clubs when investment was better spent in com-
munities to boost jobs and fund schools and
hospitals.
Ripple e!ect? Lack of allocated capital and sloppy manage-
ment for the biggest Argentine oil and gas com-
pany was bound to lead to problems. Risk man-
agement presupposes essentially two things:
that there should be enough capital to foot the
bill for a viable functional project and that an-
other tranche of equity should be available for
possible volatility.
,QWKLVFDVHWKHSURMHFWGLGQRWSDVVWKHÀUVW
condition. It was absolutely dysfunctional.
A parallel can be drawn to a similar case of
water distribution and sewage services run by
Aguas Argentinas - a consortium led by Suez,
Aguas de Barcelona, Vivendi and AWG Group
- which lost its contracts for mismanagement
under similar circumstances.
Still, it remains to be seen whether this
nationalisation leads to a decrease in foreign
LQYHVWPHQWVLQFHLWLVGLIÀFXOWWRLPDJLQHWKDW
SURÀWDEOHFRPSDQLHVOLNH7HOHIyQLFDGH(VSDxD
which provide satisfactory services, could ever be
put in such odious position.
westsideconsultants.coM
$IWHU\HDUVLQEDQNLQJ-RUJH9UOMLFDNVSHFLDOLVHGLQ
TXDQWLWDWLYHÀQDQFLDOUHVHDUFKWKHGHYHORSPHQWRI
DQDO\WLFDOVRIWZDUHOHDGLQJFRQVXOWLQJWHDPVDQG
UXQQLQJRQOLQHÀQDQFLDOLQIRUPDWLRQVHUYLFHVWKH
ODWWHUDW5HXWHUVIRU\HDUV+LVH[SHULHQFHRI
\HDUVLQFOXGHVFUHGLWFRPPRGLWLHVHTXLW\À[HG
LQFRPHPRQH\DQGIRUHLJQH[FKDQJHPDUNHWVLQ-
FOXGLQJFHQWUDOHFRQRPLHVDQGHPHUJLQJPDUNHWV
154 LATIN AMERICA Leni Gas and Oil
Leni Gas and Oil is setting o# from Spain for greener pastures in Trinidad
the tRinidad option
154
155JULY 2012 The International Resource Journal
Leni Gas and Oil is setting o# from Spain for greener pastures in Trinidad
the tRinidad option
latin aMeRica
WORKOVER AT AYOLUENGO
156 LATIN AMERICA Leni Gas and Oil
GOUDRON WELL IN TRINIDAD
157JULY 2012 The International Resource Journal
london-headquaRteRed leni Gas and Oil (LGO)
LGHQWLÀHVSRWHQWLDOLQH[LVWLQJUHVHUYHVDQGGH-
velops those reserves with new technologies and
investment. Its strategic assets are the Ayoluen-
JRRLOÀHOGLQ6SDLQWKHRQO\SURGXFLQJRLOÀHOGLQ
the country, and it has interests in the Caribbean
island nation of Trinidad.
But the company’s asset base is about to
change, explains Neil Ritson, chief executive at
LGO, as it divests the Spanish assets to further
FDSLWDOLVHDQGGHYHORSLWV7ULQLGDGLDQRLOÀHOGV
Switching playsFirst developed by Chevron in the 1960s, the
$\ROXHQJRRLOÀHOGZDVJLYHQDZRUNRYHUDIWHULW
was acquired by LGO, a move that doubled pro-
duction which peaking at over 300 barrels of oil
SHUGD\ERSGODVW\HDU7KHÀHOGLVHVWLPDWHGWR
have over 100 million barrels (mmbbls) original
oil in place. Unfortunately, the economics showed
that between 300 to 400 per cent increase was
necessary to create the necessary internal cash
ÁRZWRJURZZLWKRXWIXUWKHUH[WHUQDOLQYHVWPHQW
The operational cost structure, explains Rit-
son, is not particularly favourable.
“Equipment needs to be imported across
Europe, there is no indigenous service sector,
while labour, equipment and transportation costs
are on the high end compared to the US or other
international areas and on top of that, there is
no obvious follow-on business,” says Ritson.
6WLOOLWLVDSURÀWDEOHHQWHUSULVHHYLGHQFHG
by interest from multiple bidders when the asset
went on sale. Ritson downplays the impact of
the eurozone crisis in the company’s divestment
decision, saying that he has not seen interest
for European primary production assets wane;
though raising capital to develop them will likely
FRQWLQXHEHLQJGLIÀFXOW
Out of the submitted proposals, one bid-
der was given exclusivity until the end of May to
PDNHDÀUPEX\LQJDUUDQJHPHQW5LWVRQLVWLJKW
lipped about any further details as discussions
are ongoing, but he does add that should talks
stall, other bidders are waiting on the sidelines.
“We should conclude something in the third
quarter, but if the current market does not sup-
port the kind of price we want then we will keep
WKHDVVHWLWLVQRZSURÀWDEOHDQGPDNHVPRQH\
for us every month,” Ritson says.
Trinidad opportunitySo why sell now? In the continuing turbulence of
capital markets – particularly for small caps with
high capital expenditure projects – LGO wants to
take advantage of what the company’s manage-
ment believes is an early mover advantage for the
redevelopment of the onshore Trinidad oil play.
158 LATIN AMERICA Leni Gas and Oil
In November, the £10 million market cap
producer raised £1.5 million for working capi-
tal purposes, which adds to a £5 million line of
equity to draw down from as well as a revenue
base from an annual 65 thousand barrels of oil
(mbbls) across its operations. The company’s
aim at this point, explains Ritson, is to stay out
of the capital markets altogether and this will
mean using its asset base in order to pursue
growth opportunities.
In 2008, LGO acquired a 50 per cent in-
WHUHVWLQWKHSURGXFLQJ,FDFRVRLOÀHOGLQVRXWK
western Trinidad operated by local oil and gas
company, Primera. Current daily production for
ICACOS FIELD WELL
159JULY 2012 The International Resource Journal
WKHÀHOGLVERSGIURPRQO\WKUHHRIZHOOV
This led to further acquisitions in undeveloped
areas of the Cedros Peninsula close to the
nearby East Venezuelan Basin.
But the big step for LGO in Trinidad has been
EX\LQJWKHULJKWVWRWKH*RXGURQÀHOGZKLFKZDV
developed by Texaco in the 1950s through until
1986 when the lease expired. Texaco left in part
because its focus moved away from Trinidad, but
also because of technical challenges from uncon-
solidated reservoirs and wells that tended to sand
XS+RZHYHUZKDWZDVWHFKQLFDOO\GLIÀFXOW\HDUV
ago is not quite so complicated today and there are
widely available products and techniques to deal
with such challenges, explains Ritson.
At Goudron, LGO has started moving rigs to
EHJLQDFWLYHZRUNRYHUVRIWKHÀHOGZKLFKLVSUR-
ducing at about 50 bopd, through Ritson points
out that there are perhaps 100 useable wells in
total and oil quality is high.
“You could put the product straight into your
GLHVHOWUXFN\RXZRXOGQRWQHHGWRUHÀQHLW\RX
FRXOGUXQWKHÀHOGRQFUXGHUDWKHUWKDQLPSRUWLQJ
diesel because of how remote the region is… the
oil is a low sulphur, high API crude, of very good
quality,” Ritson says.
Baropex is an independent advisory firm with a great track record in helping oil and gas companies, private investors and financial institutions making the right decision on investment in and evaluation of petroleum assets.
We work hard to ensure that our clients get the best out of their investment by using our worldwide experience, knowledge of several languages and cultures and an integrated approach in reservoir management and asset evaluation.
10 Fenchurch AvenueLondon EC3M 5BNUnited Kingdom
Tel: + 44 (0) 208 613 1051Email: [email protected]
Contact us:
160 LATIN AMERICA Leni Gas and Oil
Industrial baseMeanwhile, Trinidad is home to the largest oil
UHÀQHU\LQWKH&DULEEHDQDQGDUREXVWVHUYLFHVLQ-
dustry to support operations, both as a convenient
supplier, but also buyer of product.
´7ULQLGDG·VUHÀQHU\H[SRUWVSURFHVVHGUH-
ÀQHGSURGXFWVDQGLWLVGHÀFLHQWLQFUXGHVXS-
ply at the moment and that is something the
government is keen to address, it is looking to
attract inward investment from companies such
as ourselves to raise production levels. They
are currently importing crude in order to meet
GHPDQGIRUUHÀQHGSURGXFWVWKRXJKLWFRXOGEH
produced indigenously,” he says.
non-coRe opeRations
Area 4, Southern Offshore Malta (10 per cent
interest, a legacy asset)
High potential exploration play in highly
prospective oil and gas basin in proximity to
Tunisian and Libyan active petroleum basins.
Major seismic interpretation executed on
the 5700km2 production sharing contract
(PSC) area.
Identified four prospects and five leads with
gross mean 2P STOIIP of 5 billion barrels and
recoverable reserves of 1.5 billion barrels.
PSC signed with the Maltese Government
to drill well on Area 4 to depth of 2500m.
Currently targeting high chance of success
drilling locations with new seismic acquired
in 2011. Area 4 is the only block not
contested among Malta’s neighbours.
GulF oF Mexico
Multiple leases in the shallow Gulf of
Mexico (7.25 per cent interest)
Total 2010 production net to LGO’s interest
was 6,617 barrels of oil and 37.8 million
standard cubic feet of gas (12,913 barrels of
oil equivalent). Additional potential exists
at Eugene Island to recomplete existing
wells or to sidetrack wells to undepleted
zones. LGO and its partners are actively
studying these options.
AYOLUENGO WELL IN NATIONAL PARK
161JULY 2012 The International Resource Journal
7KH*RXGURQÀHOGLVORFDWHGRQWKHHGJHRID
wildlife sanctuary, and it is these environmentally
sensitive concerns that LGO addresses with its
corporate social responsibility programmes. The
$\ROXHQJRRLOÀHOGLVORFDWHGLQD1DWLRQDO3DUNVR
this is nothing new for LGO.
“The country has been producing oil for 100
years, so we don’t have some of the other issues
VXFKDVODFNRIVNLOOHGODERXUWKDW\RXPLJKWÀQG
in other regions. Our issues are around good
housekeeping, not spilling oil, not contaminating
water supplies or allowing chemicals to leak, and
not unduly affecting the wildlife, concerns of that
type,” Ritson says.
In total, Ritson estimates that there are well
over 200 million barrels of oil in place across
its Trinidadian assets and reserves of over 20
million bbls.
“In a different market, developing our as-
sets would have happened much more quickly,
recession is really just a lack of forward move-
ment. It is not an easy time, but the opportunity
is there, we have oil in the ground and a major
sustained downturn in the oil price seems un-
likely,” he adds.
www.leniGasandoil.coM
“Trinidad’s re!nery exports processed re!ned products and it is de!cient in crude supply at the moment and that is something the government is keen to address, it is looking to attract inward investment from companies such as ourselves to raise production levels.”
162 LATIN AMERICA Cabral Resources
stRike when iRon is hotCabral Resources
162
163JULY 2012 The International Resource Journal
stRike when iRon is hotCabral Resources
162 Hot on the heels of signing agreements with the Bahia state government, Cabral Resources has begun a maiden resource drilling programme at its Brazilian magnetite tenements.
latin aMeRica
164 LATIN AMERICA Cabral Resources
caBRal ResouRces’ initial assessment at its
tenement portfolio in the central eastern coastal
Bahia state in Brazil indicate a potential target
of 331 to 644 million tonnes (Mt) of high grade,
coarse grained magnetite iron ore.
And the explorer’s maiden 3km diamond
drilling campaign at Morro do Gergelim initi-
DWHVDLPVWRSURYHXSWKRVHÀJXUHVDFURVVLWV
tenement portfolio with a debut JORC resource
DWWKLVÀUVWGULOOWDUJHWE\6HSWHPEHUWKLV\HDU
The initial campaign target is driven by Ca-
bral’s promises to shareholders that capital
raising initiatives, which added A$25 million to
the company’s coffers in February 2011, would
fund exploration activities on the company’s
initial 12 tenements.
Since that time, explains Michael Bogue,
managing director and chief executive of Cabral,
the company has grown the portfolio substantially
and it now includes high grade hematite direct
shipping ore (DSO) targets, which could generate
HDUO\FDVKÁRZV
“Bahia is really underexplored, it is one of
the poorer states in Brazil and the government
is very progressive in looking at ways to create
development and opportunities in the region for
economic prosperity and employment. That is
one of the reasons why this project has such a
good infrastructure story,” says Bogue.
165JULY 2012 The International Resource Journal
166 LATIN AMERICA Cabral Resources
On the groundCabral signed agreements with the state’s govern-
ment in March this year for up to 15 million tonnes
per year (Mt/y) on the FIOL rail line, due for com-
pletion in 2013 and at Porto Sul, due for comple-
tion in 2014. The rail and port infrastructure build
is set to boost not only the iron ore sector, but also
the agricultural sector.
Cabral’s closest neighbour is LSE-listed
Eurasian Natural Resources Corporation, which
has spent upwards of US$1 billion buying un-
derdeveloped iron ore projects in the region and
looking to access the same infrastructure.
The $25 million capital raising enabled Cabral
to acquire a “starter pack” of tenements in Bahia
state and acquire and consolidate more over time
as well as embark on the JORC drilling campaign
while getting the exploration team established on
the ground. With $13 million left in the bank to
see those activities through, Bogue expects that
the company will not need to go back to equity
markets until the middle of next year.
The Lagoa Real group of tenements contain
coarse-grained, crystallised magnetite ore. Bogue
H[SODLQVWKDWLWZLOOEHFRVWHIÀFLHQWWRH[WUDFWWKLVRUH
when compared with deposits in Western Australia.
“Iron ore liberation grind sizes [in Western
Australia] are down to 32 microns or below,
whereas we are estimating that ours [in Lagoa
Real group] will come in at 75+ microns. There
will be a big operating cost advantage for us in
that respect,” he notes.
The other two groups, Itaquarai and Canabra-
va, are the hematite DSO and itabiritic ores and
Cabral is systematically working its way through
that portfolio, prioritising each of the tenements in
anticipation of identifying promising drill targets.
Local and global partners7RKHOSZLWKÀHOGZRUNDQGDVSDUWRIDJUHHPHQWV
signed with Bahia State, Cabral employs local
people where it can. As the project progresses,
Bogue expects that engagement in the region will
increase as well.
“Bahia is really underexplored, it is one of the poorer states in Brazil and the government is very progressive in looking at ways to create development and opportunities in the region for economic prosperity and employment.”
167JULY 2012 The International Resource Journal
“In our region, we have subsistence farming
and we are very conscious of having a good rela-
tionship with local landowners. We employ them in
WHUPVRIEDVLFÀHOGZRUNDQGSHULRGLFDOO\HQJDJH
with communities in terms of having open ses-
sions and keeping regular dialogue. Locals under-
stand the mining industry well, some operations in
the area have been running for 70 years…and as
we move to construction and operating phases we
will certainly look to training and technology for lo-
cal talent in order to achieve our objectives as well
as those of the state government,” he says.
In terms of overseas partners, Cabral has
formed a “unique and established Chinese contact
network” for offtake agreements, joint venture
partners, infrastructure solutions, rolling stock
and locomotives and project funding alternatives.
That contact network is fomented by James
Li, who is employed by Cabral. A metallurgist by
background, Li has strong relationships with steel
PLOOVHQJLQHHULQJDQGFRQVWUXFWLRQÀUPVSROLF\
banks and other state-owned enterprises that can
be tapped into towards developing the project.
China is not only a partner, but also a
target customer.
“We will be looking to our Chinese friends for
project partnerships and infrastructure solutions,
so it makes sense to look at offtake agreements
CONSULTORES & ASSOCIADOS
www.5aconsultoria.com.brphone: 55-71-3033-8680 | [email protected]/Bahia/Brazil
^ƉĞĐŝĂůŝnjĞĚŝŶĐŽŶƐƵůƟŶŐĂŶĚƚƌĂŝŶŝŶŐŝŶĞŶǀŝƌŽŶŵĞŶƚĂůĂŶĚŽĐĐƵƉĂƟŽŶĂůƐĂĨĞƚLJ ƚŚĞϱĂŶĚƐƐŽĐŝĂƚĞƐŽŶƐƵůƚĂŶƚƐ>ƚĚŽīĞƌƐŵĂŶĂŐĞŵĞŶƚƐĞƌǀŝĐĞƐƚƌĂŝŶŝŶŐůŝĐĞŶƐŝŶŐůĞŐŝƐůĂƟŽŶĂŶĚĚĞǀĞůŽƉƐƉĞĐŝĮĐƉƌŽũĞĐƚƐĂŶĚƚĞĐŚŶŝĐĂůƐƚƵĚŝĞƐĨŽƌƚŚĞƐĞĐƚŽƌ
dŚĞĐŽŵƉĂŶLJŝƐĨŽƌŵĞĚďLJĂŵƵůƟĚŝƐĐŝƉůŝŶĂƌLJƚĞĂŵŽĨŚŝŐŚůLJƚƌĂŝŶĞĚƉƌŽĨĞƐƐŝŽŶĂůƐŝŶƚŚĞĂƌĞĂƐŽĨďƵƐŝŶĞƐƐĂĚŵŝŶŝƐƚƌĂƟŽŶďŝŽůŽŐLJ;njŽŽůŽŐLJĂŶĚďŽƚĂŶLJͿƐĂĨĞƚLJ ĞŶǀŝƌŽŶŵĞŶƚůĂǁĞŶŐŝŶĞĞƌŝŶŐĂŶĚƐŽĐŝŽůŽŐLJ
WƌŽǀŝĚĞƐĞƌǀŝĐĞƋƵŝĐŬůLJ ƌĞƐƉŽŶƐŝďůĞĂŶĚĂƐƐĞƌƟǀĞŝƐƚŚĞŵĂŝŶŵŝƐƐŝŽŶŽĨϱĂŶĚƐƐŽĐŝĂƚĞƐŽŶƐƵůƚĂŶƚƐ>ƚĚ
Excelling in Environmental Consulting
168 LATIN AMERICA Cabral Resources
austRalian-lataM inVestMent in the spotliGht
IRJ - May 22 - Australia’s trading relationship with a number of Latin American
partners is being showcased at the inaugural Paydirt 2012 LatinAmerica
DownUnder resources conference in Sydney.
Brisbane-based Xstrata Copper said an expansion of its copper projects in
Latin America will be fundamental to achieving 60 per cent growth in annual
copper output within three years and would underpin the current $7 billion
commitment to achieve such a target. The company is currently producing
900,000 tonnes per year (t/y) but are looking to boost that nearer to 1.5 million
t/y, according to Charlie Sartain, Xstrata Copper chief executive.
“This is an ambitious programme a strong growth pipeline but new projects
now under construction or development in Peru and Chile and to some extent,
Argentina, will help to progressively deliver this objective,” he said. Xstrata
saw operating profit of $3.9 billion in 2011 with its South American operations
contributing 68 per cent of that margin.
“The next major phase will take in the current $90 billion Xstrata-Glencore
merger,” he added.
Also on display was Peru’s stock exchange in Lima, which merged with
stock markets in Chile and Colombia in 2011. Australia’s equities markets
and resources players were encouraged to dual list as a way to tap additional
sources of funds for new mining ventures in Latin America.
Peruvian stock exchange boss, Francis Stenning, pointed out that Toronto-
listed players were dominant on the Lima Stock Exchange with Canadian
juniors dually listed raising some $273 million globally.
In one of the lesser known LatAm stories, Nicaragua made a play to attract
investment, which saw a 90 per cent surge to $968 million in 2011 when
compared to the year previous. Mining investment is the third largest sector in
capturing foreign direct investment.
Javier Chamorro, executive director of PRONicaragua, a lobby group that
promotes investment in the country, said: “Foreign direct investment is now 13
per cent of GDP, the highest rate in Latin America, so Australian mining entities
coming into our market have a secure investment, operational, geological and
socially positive environment in which to make fresh plays,” he said.
He also hinted that a bilateral agreement would benefit both countries just
as Nicaragua’s agreements with major trading partners the EU and US do.
169JULY 2012 The International Resource Journal
as well. One of the great things about having a met-
allurgist on the team is that we can match the met-
allurgical characteristics of our ore with the right
mills, and that is a very important and distinguish-
LQJIDFWRULQÀQGLQJWKHFRUUHFWSDUWQHUVLQ&KLQD«
in total these partners will be very useful when it
comes to the big dollar requirements to get these
iron ore projects off the ground,” Bogue notes.
Model businessA pre-scoping study commissioned through ProM-
et Engineers in Australia shows a capex in the
US$2 billion range as a high-end estimate, based
on a 15Mt/y allocation of magnetite concentrate
ore as a product. However, that could get lowered
depending on the blend of products being used
considering the potential to produce less capital
LQWHQVLYHFDVKÁRZJHQHUDWLQJKHPDWLWHRUH
“In short, we are a well-placed emerging iron
ore producer with a portfolio of highly prospec-
tive iron ore tenements located close to third
party rail and port infrastructure where we have
a Protocol of Intentions agreement for allocations
signed. Not to mention a healthy cash balance to
continue our exploration efforts for the foresee-
able future. We believe Cabral’s business model
LVUREXVWDQGZLOOUHDSEHQHÀWVIRUVKDUHKROGHUV
in the period ahead” Bogue adds.
caBRalResouRces.coM.au
The Topographic is a company specializing in topographic services, your headquarters is in Belém- Pará – Brazil, with large experience in the market, the Topographic comes growing in your activities, providing quality, safety and low operating cost for your clients. With high technical and management capacity performed by quali!ed professionals, the Topographic has an objective and bold view, always focused on customer satisfaction.
The search for contentment and gratefulness of your clients is the difference at the Topographic Company, continuously looking for new technologies associated with the quali!cation of your employees.
[email protected] | [email protected]
TEN YEARS MEASURING THE AMAZON
“In short, we are a well-placed emerging iron ore producer with a portfolio of highly prospective iron ore tenements located close to third party rail and port infrastructure where we have a Protocol of Intentions agreement for allocations signed.”
170 SUSTAINABILITY NEWS IN REVIEW
Unprecedented levels of civil society representatives have $ooded into Brazil for Rio+20, the majority of which are from the developing world for the !rst time.
iRJ takes a look at global developments pushing
sustainability into the headlines.
Large miners lead way on sustainability
IRJ - June 8 - The world’s biggest mining companies
have made major improvements in environmental
policies though as a whole the industry continues
WRIDFHVLJQLÀFDQWFKDOOHQJHVVDLGUHVHDUFKHU$EEL
Buxton, author of a report from the International
Institute for Environment and Development.
7KHVHDUHDPRQJWKHÀQGLQJVRID\HDUUH-
view of the progress the mining sector has made
since companies joined NGOs in calling for the
Mining, Minerals and Sustainable Development
(MMSD) initiative.
“The 2002 MMSD report was a game-chang-
HUµVD\V%X[WRQ´)RUWKHÀUVWWLPHPLQLQJH[HF-
utives committed to act to maximise their sec-
tor’s contribution to sustainable development,
and they adopted the MMSD agenda as a robust
and credible way to do this. Ten years on, how-
ever, the results are mixed and new challenges
have emerged.”
6RPHRIWKHÀQGLQJVVKRZWKDWZKLOHJRYHUQ-
ments are reasserting control over their natural
resources, they lack the capacity to ensure that
Sustainability news in ReView170
171JULY 2012 The International Resource Journal
mining contributes to sustainable development.
Buxton’s report also states that the Interna-
tional Council on Mining and Metals – an umbrella
organisation of leading companies such as Rio
Tinto and Anglo American - has succeeded in imple-
menting many of MMSD’s recommendations for
industry. But complementary measures proposed
for governments, the small scale mining sector and
communities have not matched this success.
Ecuadorian coalition hits Chevron with $18bn lawsuit in Canada
,5-0D\$Q(FXDGRULDQJURXSÀOHGD
lawsuit in Canada seeking to enforce Chevron’s
compliance with an $18 billion clean up fee for
dumping toxic water in the rainforest.
7KHFRDOLWLRQFRQVLVWVRILQKDELWDQWVRIÀYH
indigenous groups in Ecuador and approximately
70 farmer communities who want Chevron to pay
the judgment imposed by an Ecuador trial court
LQ)HEUXDU\ZKLFKZDVODWHUDIÀUPHGE\
Ecuador’s court of appeals in January. In total,
the long-standing case spans 19 years.
Canadian lawyer Alan Lenczner, who will be
representing the Amazon communities, said the
ODZVXLWÀOHGLQWKH6XSHULRU&RXUWRI-XVWLFHLQ
Ontario is targeting Chevron and various subsidiar-
LHVWKDWWRJHWKHUKROGVLJQLÀFDQWDVVHWVLQ&DQDGD
including the country’s largest offshore drilling
project and new investments in oil sands in Alberta.
Chevron has virtually no oil assets in Ecuador.
Sustainability news in ReView
172 SUSTAINABILITY NEWS IN REVIEW
“I am honoured to have been asked by the
indigenous people of Ecuador to correct a histor-
ic injustice visited upon them by Chevron,” said
Lenczner, who visited Ecuador and reviewed the
extensive trial and appellate records of the case,
which exceed 250,000 pages.
“Chevron fought for nine years to move the
trial from the United States to Ecuador, and then
had a full opportunity for eight years to defend
itself in Ecuador,” Lenczner added. “This is a le-
gitimate judgment and I believe Canadian courts
will recognise it and enforce it as such.”
In response to the media reports, Chevron
said that the Ecuador judgment is a product
of bribery, fraud, is illegitimate and that the
company will vigorously defend against any
enforcement action.
“Chevron is defending itself against false al-
legations that it is responsible for alleged environ-
mental and social harms in the Oriente region of
Ecuador. Chevron never conducted oil production
operations in Ecuador, and its subsidiary Texaco
Petroleum (TexPet) fully remediated its share of
environmental impacts arising from oil production
operations, before leaving Ecuador in 1992,
´$IWHUWKHUHPHGLDWLRQZDVFHUWLÀHGE\
all agencies of the Ecuadorian government
responsible for oversight, TexPet received a
complete release from Ecuador’s national,
provincial, and municipal governments that
173JULY 2012 The International Resource Journal
extinguished all claims before Chevron ac-
TXLUHG7H[3HWLQ$OOOHJLWLPDWHVFLHQWLÀF
evidence exonerates Chevron and proves that
WKHUHPHGLDWHGVLWHVSRVHQRVLJQLÀFDQWULVNV
to human health or the environment,” the oil
major said in a released statement.
The Amazon Defense Coalition says that
Chevron is using the “fraud” charge as a ruse
to try to block enforcement of the judgment
and to distract attention from the overwhelming
evidence of its historic misconduct. The Ecua-
dorian state-backed NGO noted that Chevron’s
ELOOLRQFXOSDELOLW\LQ(FXDGRULVMXVWLÀDEOH
when compared to BP’s disaster in the Mexican
Gulf in 2010. BP estimated the accidental leak
of 4.9 million barrels of crude oil would cost the
oil major $37.3 billion. By comparison, Chevron
intentionally dumped 16 billion gallons of toxic
produced water in Ecuador containing far more
crude oil that was spilled in the Gulf, as well as
heavy metals and other drilling chemicals, and
faces less than half of BP’s costs to clean it up.
EBRD launches next "25bn phase of sustainable energy investment
IRJ - May 18 - The European Bank for Reconstruc-
tion and Development (EBRD) launched the next
phase of its Sustainable Energy Initiative (SEI) at
the bank’s annual meeting taking place in Lon-
don May 18 to 19 amid criticisms of its high level
of fossil fuel investment.
The announcement outlines new funding
for projects worth up to €25 billion over the next
three years that reduce energy waste and green-
house gas emissions. The bank is aiming to pro-
vide €4.5 to €6.5 billion out of its own coffers.
The EBRD was founded in response to the col-
lapse of the Berlin Wall and is owned by 63 coun-
tries as well as the European Union and the Euro-
pean Investment Bank. It supports projects in 29
countries from Central Europe to Central Asia.
And as government budgets get slashed
across Europe in the middle of ongoing currency
DQGPDUNHWVFULVHV-RVXp7DQDNDPDQDJLQJ
GLUHFWRUIRUHQHUJ\HIÀFLHQF\DQGFOLPDWHFKDQJH
VDLGGXULQJDSUHVVEULHÀQJWKDWWKHSULYDWHVHF-
tor has an important role to play.
“A lot of the very capital intensive measures
on climate mitigation are being postponed be-
cause of constraints from governments…[previ-
ously] it was all about governments and public
sector well, you know what is happening to bud-
gets...so the emphasis that is given to the private
sector is very important,” he said.
Since its inception, SEI has adopted a
business model that drives investment at
commercially viable projects at market rates.
174 SUSTAINABILITY NEWS IN REVIEW
,QWKHEDQNEHFDPHWKHÀUVWLQWHUQD-
WLRQDOÀQDQFLDOLQVWLWXWLRQWRDGRSWDFDUERQUHGXF-
tion target and in 2011 became carbon negative
(-6.1Mt). SEI business volume is at €8.8 billion with
an estimated 46.9Mt/y of carbon emission reduc-
tion across 464 projects since 2006.
,WKDGUHFHQWO\FRPHXQGHUÀUHIURPZDWFK-
dog CEE Bankwatch Network because over €3
billion, or 48 per cent, of the bank’s energy loans
and equity between 2006 and 2011 had gone to
fossil fuel sources and coal, which will continue
to remain an important part of EBRD members’
energy mix. Tanaka pointed out that SEI is a large
part of the bank’s work.
“What we have achieved in these six years is
roughly [the equivalent of] making Serbia carbon
neutral,” said Tanaka, adding that SEI is “not a
side activity with a little green door to show the
EBRD cares about climate…it is almost one-third
of what we do”.
Renewable energy investment in projects such
as wind farms will stay a priority going forward and
as the EBRD begins operations in the Middle East
and North Africa regions, a more compelling argu-
ment could get made for solar energy.
,QGXVWULDOHIÀFLHQF\LVDQRWKHUDUHD(%5'ZLOO
continue to look at. Case studies presented at
WKHSUHVVEULHÀQJLQFOXGHGWKHEDQN·V½PLO-
lion long-term loan to Russian steelmaker Novoli-
petsk Steel Works (NLMK). The loan was used to
construct a 150MW combined heat and power
plant which will utilise waste gases from blast
175JULY 2012 The International Resource Journal
furnaces. It is expected to cut energy consump-
tion 15 per cent by 2015.
Carbon markets, on the other hand, have
dropped down the agenda.
“The market mechanism was supposed
to send a carbon price signal, at this stage it
is not…we obviously feel we need to try and
continue supporting this approach because it
is an approach that does have a benefit, but
at this point we may be at the low end of the
cycle on it,” he said.
Speaking at the opening session of the board
RIJRYHUQRUV*HRUJH2VERUQH8.·VÀQDQFHPLQ-
ister, congratulated the EBRD on its work.
“The EBRD can help expand new markets
and leverage private investment and with many
of the bank’s shareholders dealing with large
EXGJHWGHÀFLWVRIWKHLURZQLWZLOOQHHGWRGHP-
onstrate it is delivering maximum value,” he said.
,QWKHEDQNUHDOLVHGSURÀWVRI½
million and invested over €9 billion in 380 proj-
ects of which 29 per cent were sustainable
energy initiatives.
176 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources
RiVeRsdale ResouRcesAlaskan coal play176
177JULY 2012 The International Resource Journal
RiVeRsdale ResouRcesAlaskan coal play
us, canada and austRalia Metals and MininG
178 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources
179JULY 2012 The International Resource Journal
After their success in Mozambique coal, the Riversdale team is intent on realising another triumph - this time in Alaska.
RiVeRsdale ResouRces’ philosophy is the same as
the last time IRJ caught up with the team, which saw
its original operation, Riversdale Mining, acquired by
Rio Tinto for A$4 billion.
180 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources
Summing up that philosophy is Steve Mallyon,
managing director: “Go hard or go home”. The
ÀJXUHVFHUWDLQO\EDFNXSWKHFODLPRIJRLQJELJLQ
2004, $1,000 invested in Riversdale Mining grew to
$82,500 when it was acquired by Rio Tinto in 2011.
Still, Alaska and Mozambique seem like quite
different prospects.
“It is a different operating environment,” says
Mallyon. “But to some extent all of the systems,
people and protocols are identical to what we
had in the original Riversdale Mining. And once
again, it is a multi-seam, coking coal basin that
we are pursuing.”
He admits there is one big difference, an in-
tentional one. That is the availability of infrastruc-
ture in Alaska, something that was woefully miss-
ing in Mozambique and an aspect of the project
that the Riversdale team admit was the toughest,
and most expensive, in their African experience.
By contrast, the Chickaloon project in Alaska
has a long history of coal mining and had been
mined from 1913 to 1922, when the US Navy
focused on high quality coking coal for their Pa-
FLÀFÁHHWV,QDUDLOOLQNZDVGHYHORSHGWR
service the mines. Operations ceased when pe-
WUROHXPEHJDQWRJDLQJUHDWHUVLJQLÀFDQFHDIWHU
discoveries in California and later in Alaska.
“As a result of that work, as well as additional
work by a number of US-based companies in the
1960s and a small development project undertak-
en by a private group in the 1980s in the area, we
KDGWKHFRQÀGHQFHWRJRGRZQWKHSDWKRIGHYHO-
opment. The Riversdale model has not changed,
ZHDUHQRWUHDOO\DJUHHQÀHOGH[SORUHUZHJRLQWR
known coal domains with good quality coal, but the
difference here is that we were sensitive about ac-
cess to related infrastructure,” Mallyon says.
Port, rail, roadThat includes the deep water Port MacKenzie,
which is well-placed as a delivery point to natural
markets for the product in Japan, South Korea
and Taiwan. There is all-year round shipping and
the port is located about 120km from Chickaloon
on Glenn highway.
The Glenn highway runs through the centre of
“We feel the company is in a strong position to advance the project for the next couple of years with existing funds and we are unlikely to be in a position where we are beholden to any market to try and get additional money.”
- Anthony Martin, chief !nancial o%cer
181JULY 2012 The International Resource Journal
The change will do you goodSM
weatherford.com
Change to Affordable On-site DataWeatherford slimline logging services help you extract more value from coal, minerals and unconventional hydrocarbon resources
Weatherford has a full suite of specialized tools and experienced logging personnel to acquire
high-quality logging data from small-diameter holes in subterranean mines and vertical to
high-angle boreholes.
Our market-leading slimline logging services are a cost-effective alternative to
core sampling. You get data in a fraction of the time without transport
costs and lab delays, as we process, analyze and present
EBUBPOB1$SJHIUBUZPVSXPSLTJUF0VSPJMæFME
quality log images include advanced
density, neutron and gamma
ray measurements.
q&YQMPSBUJPOTVJUFHBNNBSBZ TQFDUSBMHBNNBSBZ EFOTJUZ EJQNFUFS OFVUSPO SFTJTUJWJUZ
q(FPUFDIOJDBMTVJUFBDPVTUJDUFMFWJFXFS"57q%CPSFIPMFJNBHJOH
Technologies
q.JOFSBMTHPME TJMWFS QMBUJOVN VSBOJVN CBTFNFUBMT
q$PBMBOEDPBMCFENFUIBOF
q0JMTIBMFTq4IBMFHBTBOEPJMq4IBMMPXPJMBOEHBT
Applicationsq5JHIUHBTq(BTIZESBUFT
Drilling
Evaluation
Completion
Production
Intervention
Wireline servicesCased-hole0LFURVHLVPLFVHUYLFHVOpenholeSlimline
Borehole diameters
q4UBOEBSEUPJOUPNN EFQFOEJOHPODPOåHVSBUJPO-BSHFSTJ[FTBWBJMBCMFVQPOSFRVFTU
q4MJNUPJOUPDNCPSFIPMFT-BSHFSCPSFIPMFTJODMVEJOHJODNEJBNPOEBTTBZCPSFIPMFT
© 2
012
Wea
ther
ford
. All
right
s re
serv
ed. I
ncor
pora
tes
prop
rieta
ry a
nd p
aten
ted
Wea
ther
ford
tech
nolo
gy.
Put our 30-plus years of mining experience and Tactical Technology™ to work for you. Contact your Weatherford logging services representative or visit us at weatherford.com/slimline.
182 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources
the state and through Anchorage, the biggest city
in Alaska with a population of about 300,000 and
connects with Chickaloon. Riversdale believes the
Port Authority is targeting between 2 and 3 million
tonnes per year (Mt/y) of coal exports from existing
infrastructure and rail and dock upgrades are being
considered for the future.
The Chickaloon region’s coal is bounded by
two river systems, the Chickaloon and King rivers,
and the land is amenable to a number of open pit
and underground development. Riversdale has
acquired about 40.5km2 of land in the Matanuska
valley, leased from the Alaska Mental Health Trust
(AMHT), which was awarded the land as part of
legislation in order to generate funds to support
mental health programmes.
Riversdale has a 10-year lease with exten-
sion by production and exclusive rights to coal
in a US$3million deal. In addition, royalties are
payable to AMHT with no additional state royal-
ties payable, though this does not reduce Rivers-
dale’s requirements to comply with the Depart-
ment of Natural Resources or other regulations.
“The relationship with AMHT is a unique
arrangement and from our perspective a very
satisfying one. Every dollar that we spend in
acquiring the land lease and in paying royalties
ZLOOEHQHÀWWKHKRVSLWDOV\VWHPLQ$ODVNDZKLFK
183JULY 2012 The International Resource Journal
looks to us to be quite underfunded. We are not
WKHUHWREXLOGDÀYHRUWHQ\HDUOLIHSURMHFWZHDUH
targeting between 20 and 25 year production life,
so the royalty base will grow as we develop it and
WKHEHQHÀWJRHVGLUHFWO\WRWKHKRVSLWDOV\VWHPµ
Mallyon explains.
The area is also home to a small population
at Chickaloon village, with about 350 landhold-
ers and about half that for people living in the
area. In addition there is a native community liv-
ing nearby. At this stage, the company is involved
in a community engagement programme, giving
presentations at local councils as well as spon-
soring community events. The main concerns
coming from the community are around the envi-
ronment, as a number of people use the area for
KXQWLQJÀVKLQJDQGJDPLQJ$EDVHOLQHVWXG\IRU
environmental work has commenced to address
issues such as potential impacts on surface and
JURXQGZDWHUTXDOLW\DQGÁRZQRLVHGXVWFXO-
tural resources, vegetation, soil, wetlands, recre-
ational activities, wildlife and social impacts.
Mallyon notes, however, that the lease has been
effectively dedicated for mining since the 1920s.
“It is an exciting exploration environment
because Alaska has really developed on the back
of the oil and gas industry. There are a number
of sedimentary basins across Alaska from the
south of Anchorage to the northwest slope where
the major oil producing centre is. Coal has been
widely overlooked by the oil majors, yet groups
such as BHB Billiton have developed a sizeable
resource on the northwest slope. Our plan over
the next year or two is to investigate a number of
coking coal opportunities throughout Alaska, as
well as accumulate a larger footprint in the valley
we are in,” says Mallyon.
Quality coalThe company’s president in Alaska is associated
with the original Riversdale team, Russell Dann.
He was a former Regional Director of the Depart-
ment of Employment, Economic Development
184 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources
$ODVND(DUWK
6FLHQFHVComprehensive Geologic Services
Geologic Consulting Geologic Staffing Geological Engineering Reporting (including 43-101) Logistics/Operation Coordination Remote Site Management GIS Services Permitting Assistance Community Engagement Claims Staking Claims Administration Equipment Rental
Dedicated to responsible development of Alaska’s resources.
11401 Olive Lane, Anchorage, Alaska907-522-4664 www.alaskaearthsciences.com
and Innovation in the Queensland Government’s
Mining and Energy agency and, prior to that, was
the Latin America, Philippine and USA exploration
PDQDJHUIRU5*&5HQLVRQ*ROGÀHOGV&RQVROLGDW-
ed – part of the former Hanson Plc group) .
“There are a series of igneous intrusions in the
area and that appears to be the primary reason
ZK\WKDWVSHFLÀFORFDWLRQKDVFRNLQJFRDO:KHQ
we take some of the historical coking coal analyses
DQGFDOLEUDWHWKRVHDJDLQVWPRGHUQVSHFLÀFDWLRQV
for coking coal, we are very happy with those re-
sults. It certainly gives us the indication and encour-
agement that we have the potential for a very good
quality coking coal,” Dann says.
6XUIDFHPDSSLQJKDVLGHQWLÀHGRXWFURSV
including two coal zones of between 6 and 9
metres wide.
“A key element for coking coal is that it has
WRKDYHDKLJKFDORULÀFYDOXHULJKWQRZWKLV
resource could be a low volatile bituminous coal
and the indications we have for ash at the mo-
ment are relatively low but we may need to wash
that coal. We don’t have enough information
at this point in time within the Chickaloon coal
lease itself and that is the purpose of the forth-
coming drilling campaign…We would like to drill
holes into sections right through that full thick-
ness of the coal seams and understand exactly
how thick those seams are and how the quality
varies between them,” Dann says.
Global and local partnersAs the company moves towards development,
Dann explains that Riversdale is trying to com-
bine teams of local Alaskan knowledge and expe-
rience with the more global technical capability
of groups it has worked with in the past.
Riversdale is working with Anchorage-based
Alaska Earth Sciences to tap into the group’s coal
expertise and experience in community engage-
ment. Overseeing the environmental programme is
LQWHUQDWLRQDOFRQVXOWLQJÀUP+'5$ODVND,QFZKLFK
has also contracted SRK Consulting for the water
185JULY 2012 The International Resource Journal
quality work and SLR International Corp for the me-
teorological and air quality work.
Geological services group McElroy Bryan is
WDVNHGZLWKUHVRXUFHGHOLQHDWLRQDQGGHÀQLWLRQDQG
the geophysical company, Fugro will be starting an
airborne geophysical programme later this month.
Exploration mapping is expected to be completed
by the end of this year and coal quality results are
expected by the end of 2014. A scoping study is
planned for completion by the end of 2014, while a
feasibility study and development decision is antici-
pated by the end of 2016.
Raising capitalHaving just completed an A$20 million capital rais-
ing effort with institutional and high net worth inves-
tors out of Europe, Asia and Australia, Riversdale
believes it is in a strong position to proceed with
work on the ground in Alaska, but also to potentially
look at additional opportunities for the company in
Australia and North America, says Anthony Martin,
FKLHIÀQDQFLDORIÀFHUDW5LYHUVGDOH
“The current intention is to look at an IPO
during 2013 as the next capital raising effort,
but that is dependent on markets at the time.
We feel the company is in a strong position to
advance the project for the next couple of years
with existing funds and we are unlikely to be in a
position where we are beholden to any market to
try and get additional money,” Martin notes.
Though he says that it is still early days to
talk about capital expenditure of the project,
Martin adds that compared to other potential
coal developments globally, due to the proximity
of rail and port infrastructure and potentially a
VLJQLÀFDQWUHGXFWLRQLQWKHVL]HRISODQWIDFLOLWLHV
based on historical coal quality and yield results,
capex may “comparatively sit quite well in the
coal development world”.
“It is a di!erent operating environment. But to some extent all of the systems, people and protocols are identical to what we had in the original Riversdale Mining. And once again, it is a multi-seam, coking coal basin that we are pursuing.”
- Steve Mallyon, managing director
186 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
New Millennium Iron186
187JULY 2012 The International Resource Journal
iRon willNew Millennium Iron"ough it is still a “small” junior miner, New Millennium Iron has heavyweight backing, huge resources and big production goals. 186
us, canada and austRalia Metals and MininG
188 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
FRoM its BeGinninGs as a capital pool company
in 2003, New Millennium Iron has grown into an
emerging producer controlling one of the largest iron
ore resources in the world – the Millennium range,
a 210km long taconite belt in eastern Canada.
The company’s direct shipping ore (DSO)
project in partnership with Indian steelmaking
JLDQW7DWD6WHHOLVÀUVWWRGHYHORSPHQWEH-
cause of its smaller scale and relatively lower
capital costs. When the DSO project goes into
production by the end of the year, New Millen-
nium will become an operating company with
QHDUWHUPFDVKÁRZ
In 2013, the company is targeting 2 million
tonnes (Mt) in production, ramping up to full
capacity of 4.2 million tonnes per year (Mt/y)
in 2014. Tata Steel Europe, which has plants
in the UK and Netherlands, has committed to
Big Span Steel on site. Image c/o www.nmliron.com
189JULY 2012 The International Resource Journal
1.866.SAUVAGEAU.728.8243
Across Quebec, one near you
www.sauvageau.qc.ca
From its very beginnings, Location Sauvageau distinguished itself with its product line, its ability to provide you with the right vehicle and the quality of its service. Over the years, we have become the rental specialists for work vehicles in Quebec. More and more professionals, businesses and municipalities turn to us. They know they can count on us to meet their transport needs.
521 Côte Joyeuse, St-Raymond, Québec, Canada, G3L 4A9www.sauvageau.qc.ca
190 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
191JULY 2012 The International Resource Journal
BEI Professionals can provide services in the following areas:
ARE YOU THINKING OF INSTALLING A PIPELINE SYSTEM?
Sustainable use of Earth's natural resources www.outotec.com
Proudly supplying NML with our leading pelletizing plant technology.
192 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
100 per cent of the offtake at market prices
from the joint venture company, Tata Steel
Minerals Canada (Tata Steel 80 per cent: New
Millennium 20 per cent).
,W·VDEURZQÀHOGGHYHORSPHQWORFDWHGLQWKH
historic iron ore producing region of Northern
Quebec and Labrador and had been previously op-
erational until the market lost its appetite for lower
quality ore being produced by the operation.
“We have this resource which will last for upwards of a century and the world’s iron ore resources are being depleted at a considerable rate”
193JULY 2012 The International Resource Journal
Dean Journeaux, chief executive of New Mil-
lennium, gets his share of questions on this point
– what makes him think he can do better today?
“The operator closed down the mine in
1982 because for one, the market was bad,
but also, the product was not treated, not up-
graded, running around 58 or 59 per cent iron.
We are upgrading the run of mine ore grade
to a 64.5 per cent iron, in other words, we are
meeting today’s market requirements for quali-
ty, and of course, the price of iron ore has gone
up quite a bit since 1982,” Journeaux says.
7DWD6WHHOLVDUUDQJLQJÀQDQFLQJIRUXSWR
C$300 million of the capital costs, with New Mil-
lennium responsible for 20 per cent of the excess.
Human ResourcesThe DSO project is just the beginning for the
194 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
Indian steelmaker in Canada, and it will be using
the experience as a tester before considering
WKHIDUPRUHVLJQLÀFDQW7DFRQLWHSURMHFWZKLFK
comes with estimated capital costs of between
$4.4 and $5 billion dollars for each of the two
deposits targeted for development.
A $50 million feasibility study, expected to be
completed by the end of the year, is underway for
WKHWZRGHSRVLWV.p0DJLQ4XHEHFDQG/DE-
Mag in Western Labrador. Tata has an option to
develop either one or both properties, with New
Millennium free to decide what to do should Tata
not go ahead.
LabMag is located about 30km northwest
of the town of Schefferville, Quebec. About
1,800 First Nations people live in the surround-
ing area, a sizeable population that Journeaux
says can go far in meeting the projects’ human
resources needs in the future – the plant op-
erators, truck drivers, mechanics, electricians
LabMag iron ore deposit. Image c/o www.nmliron.com
195JULY 2012 The International Resource Journal
COLERAINE MINERALS RESEARCH LABORATORYDavid Hendrickson - Director Minerals Research
[email protected] | 218-245-4204
Serving the Mining Industry with State of the Art Research Laboratory Facilities in:
Mineral ProcessingHPGR, Crushing, Grinding, Classification, FlotationBench Scale and Pilot Scale facilities
PyrometallurgyBlast Furnace Pellet Production and TestingSinter Pot SimulatorPot Grate SimulatorDRI Pellet Production and TestingMidrex and HYL DRI TestingBench Scale and Pilot Scale Facilities
Concetrator Modeling CenterCFD Modeling CenterAdvanced Analytical LaboratoryEconomic Geology Group
196 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
and other supervisory, management and ad-
ministrative personnel who will be required to
maintain operations.
On the DSO project, the JV, Tata Steel Miner-
DOV&DQDGDKDVDQLPSDFWEHQHÀWVDJUHHPHQW
with First Nations groups. Apart from employ-
ment, the company is providing training and has
donated $50,000 to run a bursary programme
at the region’s secondary schools.
“I get asked if I am worried about the future
labour supply considering the global skills shortage
and I guess we are, but on the other hand, we have
this tremendous asset in the surrounding communi-
ties and if we can encourage people through educa-
tion and through other means, we hope it will bring
them into the employment pool,” says Journeaux.
For now, the company estimates that at least
1,000 people will be needed to operate each of
DSO Project - Existing pits and dumps Image c/o www.nmliron.com
197JULY 2012 The International Resource Journal
Remote SitesRemote Sites
Quality of Daily Life in Remote SitesFor more than 40 years, Sodexo has been providing Quality of Daily Life Solutions for Remote Sites across Canada. Working in partnership with Aboriginal communities Sodexo operates and maintains your remote site while providing genuine long term benefi ts to the local communities in which we serve.
Designing, Managing, and Delivering Integrated Camp Management Solutions
For more information on how Sodexo Remote Sites can provide a complete on-site service solution for your remote site, contact Jerome Texier, Vice President Sodexo Remote Sites at 514-866-7070 ext. 249 or email Jerome at [email protected].
• Engineering – HVAC • Catering • Housekeeping• Camp Maintenance • Retail Brands • Laundry Services • Project Management • Convenience Stores • Logistics
198 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
the deposits while facilities at Schefferville are
LQVXIÀFLHQWWRVXSSRUWVXFKDQLQÁX[RISHRSOH
$VDUHVXOWWKHRSHUDWLRQLVH[SHFWHGWREHÁ\
LQÁ\RXW
Taconite technologyLabMag is owned 80 per cent by New Millennium
and 20 per cent by Naskapi Nation of Kawawa-
chikamach through an initial investment, one of
WKHÀUVWVXFKDUUDQJHPHQWVZLWKD)LUVW1DWLRQV
JURXSDQG.p0DJLVSHUFHQWRZQHGE\WKH
company. Production is expected by the end of
2016, ramping up in 2017 for full production
at 22Mt/y, of which 17Mt/y will be pellets and
5Mt/y will be pellet feed. The company expects
to have grades of 69 per cent in the concentrate
and slightly lower for the pellets.
Journeaux explains that the operation will
EHDEOHWRPDNHDFLGDQGÁX[HGSHOOHWVDWYDUL-
ous silica levels for blast furnace use as well as
“I get asked if I am worried about the future labour supply considering the global skills shortage and I guess we are, but on the other hand, we have this tremendous asset in the surrounding communities”
199JULY 2012 The International Resource Journal
a low gangue direct reduction grade pellet. That,
he explains, means the company can tailor the
product to the demands of the steel industry.
The Taconite project will be an open pit
mining operation with a crushing plant, grinding
and magnetic separation facilities with concen-
trate transported either by rail or in slurry form
via 600km ferroduct to Port of Sept-Iles.
1HZ0LOOHQQLXPLVXVLQJHQJLQHHULQJÀUP61&
Lavalin as the study manager for the feasibility
study and has also contracted specialist German
ÀUP6WXGLHQ*HVHOOVFKDIWIU(LVHQHU]$XIEHUHL-
tung as its primary metallurgical process consul-
tant while Midland Research Centre, in Minnesota,
provides crushing, blending and characterisation
work of samples.
Journeaux explains that the process to
mine and process Taconite was developed in
Minnesota because the US state is home to
the massive Mesabi iron range. Aside from
laBMaG contains: 3,545Mt proven and probable reserves
at a grade of 29.6 per cent Fe
1,045Mt of measured and indicated
resources at an average grade of 29.5
per cent Fe
1,151Mt of inferred resources at an
average grade of 29.3 per cent Fe
kéMaG contains: 2,141Mt of proven and probable
reserves at an average grade of 31.3
per cent Fe
307Mt of measured and indicated
resources at an average grade of 31.3
per cent Fe
1,014Mt of inferred resources at an
average grade of 31.2 per cent Fe
lac Ritchie contains:3,330Mt of indicated resources at an
average grade of 30.3 per cent Fe
1,437Mt of inferred resources at an
average grade of 30.9 per cent Fe
dso pRoJect contains: 64.1Mt of proven and probable mineral
reserves at an average grade of 58.8
per cent Fe
21.0Mt of measured and indicated
mineral resources at an average grade
of 59.2 per cent Fe
10.3Mt of inferred resources at an
average grade of 58.3 per cent Fe
Between 25 and 30 million tonnes
of historical resources that are not
currently in compliance with NI 43-101
“I get asked if I am worried about the future labour supply considering the global skills shortage and I guess we are, but on the other hand, we have this tremendous asset in the surrounding communities”
200 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
Midland Research Centre, other Minnesota-
based specialists have been brought on board.
Barr Engineering will be doing work on the
concentrator and the company uses the Univer-
sity of Minnesota Coleraine Minerals Research
laboratory facility.
As with the DSO project, Tata Steel Europe
is expected to be a major offtake customer
for the Taconite project as well, taking at least
half of the product. The rest will be left for the
open market.
For that product to reach Asian markets, how-
ever, the Port of Sept Iles will need an upgrade
for a deep water dock capable of handling ships
with 360,000 to 400,000 tonnes of capacity.
This last February, those development plans
received a boost when the Government of
&DQDGDDQQRXQFHGÀQDQFLDOVXSSRUWRI
million, or 25 per cent of the project costs,
towards construction.
“[The deep water dock] is under detailed
planning right now…we need those larger ves-
sels to lower freight costs so this is an impor-
tant factor in our development plan,” he says.
Strategic boardIn furthering that development plan towards
production, New Millennium’s board represents
THE BROADEST PRODUCT LINE IN THE MINING INDUSTRYWherever there’s mining in Quebec, you’ll find Cat® products hard at work – drilling and digging, loading and hauling, grading and dozing. A Hewitt Equipment Limited branch will be there for you, providing unmatched support, expert service and integrated solutions, among which you will find our large offer of power systems.Superior products. World class service. One source.
WHEREVER THERE’S MINING, WE’RE THERE.
HEWITT EQUIPMENT LIMITED Tel: 514.630.31005001, Trans-Canada Highway Toll free: 800.363.6785Pointe-Claire, Québec, www.hewitt.caCanada, H9R 1B8 mining.cat.com M
AC
50-
12
MAC 50-12 Pub Energy & Mining Spring.indd 1 12-06-06 3:59 PM
201JULY 2012 The International Resource Journal
EFFICIENCY & EXPERTISEA subsidiary within the Municipal Group of Companies, Greyrock is a full service civil/mining contractor based in Labrador. Our history is firmly embedded in the mining industry of Eastern Canada, and, as an organization, we have been operating in the region for well over 50 years. Thanks to our experience and knowledge, we provide a vast range of service capabilities, including:
· Mine design/construction · Drilling/blasting· Open pit mining and stripping · Mine support services· Mine closure/reclamation · Plant construction· Rail/road construction · Hauling (ore/waste) · Crushing and screening · Tailings construction
In addition to strict safety and environmental practices, we are dedicated to working with aboriginal groups to promote sustainable and socially responsible development — specifically through our cross cultural partnership, Innu Municipal.
To learn more about our team, please visit www.municipalgroup.caor call 709-944-2995.
INNU MUNICIPAL a broad range of backgrounds with experience
in mining, accounting, business and marketing,
geology, strategy and most recently, commanding
the Canadian Armed Forces.
General (Ret.) Rick Hillier, former Chief of the
Defence Staff, the highest rank of the Canadian
Forces, joined New Millennium’s board in 2011.
If that seems surprising, consider this, what iron
ore project couldn’t use a leader with a steady
resolve who doesn’t waver under pressure?
“He’s managed large groups of people and
facilities, the logistics side, but a good part of
the decision was that he is a Newfoundlander.
:HZHUHWU\LQJWRÀQGVRPHERG\ZLWKJRRGEXVL-
ness sense, experience and who understands
“We were trying to !nd somebody with good business sense, experience and who understands the area in which we operate, looking down the list [Rick Hillier’s] name certainly popped”
202 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron
the area in which we operate, looking down
the list [Rick Hillier’s] name certainly popped,”
Journeaux says.
+HDGGVWKDWWKHKLJKSURÀOHDSSRLQWPHQW
is a welcome boost in furthering the company’s
vision to develop the Millennium Iron range into
a world class mining operation.
“New Millennium is a small junior mining
company on the TSx Exchange but we have
these very large deposits and we see it
becoming another Mesabi iron range, which
had eight or so mining operations at one time
in different pits. We have this resource which
will last for upwards of a century and the
world’s iron ore resources are being depleted
at a considerable rate, and also other factors,
declining grades, quality. We have a brand
new operation where we will be able to put
BRITISH COLUMBIA ALBERTA SASKATCHEWAN NOVA SCOTIA NEWFOUNDLAND & LABRADOR
DOOQRUWKFRP
Integrity and Innovation.
One Source.
From prefeasibility, permitting
and engineering, through
development, to
closure and reclamation,
Allnorth is the One Source
for your mining project needs.
“New Millennium is a small junior mining company on the TSX Exchange but we have these very large deposits and we see it becoming another Mesabi iron range, which had eight or so mining operations at one time in di#erent pits”
203JULY 2012 The International Resource Journal
out the highest quality products and all of this
purports for a strong future for New Millennium
and we hope that one day we will rank in the
larger mining companies in the world, certainly
in iron ore,” Journeaux says.
www.nMliRon.coM
“New Millennium is a small junior mining company on the TSX Exchange but we have these very large deposits and we see it becoming another Mesabi iron range, which had eight or so mining operations at one time in di#erent pits”
Forge Resources
204FoRGinG ahead
Forge ResourcesWith much of the pre-development legwork already completed at its recently acquired $agship Balla Balla project in Western Australia, Forge Resources has begun marketing a magnetite iron ore product as the company seeks to secure project !nancing.204
us, canada and austRalia Metals and MininG
FoRGinG ahead
206 US, CANADA AND AUSTRALIA METALS AND MINING Forge Resources
Balla Balla is a large-scale, JORC compliant
titanium-vanadium-magnetite resource close to the
FRDVWLQ:HVWHUQ$XVWUDOLDZLWKGHÀQHGUHVHUYHVRQ
granted mining tenements. Major approvals such as
environment, native title, water access and condi-
WLRQDOJDVDJUHHPHQWVDUHLQSODFHDQGDGHÀQLWLYH
feasibility study (DFS) was completed in early 2010.
´7KH')6VKRZVWKHSURMHFWLVYHU\ÀQDQFLDOO\
robust as a magnetite only project. However what
is attractive about Balla Balla is the additional
vanadium and titanium contained within the
resource, which we view as an embedded option
for the company,” says Matthew James, manag-
ing director of Forge.
Initially, the vanadium which is contained
within the magnetite concentrate that will be sold
to steel mills, most likely in China, will act as a
free credit for those mills that have the technol-
ogy to separate the vanadium, he explains.
“This vanadium credit allows steel mills to lower
their net cost of production. In addition we will be
getting a titanium revenue stream from an ilmenite
by-product produced alongside the magnetite. In
the longer term we aim to extract the full value of
both the titanium and the vanadium,” says James.
Missing linkHowever there is one missing link, which is the
original studies were built on access to 10 million
tonnes per year (Mt/y) of shipping capacity at
Port Hedland.
James explains that Forge bought the Balla
Balla project from Atlas Iron for A$39.5 million,
which was over $100 million less than Atlas Iron
paid approximately 18 month prior to acquire
Aurox Resources, which then owned the project.
Atlas kept the 10Mt/y Port Hedland capacity for
its own DSO hematite iron ore operations.
“Without the Port Hedland capacity we knew
an alternative transport route would be required
to get to export. We were already looking at
trans-shipping as an option, which we think is
feasible particularly as a trans-shipment opera-
tor is already in northern Western Australia. In
places like South America and Indonesia there
is quite a bit of this being done, where the mate-
rial is barged from the coast to a ship anchored
offshore” says James.
A back up plan includes negotiating capacity
at Anketell Port since the Balla Balla project is
situated just 100km east of the area and Forge
has been short-listed for consideration, but the
company’s main focus is on trans-shipment.
“Our primary plan is the trans-shipment op-
WLRQ:HKDYHLGHQWLÀHGWKUHHORFDWLRQVQHDUWKH
mine that we are evaluating for trans-shipment.
:HKDYHÀQLVKHGVFRSLQJVWXGLHVRQWKHVHD
side of the operation and on the land side we
207JULY 2012 The International Resource Journal
pRoJect in the pipeline
Eucla Mineral Sands project in Western Australia
Three contiguous granted exploration licences, 218.8km2
Maiden resource of 470Mt at 4.6 per cent heavy minerals
= 21.5Mt of contained heavy mineral
Farm-in agreement signed with a commitment to spend
A$2 million to earn 50.1 per cent and ability to go to 100
per cent with continued farm-in or JV with vendors
“We have two years to spend about $1 million with what
remains of the farm-in agreement to attain 50.1 per cent. It
is important to note that the McClaren deposit, which is the
resource we have defined, is a fairly small area within the
tenements. It is ilmenite-rich but the zirconium levels are
fairly low at around one per cent. We are ideally looking for
an area to contain a higher level of zirconium, ideally four or
five per cent. Based on the geology, we are quite confident
it is there, it is just a matter of finding it,” –Matthew James,
managing director, Forge Resources.
208 US, CANADA AND AUSTRALIA METALS AND MINING Forge Resources
A professional team with extensive global experience Located in Sydney ensuring easy access to global mineral projects Specialists in Induced Polarisation and Electromagnetics Pre IPO - cost effective data Greenfields exploration Resource Definition
P +61 2 8920 3252 l M +61 448 493 717Suite 203, 283 Alfred Street, North Sydney NSW [email protected]
Beyond just data acquisition.
HARVEST EXPLORATION PTY LTD ABN:68003069501
“Covering all of your mineral exploration bases”Harvest Exploration Pty Ltd is a geological and mineral resources consultancy that has been successfully operating in Australia for almost 30 years.
We provide high level services in the following areas:The Firm encompasses:
209JULY 2012 The International Resource Journal
are doing detailed studies on environment as
well as engineering in terms of infrastructure
requirements.” he adds.
Calculating costsWorking with GR Engineering Services as well
as other supporting engineers and specialists
in the mining industry, Forge is anticipating the
release of a revised DFS report in August which
details the company’s views on revised capex
DQGRSH[ÀJXUHV
Currently, capex is at $1.3 billion, but James
H[SODLQVWKDWWKLVPD\EHVLJQLÀFDQWO\UHGXFHG
and Forge is aiming to see that number come
down closer to $1 billion. Some of that reduc-
tion will come from removing the costs of a slurry
pipeline intended to carry product to Port Hedland
and associated port infrastructure requirements
which accounted for $310 million of the original
FDSH[ÀJXUH7KDWLVQRWWRVD\WKHUHZLOOQRWEH
expenditures on a transhipment option, he notes,
EXWLQJHQHUDOWKHFRPSDQ\LVFRQÀGHQWWKDWERWK
capital and operating costs, currently approxi-
mately $40 per tonne of 58 percent Fe magnetite
concentrate, can be reduced all around.
In a recent capital raising effort, Forge raised
$50 million in a combined debt and equity pack-
age to purchase 100 per cent ownership of Balla
Balla. Todd Capital came in as a strong unincor-
porated joint venture partner, contributing $10
million towards the purchase for a subsequent
25 per cent ownership of the project as well
as contributing towards the equity component,
raised at $0.5/share, to become a 19.9 percent
shareholder in the company.
“As Forge is the project manager we will be
developing a close relationship with Todd Capi-
tal in the development of the Balla Balla proj-
ect. After the purchase of this asset, Forge is
left with $10 million for working capital, which
we are using for the work to get us through to
SURMHFWÀQDQFHµ-DPHVVD\V
“The DFS shows the project is very financially robust as a magnetite only project. However what is attractive about Balla Balla is the additional vanadium and titanium contained within the resource, which we view as an embedded option for the company”
210 US, CANADA AND AUSTRALIA METALS AND MINING Forge Resources
new south wales pRospects
Wymah, 100 per cent owned, Tungsten, tin and
molybdenum
Mayfield, 46.55 per cent owned, Mineral resources
containing 94,800 ounces gold, 1.3 million ounces silver,
17,250 tonnes copper and 29,900 tonnes zince
Michelago, 100 per cent owned, Volcanogenetic massive
sulphides – base metals
Captains Flat, 49 per cent reducing to 25 per cent
owned, Volcanogenetic massive sulphides – base metals
Mayfield North, 100 per cent owned, Granite hosted
copper/gold with potential for Cadia-Ridgeway or
Intrusive Related Gold (IRG) deposits
211JULY 2012 The International Resource Journal
Towards this end, Forge has received a letter
of interest from National Australia Bank in rela-
tion to project funding and the company aims to
complete this step by the end of 2012.
“One of the key aspects why Forge is a good
investment opportunity is the track record of
the management team, for example, our chair-
man has a strong track record of identifying and
ÀQDQFLQJUHVRXUFHSURMHFWVµKHVD\V
On board and o!takeApart from an extensive history in the resource
banking and development sector, chairman Nick
Curtis has seen two companies through from
tens of millions to billions in market cap on the
ASx – Sino Gold and later, Lynas Corporation.
James himself is an alumnus of Lynas as is
Forge’s non-executive director, Harold Wang, an
experienced resources expert who has worked
across China’s ferrous and non-ferrous sector as
well as in Australia. Prior to Lynas, James worked
at McKinsey & Company and Deutsche Bank,
both in London.
$IWHUVHFXULQJSURMHFWÀQDQFLQJ)RUJHH[SHFWV
WKDWIURPVWDUWRIHQJLQHHULQJWRÀUVWSURGXFWZLOO
be a three-year schedule starting with 6Mt/y pro-
duction and ramping up to 10Mt/y a year later.
Mineral reserve estimates shows proven and
probable reserves of 229 million tonnes (Mt) with
45 per cent Fe content, 0.62 per cent vanadium
oxide and 13.8 per cent titanium oxide.
There are historical offtake agreements
equating to 10Mt/y with two Chinese steel mills
with which Forge has started initial discussions
in a bid to revive the contracts.
´7KH%DOOD%DOODSURMHFWLVDÁDJVKLSSURM-
ect, a company-making asset and in a relative-
ly short time-frame can be put into production
ZKLFKZLOOFUHDWHVLJQLÀFDQWYDOXHIRUWKHFRP-
pany,” he adds.
FoRGeResouRces.coM.au
Artwork @ 100% of actual sizeScale
95 121mm width x mm heightTrim0 0mm width x mm heightBleed
Ink/s CMYK
FA AM/D
DD QA
CSM HH if req
212 US, CANADA AND AUSTRALIA METALS AND MINING Navarre Minerals
212GoinG BiG FoR GoldNavarre Minerals
213JULY 2012 The International Resource Journal
212Australian-based explorer Navarre Minerals has achieved early exploration success at its Tandarra Gold Prospect situated just 40km from the historic Bendigo Gold!eld in Victoria. GoinG BiG FoR Gold
us, canada and austRalia Metals and MininG
214 US, CANADA AND AUSTRALIA METALS AND MINING Navarre Minerals
215JULY 2012 The International Resource Journal
naVaRRe MineRals has FRPSOHWHGWKHÀUVWSKDVH
of a major drilling programme and though results
are still coming in, early indications show cause for
optimism - RC and diamond drilling have proven
over 850m of strike with continuous gold minerali-
sation and 10 assays have greater than 20 grams
per tonne (g/t) of gold contained intersected over
the full 2,500m of strike. A maiden mineral resource
LVDQWLFLSDWHGLQWKHÀUVWTXDUWHURI
This goes a long way to help the company
prove up the economic potential of a mining
operation targeting high-grade pods of gold
contained within broad zones of gold bearing
quartz. It helps that the area’s geology and
PLQHUDOLVDWLRQLVDNLQWRWKH%HQGLJR*ROGÀHOG
which produced over 22 million ounces (Moz) of
gold over its lifetime.
´6RIDUZHKDYHLGHQWLÀHGSRWHQWLDOOLQHV
of reef and are RC drilling testing three of those
at this stage so there is plenty of work to do. One
of those lines, the Tomorrow Anticline, contains
a level of gold between one and three grams per
tonne with patches of high grade. The results so
far are in line with all of our models and we are
SUHWW\H[FLWHGDWGHÀQLQJRYHUPRIFRQWLQX-
ous gold mineralisation with our RC drilling from
ZLWKLQDP]RQHFRQÀUPHGE\DLUFRUHGULOO-
ing,” says Geoff McDermott, managing director
and chief executive at Navarre.
Taking coverMcDermott explains that the terrain on which
the company is exploring is concealed under a
shallow cover of sands and clays. In fact, most
of the 75Moz’s of gold mined historically in Vic-
toria has been found in areas where basement
rocks were exposed to the surface and these
veins were followed underground.
7KHUHFHQWEURDGLQWHUFHSWVFRQÀUPRSHQSLW
mining potential and the company is well-funded
to carry out the A$4.2 million programme of geo-
physics, air-core, RC and diamond drilling after
raising $3.7 million last year.
216 US, CANADA AND AUSTRALIA METALS AND MINING Navarre Minerals
Currently, Navarre is planning a bulk sam-
ple with some 15 to 20 tonnes of material left
after drilling.
The company’s board owns 25 per cent of
the stock with another nine per cent of the com-
pany owned by Crocodile Gold as part of a legacy
asset when it acquired the Australian assets of
Canadian miner Northgate Minerals.
“We are strong believers in Victoria and hope
that one day it will return to its golden heyday.
Hopefully Tandarra is the start of a new rush,”
explains McDermott.
A recent farm-in arrangement has been nego-
WLDWHGZLWK&DVWOHPDLQH*ROGÀHOGV²EHLQJWDNHQ
over by Singaporean LionGold - for an area imme-
diately south of the Tandarra prospect since min-
eralisation continues north and south of Navarre’s
existing tenements. For $900,000, Navarre can
earn-in 75 per cent of the Raydarra Project.
Moreover, Crocodile Gold is the company’s
neighbour at another of its projects, Kingston,
where it had a good drill intersection around an
old mining prospect.
Great neighbourhoodMcDermott adds that Navarre’s projects are
located in one of the best addresses in the world.
Victoria is a small state with excellent infrastruc-
ture. Tandarra is ideally located near the city of
kinGstonAt-surface, oxide gold mineralisation
with shallow high-grade gold intercepts
to follow up
100% owned with dominant position
along prospective Landsborough Fault
Historic mining over 1,000 metres of
strike to 75 metres deep – high-grade
gold, silver and lead mined
Active mining jurisdiction – Stawell Gold
Mines operation 30 kilometres away
Navarre Minerals recently conducted
a small diamond drilling program ( 3
holes) the first hole had the following
results ; 16.9m at 5.5g Au/t from 65.7m
down-hole in DDK001, including 3.1m
@ 29.5g Au/t on hangingwall of quartz
lode structure. There was visible gold
in quartz observed in drill hole DDK001
between 65.7m and 65.9m down-hole.
Quartz lode structure was intersected in
next two diamond holes with geological
logging and assaying to come.
BallaRat southGravity ridge may control gold
mineralisation
Possible conceptual “Stawell basalt
dome” gold target
Gravity lines planned to model depth
217JULY 2012 The International Resource Journal
218 US, CANADA AND AUSTRALIA METALS AND MINING Navarre Minerals
Bendigo, which has a history of mining among
its population of about 100,000 people.
“There is access to water, people, power
which passes through the western side of our
tenement, there is a highway that goes straight
past and a daily train service out of Melbourne…
we are well situated. And we don’t have a town or
city sitting over top of our project so open pit min-
ing is an option,” McDermott says.
Aside from Tandarra and Kingston, Navarre
is also exploring for base metals at its Black
Range property, which is a copper-zinc-gold 100
per cent owned prospect with similar geology to
Tasmania’s Mount Read Volcanics – host to large
219JULY 2012 The International Resource Journal
deposits such as Mount Lyell and Rosebery. The
region has been under-explored due to poor out-
crop and shallow cover.
“The techniques we used to explore under shal-
low cover in Tandarra can be applied to the Black
Range prospect. The Victorian government is keen to
promote exploration in this area,” McDermott says.
As an experienced geologist and senior com-
pany executive with over 20 years of experience
and specialised expertise in Victoria, McDermott
adds that he is intimately familiar with both suc-
cessful and unsuccessful exploration techniques
for the region.
“I have served a long apprenticeship work-
ing for other companies in Victoria and now I am
using my accumulated knowledge to give Navarre
every chance of attaining exploration success.
We have made a virgin gold discovery at Tan-
darra and are working hard using science and
technology to look under cover targeting a multi-
million ounce resource,” he says.
www.naVaRRe.coM.au
“We are strong believers in Victoria and hope that one day it will return to its golden heyday. Hopefully Tandarra is the start of a new rush.”
220 The Resource Channel
"e Resource Channel’s review of Australian mining projects in 2012220
221JULY 2012 The International Resource Journal
"e Resource Channel’s review of Australian mining projects in 2012
special suppleMent
222 The Resource Channel
In contrast to the oil and gas sector, the mining sector in Australia is showing con$icting signs, writes Jody Elliott, director at "e Resource Channel
at least ten major LNG/CSG projects are now
under construction in Australia and generating
VLJQLÀFDQWMREQXPEHUVEXWWKHVLWXDWLRQIRUWKH
mining industry is slightly different.
Weaker commodity prices, the high Aus-
tralian dollar and higher input prices, including
labour costs, appear to be having a negative
impact in parts of the industry and a level of cau-
tion is evident throughout.
National economic indicators outside the re-
sources sector remain sluggish and there is still
a great deal of uncertainty on the international
front especially in Europe. This is having some
ÁRZRQHIIHFWZKHUHZHDUHQRZVHHLQJUHFUXLW-
ment freezes, project delays and even redundan-
cies - particularly in the base metals sector both
in Western Australia and Queensland and in the
steel industry in New South Wales.
Data coming from the exploration sector also
paints a mixed picture. Whilst Australian Bureau
RI6WDWLVWLFV$%6ÀJXUHVUHSRUWHGUHFRUGH[-
ploration expenditure for 2011, closer analysis
shows that expenditure in the iron ore sector
rose 32.9 per cent while exploration for Nickel
and Cobalt fell 33 per cent.
In the Bureau of Resources and Energy Econom-
ics’ latest release dated March 2012 they predict;
Australia’s resources and energy com-
modity export earnings are forecast to
grow over the medium term to reach a
record A$225 billion dollars in 2016-17
Despite projections of lower commodity pric-
es over the medium term this is to be offset
by substantially greater export volumes
223JULY 2012 The International Resource Journal
Between now and 2016-17 export vol-
umes are forecast to increase for iron ore
(62 per cent), metallurgical coal (47 per
cent), thermal coal (65 per cent), copper
ores and concentrate (77 per cent) and
alumina (29 per cent).
According to the Bureau’s Professor Grafton,
the increase in Australia’s export volumes for
PRVWFRPPRGLWLHVUHÁHFWVFRPPLWPHQWVE\WKH
industry to increase production and expand infra-
structure over the medium term.
That said, and despite signs of a more tem-
pered outlook and reduced commodity prices,
the iron ore, coal and gold sectors continue to ex-
pand at lightning speed. It is particularly in these
commodity sectors where we see the volume of
projects generating literally thousands of employ-
ment opportunities.
Our 2012 mining project summary focuses
on major projects mainly in Western Australia
and Queensland that are either underway or
showing strong progress towards this goal. This
list is not in any way exhaustive, particularly
when you consider there are 456 projects in the
Australian resource sector in the construction
pipeline with 272 of those already committed
and/or under construction. These range from
major expansions like BHP Billiton’s Iron Ore to
VLJQLÀFDQWSURMHFWVOLNH+DQFRFN3URVSHFWLQJ·V
5R\+LOOWRVPDOOHUSURMHFWVOLNHDUHÀQHU\PRGLÀ-
cation to increase capacity.
Even with caution evident in some com-
modities, the employment demand is expected
to peak at 150,000 new entrants by the end of
2013 for construction alone.
The following is an overview of a select few of
the major and more interesting mining projects
either underway, or due to commence shortly in
both Western Australia and Queensland.
224 The Resource Channel
Rio tinto expansion
operators: Rio Tinto
cost: A$15+ billion
location: Pilbara
timeframe: 2012 - 2017
employment: Requires over 6,000 employees in
the next 5 years
status: In the Pilbara, initially three of Rio Tinto’s
mines are expanding:
Brockman 4 is expected to almost double
its current capacity of 22 to 40 Mt per
year (Mt/y) by 2013.
Western Turner Syncline will expand from
the 6 Mt/y road haulage operation it is to-
day to a 15 Mt/y overland conveyor opera-
tion by 2013.
Nammuldi is earmarked for future expan-
VLRQZLWKDÀQDOGHFLVLRQRQLQYHVWPHQW
expected in the second half of 2011.
In addition, they will achieve growth through
sustaining existing mines and bringing on new
mines such as:
Marandoo, which will extend its mine life
by 16 years to 2030 at the current mining
rate of 15 Mt/y.
Hope Downs 4; a new open cut mine
with an annual capacity of 15 million
WRQQHV0WDQGÀUVWSURGXFWLRQDQWLFL-
pated in 2013.
Capacity at Cape Lambert port will also
expand from 80 to 183 Mt/y by 2015.
Works include the construction of a
new 1.8 km jetty and four berth wharf.
Importantly, these are all on the west-
ern side of the rail line and so will have
minimal impact on existing operations
on the eastern side. The building of the
new jetty and wharf requires a dredging
SURJUDPPHDVZHOODVVLJQLÀFDQWPDULQH
and on-shore works.
westeRn austRalia
225JULY 2012 The International Resource Journal
Rio tinto expansion suppoRt:
NRW; awarded earthworks at the Cape
Lambert Port B expansion project,
civil works for the Primary Crusher at
the Western Turner Syncline project
and the construction of the Boolgeeda
airstrip at the Western Turner
Brockman project.
Brierty; has been awarded a $55m
construction contract for the
development of infrastructure at
Wickham in the Pilbara. It’s the
first major contract awarded for the
company’s new joint venture with
Ngarluma Yindjibarndi Foundational
(NYFL), Brierty NYFL, established
in December. The Wickham Town
Expansion Phase 2 project will create
a new Wickham South subdivision and
includes 212 new dwellings, 25 residential
lots, the installation of 198 new high quality
fly in/fly out (FIFO) accommodation units,
the construction of a new 1,600m square
town administration and training centre for
both the company and community, as well
as the new public recreational parks.
FoRtescue Raises $490M FoR pilBaRa iRon oRe expan-sion plans
IRJ - June 8 - Fortescue has secured
$490 million in corporate senior debt
facilities to top up funding for its iron
ore expansion plans in the Pilbara
region of Australia.
The credit facilities, backed by
European Export Credit Agencies, will
be drawn over the next 12 to 18 months.
Fortescue’s CFO Stephen Pearce said
that the long-term corporate financing
strategy will extend the company’s
debt maturity profile at attractive rates
and that “the success of Fortescue’s
capital raising initiatives continues to
demonstrate the company’s ability to
diversify funding sources from a range
of local and international capital
markets”.
226 The Resource Channel
Roy hill iRon oRe pRoJect
operators: Hancock Prospecting
Location: Chichester Ranges
Timeframe: Construction between mid-2011 –
'HFHPEHUZLWKH[SHFWHGÀUVWRUHRQVKLS
planned for 2014
Cost: Reported to be approx. A$7 billion
Employment: During construction, the workforce
will peak at 3,500 people (with a total of 10,000 ex-
pected over the life of construction) and it will have
an operational manning of over 1,600 personnel.
Status: The Roy Hill project will be a world-class
iron ore mine. The deposit is the last of the large
low phosphorous ore bodies in Australia outside
the control of the majors and is located 105km
north-east of Newman in the Pilbara region of
Western Australia.
The project will consist of:
Mining operation for 55Mt/y hematite
iron ore;
Crushing, screening and processing lump
DQGÀQHVSURGXFWV
Stockpiling and train loading;
A 370km standard gauge, single line,
dedicated heavy-haul railway from the
mine site to Port Hedland;
westeRn austRalia
227JULY 2012 The International Resource Journal
Roy hill suppoRt:
Brookfield Multiplex Engineering
& Infrastructure; is appointed the
preferred contractor for the design,
procurement and construction of the
$1.2 billion Process Plant and Mine
Material Handling Facilities at the mine
site.
Clough Forge; awarded an Early
Contractor Involvement (ECI) contract
for the Port Materials Handling
Facilities.
ISS Facility Services Australia; provision
of camp management services,
including catering, accommodation and
transportation services.
Ausco Modular; will build the
accommodation.
BGC Contracting; won construction
contracts to build the aerodrome,
airport roads, and village roads and is
expected to generate 4,000 jobs during
the construction phase.
Macmahon & John Holland Group;
building a 340 kilometre rail line
from the Roy Hill mine through to Port
Hedland.
Port facility located at Port Hedland for
receiving, stockpiling, screening;
Exporting 55Mt/y (wet) of direct
shipped hematite iron ore as lump and
ÀQHVSURGXFWV
228 The Resource Channel
sino iRon pRoJect
operators:&LWLF3DFLÀF0LQLQJ
Location: 85km south of Karratha
Timeframe: First production expected in late
2012 with a 25-year mine life
Cost: US$30 billion
Employment: More than 4,000 construction jobs
and 600 operational jobs. With commissioning
QRZXQGHUZD\&LWLF3DFLÀFKDVUDPSHGXSLWVRS-
erational recruitment efforts.
Status: In the mine-pit, individual load tests have
EHHQFRPSOHWHGIRUWKHÀUVWFUXVKHUDQGWKHOLQH
1 conveyor belt has been installed. The power
distribution system is ready to be energised. The
major components of the second crusher have
also been installed.
Stockpile construction is complete in the con-
centrator area with ongoing punch list clearance.
The third group of mills has been delivered to site
and positioned. Mechanical and piping installa-
tion of the Line 1 AG mill is nearly complete. The
EDOOPLOODQGÀUVWPDJQHWLFVHSDUDWLRQPHFKDQLFDO
installation for Line 1 is complete excluding the
westeRn austRalia
liner and cranes. Second magnetic separation pip-
ing and electrical installation is complete. The main
e-house is ready to be energised; water cooling and
air compressor systems have been installed and
pump station installation is underway.
At the power station, gas turbines 3 and 4 have
EHHQÀUHGZLWKV\QFKURQLVDWLRQDQGORDGWHVWLQJ
XQGHU0:DOVRFRPSOHWHG/XEHRLOÁXVKLQJ
and stationary commissioning is progressing on
JDVWXUELQHVDQG/XEHRLOÁXVKLQJKDV
been completed for steam turbines 1 and 2.
Hydro tests have been carried out on the desali-
nation, return water and concentrate slurry pipe-
lines, which are now ready for integrated com-
229JULY 2012 The International Resource Journal
missioning. Main substation electrical testing has
been completed and is ready to be energised.
Major port assets including four barges, two tugs
DQGWKHÀUVWRIWZRWUDQVVKLSSHUVWKHÀUVWRI
their kind in WA waters) have arrived.
In the port area, piping and electrical installation
has been completed for building 1 of the dewa-
tering plant and individual equipment testing is
underway. Conveyor structure and mechanical
installation has been completed at the stockyard
and belt installation is progressing. Hydro tests
have been carried out on the concentrate thick-
eners and power distribution systems have been
installed throughout the area.
At the desalination plant, pressure testing and
bubble tests have been completed on the east
train and endurance testing has been completed
on all three intake pumps. Loop checking is
ongoing. Mechanical, electrical and instrumenta-
tion installation in the west train is progressing
and mechanical installation for the west train
pre-treatment is nearing completion.
Civil work has been completed for all workshops
in the mining infrastructure area and steel struc-
ture erection is underway.
230 The Resource Channel
southeRn seawateR desalination plant staGe 2
operators: Southern Seawater Alliance (SSWA)
Location: Binningup, south of Perth
Timeframe: 18 month construction, expected to
be commissioned by 2014
Cost: A$955 million
Employment: 600 jobs during construction, local
workforce only (no camp facilities)
Status: A Spanish-led consortium, Southern Sea-
water Alliance (SSWA) will build a second desali-
nation plant with 100 gigalitre per year (GL/year)
maximum capacity plant for the Water Corpora-
WLRQ7KHÀUVW*/DQQXPSODQWFDSDFLW\ZLOO
become fully operational ahead of schedule in
ODWHDQGLVLQWKHÀQDOVWDJHVRIFRPPLV-
sioning. The SSWA is led by Spanish companies,
Tecnicas Reunidas and Valoriza Agua. Its part-
ners are construction company, AJ Lucas and
engineering consultancy Worley Parsons. Tecni-
cas Reunidas and Valoriza Agua have extensive
major desalination experience and are interna-
tional multidiscipline construction companies.
These two companies will operate and maintain
the full plant, which will be owned by the Water
Corporation, for 25 years.
SSWA plant support:
westeRn austRalia
231JULY 2012 The International Resource Journal
GVk plays down austRalian en-ViRonMent MinisteR’s stopped clock
IRJ - June 6 - GVK Power and Infrastructure,
the Indian group developing the Alpha
Queensland coal project, has said “it is
committed to norms and confident of a
positive outcome” in response to Australian
environment minister Tony Burke’s publicly
stated concerns over granting of mine and
rail permits.
Burke said to media that he “stopping the
clock on the process which has been given
to us by the Queensland government”
because of remaining ecological concerns
over the $10 billion Alpha coal and rail
project, which GVK co-owns in the Galilee
basin with Gina Rinehart, the billionaire and
mining heiress.
GVK said that, “Minister Burke advising that
he is “stopping the clock” by no means is
to be interpreted that the project will not
proceed, nor is it an indication of the Federal
Government’s decision.”
The Indian coal producer added that requests
from federal departments to clarify existing
information “is not at all unusual in the
process” of acquiring permits.
Analysts quoted in the media have
implied that the move by the Australian
government is political in nature though
the delay is also widely viewed as a blow
to the Alpha project against a backdrop of
competition from other energy companies
and coal shortages in India.
AusGroup subsidiary, AGC Industries
has received a Letter of Award valued at
approximately $30 million by Southern
Seawater Alliance for the construction to
expand the second seawater desalination
plant to its 100 GL/y capacity, scheduled
to be completed by the end of 2012.
The scope of work for AGC will cover struc-
tural, mechanical and piping installation
work of the main facility as well as fabri-
cation of the secondary steelwork.
ABB – Australia, Automation and Power
Technologies.
Siemens
232 The Resource Channel
westeRn austRalia
Bhp Billiton, iRon oRe expan-sion pRoJects
operators: BHP Billiton
Location: Pilbara
Timeframe: Construction has commenced,
VWDUWXSGXHLQWKHÀUVWKDOIRI
Cost: Reported to be approx. A$7 billion
Employment: Exact numbers unknown, but is in
the thousands for construction and operational.
Status: BHP produces most of its iron ore
through seven mines at three big mining hubs in
the central and east Pilbara known as MAC, New-
man and Yandi. To expand to 220 Mt it will build
another, Jimblebar, and to move to 350 Mt it will
open up four more mines: Jinidi, Marillana 1 and
2 and Southern Flank. Since our last update,
BHP Billiton has also bought out the equipment
and operators of its contractor, HWE and moved
to an owner-operator model.
BHP Billiton announced in February 2012, the
approval of US$917 million (BHP Billiton share
$779 million) in pre-commitment funding for the
construction of a 100 Mt/y outer harbour facility
associated with its expansion projects. The
project, which is expected to be reviewed for full
approval in the fourth quarter of calendar year
2012, has an embedded option to expand by a
further 100 Mt per year. The funds approved
will enable the company to progress feasibility
studies and the procurement of long lead time
items. It will also allow for dredging to begin,
subject to the necessary regulatory approvals. In
parallel with this work, engineering studies are
underway to match mine and rail expansions to
the expanded port capacity.
7KHÀUVWSKDVHRIWKH2XWHU+DUERXU'HYHORS-
ment would include the proposed construction
of a 4km jetty, a four-berth wharf, 32 kilometres
of dredged departure channel and
landside infrastructure, including stockyards and
a rail spur.
233JULY 2012 The International Resource Journal
Bhp Billiton iRon oRe expan-sion suppoRt:
Monadelphous; has secured a
significant number of contracts for
major works, including structural,
mechanical and piping works for the
expansion project.
Joint venture partners, RCR Tomlinson
and Laing O’Rourke; will design and
construct primary and secondary
crushing facilities, including overland
conveyors.
FAST; a joint venture between Fluor
Australia and SKM will develop and
deliver iron ore projects to meet the
global market demand forecast for BHP
Billiton’s Iron Ore business.
John Holland Group.
Macmahon Holdings; awarded in
August 2011 the contract for pre-
development work adjacent to current
operations at BHP Billiton Iron Ore’s
Wheelarra Mine to construct haul roads
and run of mine.
United Group Resources; awarded
an $A165 million contract for the
fabrication and on-site installation
of structural steel and mechanical
equipment associated with transfer
stations, conveyors and shuttles.
AGC; awarded an A$100m contract for
the structural, mechanical, piping and
heavy haulage at the company’s Yandi
operation. The scope of work includes
construction of an Ore Handling Plant,
stockpile and conveyor systems;
fabrication of 2,000t of conveyor
components; and transportation of 43
structural modules - ranging from 100
to 300t - from Port Hedland to the Yandi
mine site, located 140km northwest of
Newman in Western Australia’s Pilbara
region.
RCR Tomlinson; has been awarded a
contract to provide power generation
works for BHP Billiton Iron Ore’s
Yarnima Combined Cycle Power Station
in Newman, Western Australia. The
scope of works includes the design,
manufacture and supply of three Heat
Recovery Steam Generators (HRSGs)
and associated equipment. Due for
completion in the second quarter
of 2013, the contract is valued at
approximately $30 million.
234 The Resource Channel
oakaJee poRt and Rail
operators: OPR was established in September
2007 to pursue a joint venture between Murchi-
son Metals and Mitsubishi Development, each of
which has a 50 per cent stake in OPR.Murchison
Metals. The project is now owned 100 per cent
by Mitsubishi.
Location: Mid west region of Western Australia
Timeframe: The project timetable from construc-
WLRQWR5DLODQG3RUWFRPPLVVLRQLQJWRÀUVWRUHRQ
ship, takes the project out to 2014.
Cost: A$3 billion +
Employment: OPR expects to employ about 250
personnel, who will live in the region.
During construction, OPR expects the number of
port and rail construction workers to reach a peak
of around 2600, comprising approximately 900
port area workers and just over 1,700 rail work-
ers, 19 - 24 months into the construction period of
three years.
All construction workers will be employed by the
successful construction contractors. They will be
accommodated in single rooms with private ensuite
facilities in up to seven construction villages.
One village will be located at the port site and the
others along the rail line. The portside construction
village will comprise 1,100 rooms. The rail villages
will vary in size from 150 to 760 rooms. All villages
will be managed by the successful contractors in
accordance with strategies determined by OPR.
The total number of accommodation rooms will be
determined bearing in mind project management
manning, workforce rosters and visitor contingen-
cies.
Once the port and rail are operational, the villages
will be decommissioned.
Status: Oakajee Port and Rail (OPR) will deliver a
rail and port network business to transport iron
ore from Western Australia’s mid-west region to
customers across the globe.
Back in 2009, OPR and the Western Australian
State Government signed an exclusive State
Development Agreement for the development of
the multi-billion dollar deepwater port at Oaka-
jee, 25 km north of Geraldton and integrated rail
network to service iron ore miners and other port
users in the mid-west region.
westeRn austRalia
235JULY 2012 The International Resource Journal
The port will cater for the world’s largest ore
carriers and the railway network will service the
growing number of mining projects in the region.
In 2010, Oakajee Port and Rail (OPR) delivered
a draft Bankable Feasibility Study (BFS) to the
Government of Western Australia, which demon-
strates strong technical feasibility for the devel-
opment of the Oakajee port and rail project.
Draft Implementation Agreements for the port
and rail have also been delivered to the State.
Both parties have substantially progressed the
terms of these agreements and will continue to
work together to progress outstanding matters.
On 20 February 2012, Mitsubishi Development
(MDP), wholly owned by Mitsubishi Corp – Ja-
SDQ·VODUJHVWJHQHUDOWUDGLQJFRPSDQ\ÀQDOLVHG
the purchase of Murchison Metals Ltd’s 50 per
cent stake in OPR, increasing its interest in the
project to 100 per cent.
Project planning, evaluation, engineering and
regulatory approvals are well advanced. Indepen-
dent peer reviews, including value engineering
DVVHVVPHQWVKDYHLGHQWLÀHG235·VSRUWDQGUDLO
design as the optimal solution to meet the gov-
ernment’s scoping requirements.
236 The Resource Channel
westeRn austRalia
kaRaRa iRon oRe pRoJect
operators: Gindalbie Metals and AnSteel (one of
China’s leading steel and iron ore companies)
Location: The operations, located 225km inland
from Geraldton in the mid-west region is the re-
sult of an A$2.57 billion project which has been
in development since early 2009 and is currently
LQWKHÀQDOSKDVHRIFRQVWUXFWLRQ
Timeframe: Approaching commissioning, due
September 2012
Employment: Karara Mining will require a perma-
nent workforce of approximately 600 on a long-
term basis once in full production.
Status: Karara Mining is fast approaching com-
missioning in September this year for our 8Mt/y
magnetite operations and already underway with
feasibility for 16Mt/y expansion.
World-class magnetite deposit and multiple
hematite deposits with 30Mt/y potential for a
mine life in excess of 30 years.
First major magnetite operation “opening the
mid-west”
2,400Mt ore body covers an area 800m wide
by 3km long and has been so far been drilled
to a depth of 300m. Karara’s open pit will be
similar in size to the Kalgoorlie super pit once
complete with a processing plant for opera-
tions and maintainability.
Dry stacked tailings - only one in Australia
to use this world leading technology. The
SURGXFWLRQRIGU\WDLOLQJVUHSUHVHQWVDVLJQLÀ-
cant investment in water recycling capacity
at Karara, allowing the project to reduce its
water consumption by about one-third.
Commitment to training and education including
our University Scholarship Programme which is
open to students in site local communities who
KDYHDÀUPFRPPLWPHQWWRZRUNDWDSURIHVVLRQ-
al level in a mining company.
237JULY 2012 The International Resource Journal
kaRaRa iRon oRe pRoJect suppoRt:
Brierty; awarded $150-million, three-
and-a-half year contract to provide
hematite mining and associated
services, plus authorisation to
procure key plant and facilities.
Downer EDI; awarded the mining
operation contract in February
2012, generating 120 jobs. Valued
at approximately $570 million over
six years, the contract is on the
largest single operation contracts
for the project and will include the
provision of drill and blast, and load
and haul services.
skills shoRtaGe could stall austRalia’s MininG constRuction sectoR
IRJ – May 17 – Demand for mining-
related construction in Australia is
poised to surge over the next two years
but could be held back by a lack of
skilled workers, according to a survey.
It forecasts a 14.7 per cent rise in
the total value of engineering and
commercial construction this year,
driven by oil and gas processing and
heavy industrial projects.
Released today by the Australian
Industry Group and Australian
Constructors Association (ACA), the
construction outlook survey also predicts a
further rise of 13.8 per cent in 2013.
Engineering construction turnover is
set to rise by 17.1 per cent this year and
15.4 in the next, while the total value of
commercial construction is expected to
rise by 6.1 per cent and then 7.2.
However, this growth could be offset
by an expected continuance of skill
shortages.
Around 70 per cent of businesses
predict they’ll find it difficult to hire
skilled staff over the next six months.
Australian Industry Group chief
executive Innes Willox said that
engineering construction in the mining
sector is “bursting at the seams, with
skill shortages widely anticipated and
rising expectations of shortages of raw
materials and equipment.”
238 The Resource Channel
FMG expansion pRoJect
operators: Fortescue Metals
Location: Pilbara
Cost: $360 million
Timeframe: 18 months, operational by mid-013
Employment: Unknown, but expected to be in
excess of 600
Status: The existing integrated mine, rail and
port supply chain was constructed in less than
two years and Fortescue’s board has recently
approved an US$8.4 billion expansion to their
Pilbara operations. Expansions plans are on
schedule for completion in mid-2013.
operations:&ORXGEUHDNWKHÁDJVKLSPLQHLV
located approximately 260km from Port Hedland.
Christmas Creek is 50km to the east of Cloud-
break
Cloudbreak is a 40Mt/y mining operation, Christ-
mas Creek is currently operating at approximate-
ly 18Mt/y.
The 40t axle load railway is the heaviest haul in
the world with up to seven trains a day transport
iron ore from the mines to Herb Elliott Port in
Port Hedland
The port was designed with expansion in mind, to
allow construction to take place without interfer-
ing with daily operations
Development highlights:
Fortescue is undergoing a transformative
expansion from a 55Mt/y operation to a
155Mt/y powerhouse by June 2013.
The 155Mt/y expansion involves additional
infrastructure at Herb Elliott Port, 120km of
mainline rail duplication, a new 130km rail
spur from Solomon to the mainline, a 60Mt/y
mine at Solomon and Chichester Hub de-
velopment to take its combined production
capacity to 90Mt/y (plus 5Mt/y from a 50/50
BC Iron Joint Venture).
The Solomon Project is 120km to the west
of the Chichester Hub, more than 3,000Mt
have been discovered here and early ore is
expected later this year, with full production
on target for July 2013.
Solomon is the largest iron ore start-up in
Australia, showcasing innovation to execute in
record time and at a lower capital cost/tonne
westeRn austRalia
239JULY 2012 The International Resource Journal
FoRtescue FMG expansion suppoRt:
Decmil; will construct a 200 person rail
camp, including accommodation rooms
and associated facilities, at the site south
of Port Hedland as part of Fortescue
Metals Group’s T155 Rail Expansion
Programme. Construction has a forecast
completion date of second quarter of
calendar year 2012.
Worley Parsons
RCR Tomlinson
AGC
Construction Industries Australia
Brierty
Leighton Contractors; received formal
notification as preferred contractor
for Fortescue Metals mining and
operations at the Solomon iron ore
project. Leighton Contractors and
Fortescue have reached agreement
within a limited notice to proceed
(LNP) to facilitate the continuation of
negotiations regarding the five-year
mining and operations contract. The
LNP also provides for pre-mobilisation
activities and early services for the
project, including works for operational
readiness and full mine management. A
decision by Fortescue on contract award
is expected sometime in June 2012.
ration than any of its competitors
The company is evaluating early production of
WKHVLJQLÀFDQW1\LGLQJKXGLVFRYHU\DQGH[-
pect a full scale project to be its next develop-
ment step.
A maiden resource of 625 Mt has been de-
FODUHGDWWKH:HVWHUQ+XE7KLVÀJXUHLVH[-
pected to grow and both Nyidinghu and Western
Hub will rival the Chichester Hub in production
capacity.
Fortescue is investigating a ‘two port, three
hub’ strategy that would take production to
355Mt/y which could potentially include a
new Pilbara port.
240 The Resource Channel
alpha coal & keVin’s coRneR pRoJects
operators: Hancock Prospecting
Location: Galilee Basin
Timeframe: The Test Pit for Alpha Coal has been
completed and construction is due to commence
WKLV\HDUZLWKÀUVWVKLSPHQWVH[SHFWHGLQ
Cost: A$7.5 billion
Employment: 2,500 construction jobs and 1,600
permanent jobs
Status: Hancock Coal (HCPL), a wholly owned
subsidiary of Hancock Prospecting, has as its
centrepiece, the development of an extensive
thermal coal deposit in Queensland’s Galilee
Basin, about 400km inland from the coast. The
project will include the construction of approxi-
mately 495km of rail, port facilities, mine infra-
structure, process plant and workforce village.
Adjacent to Alpha Coal, the Kevin’s Corner Proj-
ect is a recognised thermal coal deposit within
the Galilee Basin. This deposit contains very
large resources of thermal coal in a premium
location of the Basin. Hancock Galilee (HGPL),
a subsidiary of Hancock Prospecting, has a
long-standing interest in the development of the
Galilee Basin, with the parent company having
held coal exploration permits and investigated
the Alpha region since the 1970s.
Kevin’s Corner Coal Project is adjacent to Han-
cock’s Alpha Coal Project and both Projects will
utilise the proposed multi-user rail and port facili-
ties. This is designed so that at a future point, it
will have the potential to transport, load and ship
capacity greater than the combined production
level of both the Kevin’s Corner and Alpha Coal
Projects.
Similarly to the Alpha Coal Project, the Kevin’s
Corner deposit also lies within the late Permian
Colinlea and Bandanna Formations consisting
of four main thermal coal seams suitable for the
global export market. The coal seams dip gently
from east to west varying in thickness from 5 to
8m, enabling high production open-cut mining
and underground longwall mining.
Exploration to date has concentrated on the coal
reserves with the best export marketability, with
the resources to be further upgraded following
additional drilling to the west. With the comple-
queensland
241JULY 2012 The International Resource Journal
alpha coal and keVin’s coRneR pRoJect suppoRt:
WorleyParsons and Ausenco; awarded
contract to manage the delivery of
Hancock Coal’s $7.5 billion Alpha Coal
Project in Queensland. WorleyParsons
and Ausenco will provide programme
management services to the project in a
50 per cent joint venture throughout the
next four years.
tion of the 2009 drilling programmeme, the
Kevin’s Corner Project was upgraded to approxi-
PDWHO\0WRI-25&FRPSOLDQWDVLJQLÀFDQW
increase to indicated and measured resources
(that now includes approximately 500 drill holes).
The Alpha Coal and Kevin’s Corner combined
resource is currently 7,900Mt of JORC compliant
coal with ongoing drilling expected to increase
this further. The Kevin’s Corner Coal Project
will have a capacity of 30 Mt/y via open-cut and
underground longwall operations. The operation
has a scheduled mine life of approximately 30
plus years.
The Project is expected to commence construc-
WLRQLQDQGZLWKÀUVWSURGXFWLRQLQODWH
2014 dependent on gaining relevant approvals.
The Kevin’s Corner Coal Project is anticipated
to employ thousands of people throughout its
productive (30 year plus) life. The construction
workforce is anticipated to peak at approximately
2,500 people.
242 The Resource Channel
the china FiRst pRoJect
operators: Warratah Coal
Location: 38km north-west of Alpha (160km to
the west of Emerald)
Cost: A$8 billion
Timeframe: Construction to commence late
ZLWKÀUVWSURGXFWLRQLQ
Employment: The Galilee Coal Project will require
approximately 3,500 workers during the construc-
tion period (excluding construction of port facilities),
and an estimated 1,860 during operations (exclud-
ing contractors). Approximately 360 staff will work
and reside in or near Bowen during operations.
The remaining 1,500 workers will be located at the
mine site. At least 28 senior managers will reside
permanently in Alpha. Waratah Coal is currently
discussing the desired population of Alpha with the
%5&EHIRUHÀQDOLVLQJWKHWRWDOQXPEHURIZRUNHUV
who will reside in Alpha.
Status: The existing integrated mine, rail and
port supply chain was constructed in less than
two years and Fortescue’s board has recently
approved an US$8.4 billion expansion to their
Pilbara operations. Expansions plans are on
schedule for completion in mid-2013.
operations: The Galilee Coal Project includes
mine, rail and port components. Waratah Coal
plans to build a railway from the mine site to the
Port at Abbot Point and utilise proposed new port
facilities and infrastructure within the Abbot Point
State Development Area (APSDA) for the loading
and export of coal.
The railway line comprises some 468km and will
traverse the Barcaldine, Isaac and Whitsunday
Regional Council areas. Construction is sched-
uled to occur over a three-year period commenc-
ing late 2012.
The Galilee Coal Project includes open cut and
undergrounding mining. Maximum production is
expected to include 56 Mt of run-of-mine coal to
produce 40 Mt of product coal annually. Maxi-
mum production is envisaged within a 5 to 10
year period. Production is expected to continue
for at least 25 years.
Although additional work may be required on the
EIS, Waratah Coal aims to have the required gov-
queensland
243JULY 2012 The International Resource Journal
china FiRst pRoJect suppoRt:
The Metallurgical Corporation of China
(MCC); has been engaged to undertake
the engineering, procurement, construction
and management of the project.
ernment approvals for the project in mid-2012,
ahead of the planned commencement of con-
struction activities in late 2012.
austRalian pM opens a$34 Billion lnG pRoJect
IRJ - May 21 – Prime minister Julia Gillard
has officially opened an A$34 billion
liquefied natural gas (LNG) project in
northern Australian port city Darwin.
The Ichthys project, belonging to
Japanese oil and gas company Inpex,
is set to bring thousands of jobs
and many valuable contracts to the
Northern Territory.
Gillard said the project was a
fantastic opportunity for the area
and a “remarkable time” in Australia
comprising large economic growth, low
unemployment and low inflation.
“We can be confident about the
Australian economy because there are
so many investments like this one in the
pipeline,” she said, citing the total value
of investments to exceed $450 billion.
She expressed optimistic sentiment
that, despite the crisis in Europe
causing the Australian share market to
plummet two per cent today, Australia
continues to grow and has a bright
economic future ahead.
Inpex chairman Naoki Kuroda said
the Itcthys LNG project would benefit
the people of both Australia and
Japan, bringing social and economic
development to the Northern Territory and
a long-term supply of cleaner energy to
millions of Japanese homes and businesses.
“The Ichthys LNG project will
strengthen the ties between Australia
and Japan, while securing Darwin’s
place as an emerging hub of oil and gas
activity in the region,” he said.
244 The Resource Channel
Bhp Billiton caVal RidGe pRoJect, queensland
operators: The Project is a 50-50 joint venture
between BHP Billiton and Mitsubishi Develop-
ment Pty Ltd, managed by BMA.
Location: Bowen Basin, 16km south of Moran-
bah and 160km south west of Mackay
Timeframe: First production expected in 2014
Employment: 1,200 construction and 500 opera-
tional jobs
Status: The Caval Ridge project includes the
GHYHORSPHQWRIDJUHHQÀHOGFRDOPLQHLQWKH
northern section of the Bowen Basin which will
produce high quality hard coking coal. The proj-
ect was approved for construction by BHP Billiton
in late 2011. Limited work packages are open
for tender. BHP Billiton BMA has commenced
recruitment for the operational workforce. The
operation will have a life of 30 years and will be
an open cut dragline and truck shovel operation.
queensland
245JULY 2012 The International Resource Journal
Bhp Billiton caVal RidGe suppoRt:
Bechtel; appointed project manager
and is responsible for developing
the operation. Work includes
development of a new coal mine and
coal handling and preparation plant.
Bhp RestaRts teMco ManGa-nese opeRations in tasMania
IRJ - May 22 - BHP Billiton has restarted
operations at its manganese alloy facility
in Tasmania, Australia. Ran by TEMCO,
part of the manganese joint venture
between BHP and Anglo American, the
plant was suspended for 90 days due to
operating losses.
BHP conducted a successful review of its
economic viability and is now planning
for the facility’s safe and full restart.
Bryan Quinn, BHP Billiton Manganese
Australia Asset president, said:
“Extensive stakeholder consultation
and assessment of all options for
TEMCO has been undertaken over the
last three months.
“Thanks to the extensive investigation
by TEMCO employees of these options,
and the flexibility provided by several
stakeholders, significant cost reduction
opportunities have been identified,
primarily in the areas of workforce
efficiency, power supply flexibility, ore
blending and freight optimisation.
“These changes should allow TEMCO
to return to a globally competitive
position.”
BHP Billiton Manganese president
Tom Schutte said a key change will be
separating the operations of the TEMCO
alloying facility and the GEMCO mine in
the Northern Territory.
“This separation introduces the ability
to blend in other ore sources, which will
improve operating performance while
also allowing us to consider the strategic
fit of the TEMCO operation inside BHP
Billiton’s portfolio,” he said.
BHP will implement a reduced
organisational structure for the restart
that will be achieved through natural
attrition – an employment freeze and
redeployment within the company.
246 The Resource Channel
Bhp Billiton daunia pRoJect
operators: BHP Billiton Mitsubishi Alliance
(BMA)
Location: 150km south-west of Mackay
Timeframe: Following regulatory and owner ap-
provals in March 2011, construction activities at
the Daunia Mine commenced in mid-2011. Con-
struction of the mine is expected to take approxi-
mately two years. First coal is expected in 2013
and full production of up to 4.5 Mt/y is expected
to start in 2014.
Employment: 450 construction and 300 opera-
tional jobs
Status: The Daunia Mine is an open-cut coal
mine to be operated via an excavator and truck
ÁHHW,WLVDTXDOLW\FRDOUHVRXUFHRSSRUWXQLW\
to support BMA’s growth options. The mine is
located in the northern section of the Bowen
Basin approximately 18 kilometres southwest of
Coppabella. It will produce up to 4.5Mt/y of semi-
hard coking coal and pulverised coal injection
(PCI) coal for the export market.
The Daunia Mine involves:
One new open-cut coal mine
A new Coal Handling and Preparation Plant
(CHPP)
Infrastructure associated with the new opera-
tions and facilities including a conveyor, haul
roads and an overpass across the Norwich
Park rail line, linking mining areas to the
treatment plant
Purchase and construction of new mining
equipment.
Bhp Billiton daunia pRoJect suppoRt:
Bechtel has been appointed to
provide engineering, procurement,
construction and management
services.
queensland
247JULY 2012 The International Resource Journal
248 The Resource Channel
wandoan coal pRoJect
operators: The project is being delivered by
xstrata Coal Queensland and funded through a
joint venture between xstrata Coal Queensland
(75 per cent ownership), ICRA (Itochu) (12.5
per cent ownership) and Sumisho Coal Australia
(12.5 per cent ownership).
Location: Wandoan (immediately west of the
township)
Timeframe: Two to three year construction pe-
riod
Employment: 1,300 jobs required to build the
mine infrastructure which will generate up to 210
further jobs in the local region each year. Once the
mine is operational, 754 permanent jobs and 90
contractor maintenance jobs will also be created on
WKHPLQHVLWH,QDGGLWLRQWKHUHZLOOEHDÁRZRQHI-
fect that will generate 150 to 200 permanent jobs
in the local region. A number of entry level jobs
for school-leavers, including apprenticeships and
traineeships will be created among the long term
jobs on the mine site once the mine is operational.
The xstrata QMEA Education Partnership between
xstrata Coal, Queensland Department of Education
and the Queensland Minerals and Energy Academy
will provide A$720,000 over three years for fund-
ing, equipment, curricula enrichment and school
industry liaison to Wandoan State School, and
Taroom State School and Miles High School.
Status: Awaiting state and federal government
approvals. The Wandoan Coal Project has been
established to investigate the possibility of open-
ing an open-cut thermal coal mine immediately
west of the Wandoan township. The mine would
include an open-cut coal mine, a coal handling
and preparation plant and support facilities.
With an expected life of more than 30 years, the
mine would produce thermal coal which would be
crushed, sized and washed before being trans-
ported by rail to port facilities on the Queensland
coast and exported around the world, or used
here in Australia. It is anticipated that about 30
million run-of-mine tonnes (t) of coal would be
mined at Wandoan each year. As at May 2012,
;VWUDWD&RDOLVDZDLWLQJUHFHLSWRIÀQDODSSURYDOV
from the Queensland Government to allow them
to proceed with the development of the proposed
mine. After the Mining Lease and Environ-
mental Authority are granted by the Queensland
queensland
249JULY 2012 The International Resource Journal
Bhp pRessuRed to expand olyMpic daM
IRJ – May 28 – Australia’s resources
minister Martin Ferguson is putting
pressure on mining major BHP Billiton
to expand the Olympic Dam project,
according to Fairfax analyst John Meyer.
There is speculation that rising costs in
the country and a less certain environment
for uranium and copper demand could
cause BHP to defer the A$20 billion dollar
investment it is considering for the next
Olympic Dam expansion.
Meyer added that the mine has already
suffered two catastrophic fires in its
processing plant on commissioning and
requires substantial investment to meet its
required economies of scale.
“No wonder BHP might want to push this
particular white elephant further out,” he
said.
Expansion of Olympic Dam would involve
creating a large open mine to tap an ore
body that begins around 400 metres deep,
as well as a 270km electricity transmission
line, 400km pipeline, large desalination
plant, 105km railway link from Pimba to the
mine.
It would increase the amount of ore mined
at Olympic Dam from 12 million tonnes per
year (Mt/y) to 72Mt/y; copper concentrate
production from 600,000tpy to 2.4Mt/y;
uranium oxide from 4,500tpy to 19,000tpy;
gold bullion from 100,000oz to 800,000; and
silver from 800,000oz to 2.9 million.
250 The Resource Channel
pRoJect BooMeRanG
operators: East West Line Parks
Location: Comprises a new 3,370km trans Austra-
lian railway from Port Hedland, Western Australia
WR0RUDQEDKLQWKHFHQWUDO4XHHQVODQGFRDOÀHOGV
as well as 6 or more steel smelters on both coasts
(12 or more in total), associated port facilities and
infrastructure to support the project.
Cost: US$45 billion
Timeframe: 3.5 year construction period. Proj-
ect design and feasibility study commences in
2010/11. Three-year construction schedule to
EHJLQLQ&RPPHQFHSURGXFWLRQDQGÀUVW
trains run in 2015/16.
Employment: Expected to generate up to 35,000
jobs in the Northern Territory and South Australia
during construction.
Status: East West Line Parks is building one
of Australia’s largest infrastructure projects
- a transcontinental multi-user rail infrastruc-
ture corridor and steel manufacturing complex
which they claim will revolutionise global steel
manufacturing. Poised to be one of the biggest
queensland
251JULY 2012 The International Resource Journal
aBout the authoR
Jody Elliott is the founder and
director of The Resource Channel,
the leading, award-winning
employment news and job board
website for the Australian resource
sector covering mining, oil and gas,
and construction. She has 15 years
in management roles with major
resource sector employers and is a
regular speaker at conferences and
in the media.
Please forward your feedback or
enquiries to
construction challenges in the nation’s history,
Project Iron Boomerang will link the Pilbara iron
ore mines in Western Australia with the Bowen
Basin coal mines in north Queensland via a
3,300km rail line. The infrastructure, services
and resource linkages will support and fuel two
Steel Precincts, one on each coast, which will
manufacture slab steel for export.
The purpose built transcontinental railway line
will link Australia’s two great ore bodies for steel-
making, iron ore from the west coast and met-
allurgical coal from the east coast. The trans-
continental railway will be dedicated to carrying
UHVRXUFHVHIÀFLHQWO\IURPRQHVLGHRIWKHFRXQWU\
WRWKHRWKHUEHWZHHQWKHÀUVWVWDJHLURQDQG
Steel Precincts.
The project’s primary objective is to service and
facilitate the production of slab steel in Austra-
OLDIRUH[SRUWWKHUHE\VLJQLÀFDQWO\UHGXFLQJWKH
quantities of seaborne iron ore and coal con-
sumed in the world’s steel production cycle.
The Leading Logistics Network
SDV South Africa Pty Ltd. 24 Covora Street, Jet ParkProject Business Development - Caroline Brownson, Tel: +27 11 398 5000ŵĂŝůƐĚǀ ƐŽƵƚŚͲĂĨƌŝĐĂΛƐĚǀ ĐŽnjĂǁǁǁďŽůůŽƌĞͲĂĨƌŝĐĂͲůŽŐŝƐƟĐƐĐŽŵ
1st: We are the 1st intergrated logistics network in Africa
24: The number of port & rail concessions
43: The number of African countries where we are present
250: The number of subsidiaries in Africa
250: Million Euros investments per year
2 010: Million Euros turnover per year
6 000: Transport vehicles used in Africa
22 000: The number of people employed in Africa
3 500 000: Containers handled per year
6 500 000: Tons of freight handled per year
8 000 000: Square metres of warehousing space and yards
A Partner with a strong and integrated network