WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE
June–August 2004 $3 (inc GST)
Woodside turns 50
DEPARTMENT OF INDUSTRY AND RESOURCES
168 St Georges Terrace
including iron ore,
PERTH Western Australia 6000
Postal address: Box 7606 • Cloisters Square
FROM THE MINISTER copper, gold, ilmenite,
Perth Western Australia 6850 talc and garnet.
Tel: +61 8 9327 5555 • Fax: +61 8 9222 3862
estern Australia was once again Within three to four
www.doir.wa.gov.au endorsed as one of the world’s most years, the combination of
INTERNATIONAL OFFICES attractive resources investment hematite and magnetite
Europe destinations when BHP Billiton gave the green projects planned for the
European Ofﬁce • 5th ﬂoor, Australia Centre
light to a A$1.4 billion laterite nickel project — the region will see throughput
Corner of Strand and Melbourne Place
LONDON WC2B 4LG • UNITED KINGDOM company’s biggest global nickel venture since its at Geraldton Port jump to Clive Brown, MLA
Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637 Minister for State
merger — at Ravensthorpe in the State’s southeast. more than 8Mt/a. Development
The Western Australian Government will And pending successful
India — Mumbai
Western Australian Trade Ofﬁce contribute A$18.4 million towards the provision development of new oil ﬁelds in the Perth Basin,
93 Jolly Maker Chambers No 2 of infrastructure and services needed to support Geraldton could also become the base for oil
9th ﬂoor, Nariman Point • MUMBAI 400 021 INDIA
Tel: +91 22 5630 3979/74/78 • Fax: +91 22 5630 3977
the Ravensthorpe Nickel Project, demonstrating a exports to Asia and Europe.
Email: firstname.lastname@example.org preparedness to work with industry to deliver local These are exciting times in Western Australia,
India — Chennai jobs and opportunities throughout the State. and recent industry reports estimate the State’s
Western Australian Trade Ofﬁce - Advisory Ofﬁce The Government continues to invest in our
1 Doshi Regency • 876 Poonamallee High Road resources sector could grow by 175% over the next
Kilpauk • Chennai 600 084 • INDIA regions, with the Mid West, centred around 25 years.
Tel: +91 44 2640 0407 • Fax: +91 44 2643 0064 the port city of Geraldton, the focus of this edition
The Western Australian Government has
of Prospect, receiving major infrastructure initiated policies to continually enhance
Indonesia — Jakarta
Western Australia Trade Ofﬁce improvements. Western Australia’s international position
JI H R Rasuna Said Kav C15 - 16, Kuningan The recent A$103 million port upgrade as a rich resources province, including committing
Jakarta 12940 • INDONESIA
Tel: +62 21 2550 5331 • Fax: +62 21 522 7103
at Geraldton has already seen the successful A$12 million over the next four years to double the
E-mail: email@example.com development and export of iron ore from the new area of the State covered by high-tech geoscientiﬁc
Indonesia — Surabaya Tallering Peak hematite mine — the ﬁrst iron ore to aerial imaging.
Western Australian Trade Ofﬁce be exported from the Mid West in 30 years.
Graha Pena 17th ﬂoor • Jalan Ahmad Yani 88 Growing global demand for minerals and energy
Surabaya 60234 INDONESIA Mount Gibson Mining also intends to develop commodities, particularly from China, is helping
Tel: +62 31 829 9979 • Fax: +62 31 829 9975 a 1.5 Mt/a hematite mine on the Extension Hill Western Australia maintain its position as a primary
and Iron Hill deposits within the Mt Gibson supplier of resources to the world, as well as building
Japan — Tokyo
Australian Business Centre (WA Govt Ofﬁce) Range, with the ﬁrst shipments of ore planned its capacity to establish downstream industries that
28th ﬂoor, New Otani Garden Court for the third quarter of next year. And, there are add value to these resources.
4-1 Kioicho, Chiyoda-Ku • TOKYO 102-0094 JAPAN
several other hematite and magnetite mining This is leading to a resources upswing as export
Tel: +81 3 5214 0791 • Fax: +81 3 5214 0796
Email: firstname.lastname@example.org developments planned by Mount Gibson and volumes increase across a range of commodities,
Japan — Kobe others for the Mid West. including LNG, iron ore, alumina, nickel, salt,
Western Australian Government Ofﬁce In addition, the Geraldton port upgrade was a
6th ﬂoor, Golden Sun Building • 3-6 Nakayamate-dori copper and zinc.
4-Chome Chuo-Ku • KOBE 650-0004 JAPAN major catalyst in creating export agreements with This ongoing growth in the resources sector is
Tel: +81 78 242 7705 • Fax: +81 78 242 7707 China that are expected to underpin the long-term helping Western Australia maintain its position as
growth of the region’s iron ore industry. Australia’s leading State economy and creating jobs
Western Australian Trade Ofﬁce Add to this an A$88 million transport corridor and opportunities for all Western Australians.
4th ﬂoor, UBN Tower • 10 Jalan P Ramlee providing a new southern road and rail link to the
KUALA LUMPUR 50250 MALAYSIA
port, and Geraldton is now positioned to diversify
Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177
Email: email@example.com its throughput from grain (currently the second
Middle East largest in Australia) to a plethora of minerals
Western Australian Trade Ofﬁce • Emarat Atrium
PO Box 58007 • Dubai • UNITED ARAB EMIRATES
Tel: +971 4 343 3226 • Fax: +971 4 343 3238
FROM THE DIRECTOR GENERAL
People’s Republic of China — Shanghai
Western Australian Trade & Investment Promotion
Shanghai Representative Ofﬁce • Room 2208, CITIC Square
Nickel project a winner
1168 Nanjing Road West • Shanghai 200041 HP Billiton’s decision to commit to the massive Ravensthorpe laterite nickel
PEOPLE’S REPUBLIC OF CHINA project sees Western Australia poised to become the second biggest nickel
Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889
miner in the world, behind Russia.
People’s Republic of China — Hangzhou
The A$1.4 billion investment in Western Australia is a major vote of conﬁdence
Western Australian Trade & Investment Promotion in the Western Australian resources industry and will have wide beneﬁts to the Jim Limerick
Hangzhou Representative Ofﬁce State and the local communities for at least two decades. Director General
Room 910 • World Trade Ofﬁce Plaza Department of Industry
Zhejiang World Trade Centre
Perhaps more importantly, following on from BHP Billiton’s successful trial and Resources
15 Shuguang Road • Hangzhou 310007 mining and local pilot scale testing, leading to the adoption of the combination
PEOPLES REPUBLIC OF CHINA of pressure acid leaching and atmospheric pressure acid leaching processing technology, will be the
Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295
E-mail: firstname.lastname@example.org conﬁdence to further expand the processing of the State’s massive lateritic nickel ore reserves. Minara
Resources for instance has already ﬂagged the possible expansion of its treatment facilities at Murrin
Mr Young Chan Yu, Regional Director Murrin.
Western Australian Trade & Investment Ofﬁce It is a breakthrough which may unlock the successful development of the huge laterite nickel
11th Floor, Kyobo Building
1 Jongro 1-Ga, Jongro-Gu resources present in WA.
Tel: +82 2 722 1217 • Fax: +82 2 722 1218 The Department of Industry and Resources has been closely involved in the development of the
E-mail: email@example.com Ravensthorpe project since its inception, working in partnership with BHP Billiton to bring the project
Taiwan to fruition.
WA Business Development Manager
Australian Commerce & Industry Ofﬁce This edition of Prospect magazine details the stories behind the Ravensthorpe development. It also
Suite 2606, International Trade Building looks in detail at one of the fast-growing regions of Western Australia, the Mid West, where the successful
#333 Keelung Road Section 1 • TAIPEI 110 TAIWAN completion of a A$103 million port upgrade at Geraldton has provided the impetus for several world-
Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707
Email: nicholas.mckay@austrade,gov.au class resource projects.
Thailand Included in that is the shipment, the ﬁrst for more than 30 years, of Mid West iron ore through
WA Business Development Manager Geraldton, bound for the hungry steel mills of China. Elsewhere in Prospect, we celebrate Woodside
Australian Trade Commission • Australian Embassy Petroleum’s 50th anniversary through a special feature presentation.
37 South Sathorn Road • BANGKOK 10120 • THAILAND
Tel: +662 287 2680 Ext 3307 • Fax: +662 287 2589
in this issue 8
Mid West on the boil
The Mid West region of Western
Australia is coming alive on the
resources front, underpinned by the
A$103 million upgrade of the Geraldton
port. New iron ore, gold, base metals
and oil and gas projects are also
coming on stream.
2 Nickel bonanza 18 Woodside celebrates
The A$1.8 billion Ravensthorpe nickel development by Woodside Energy has turned 50. This issue of
BHP Billiton will see Western Australia emerge as the Prospect contains a special feature on the company
second biggest nickel miner in the world, as well as and the vital role it plays in the North West Shelf
provide a major ﬁllip to other lateritic nickel projects. development.
6 Westonia set for comeback 27 Oil and gas acreage releases
The historic Westonia gold mine is poised to come Six petroleum exploration areas, ranging from
back into production after exploration work identiﬁed highly prospective to frontier, have been released by
a resource of more than one million ounces. the Department of Industry and Resources.
8 Diamonds: facets of future 35 Subscribe now
John McIlwraith examines the future of the Argyle
diamond mine, where A$70 million is being spent on a
feasibility study for future underground development. 36 Resource Map
Front cover: Prospect
The new Tallering Peak iron ore mine, Western Australian Prospect magazine is published quarterly by the Western Australian Government’s Department of
north of Mullewa in Western Australia, Industry and Resources (DoIR) and Ray Burns Media.
is setting the pace for a development Editorial management: Mark Dixon, DoIR Communications & Marketing Division. Tel: (08) 9327 5555 • Fax: (08) 9327 5500.
boom in the Mid West region. Advertising management: Ray Burns Media, PO Box 1230, South Perth Westerm Australia 6951
Tel: (08) 9227 6688 • Mobile: 0408 474 328 • Email: firstname.lastname@example.org
Prospect has been compiled in good faith by the Department of Industry and Resources from information and data
gathered in the course of the magazine’s production. Opinions expressed in Prospect are those of the authors and not
necessarily those of the Department of Industry and Resources. No person or organisation should act on the basis of any
matter contained in this publication without considering, and if
necessary taking, appropriate professional advice from other sources. Department of
The Department of Industry and Resources, its employees and Industry and Resources
contracted personnel undertake no responsibility to any person
or organisation in respect of this publication.
Prospect June–August 2004 1
2 Prospect June–August 2004
still on cards
ey negotiations between BHP Billiton
and the Western Australian State
Government could shortly decide
the workforce nature of the Ravensthorpe
The negotiations centre on the State facilitating
assistance to allow BHP Billiton to establish
a residential workforce in the Ravensthorpe
district. Both parties, and the Shire of
Ravensthorpe, are keen to avoid the use of
ﬂy-in, ﬂy-out operations.
gets the green light
By MARK DIXON
The State Government initially, in October
2001, committed A$18.4 million towards the
provision of infrastructure. The company
Department of Industry and Resources committed A$8 million and the Federal
Government was invited to also contribute
towards the total A$55 million cost.
he massive Ravensthorpe nickel project, representing BHP Billiton’s biggest
global nickel venture since its merger, has emerged as one of the largest However, the Federal Government has refused
greenﬁelds mineral resources developments in Australia’s history. to back that aspect of the project and has
At a development cost of A$1.8 billion it will provide a major boost for two instead suggested the shires of Ravensthorpe
States, Western Australia and Queensland, and when it comes on stream in 2007 and Esperance apply for Federal money
will ﬁrmly entrench BHP Billiton in the major league of nickel producers, as the through existing or new programs.
third biggest in the world.
It will also establish Western Australia as the world’s second biggest nickel
The Department of Industry and Resources
miner, behind Russia, while the success of innovative technology has already seen
has been involved in the development
signiﬁcant upgrade proposals for other laterite nickel projects.
of needed infrastructure and associated
The ﬂow-on effects from the project will be most dramatic for the previously
population increase for the project for more
sleepy Ravensthorpe district, about 540 km southeast of Perth, as 1000 workers
than four years and has been instrumental in
ﬂock on site during the construction phase.
helping pave the way in a number of key areas.
A permanent workforce of about 300 is envisaged, with BHP Billiton’s strong It has guided the Shire of Ravensthorpe in
preference lying with a residential, rather than ﬂy-in, ﬂy-out operation. That many ways, especially the development
aspect and the need for community infrastructure to support a residential project, of a new town planning scheme to cater
is still under negotiation with the State Government. for a permanent workforce and associated
According to a recent regional economic model referred to by the local population increase.
government authority, the Ravensthorpe Shire, the project will create a ﬂow-on of
more than 800 jobs within the southeast coastal region. These will complement Planning has involved both the towns of
those on site and see the district return to its more famous days of a major mining Ravensthorpe, as the service centre, and
centre, in the late 1800s. (see article at right) Hopetoun, where most of the project’s
It will also underpin expansion at the town of Esperance, 155 km east of the workforce will live, and also included a new
project, through which BHP Billiton plans to import raw materials and export the waste water treatment plant in Hopetoun to
nickel concentrates to Yabulu, near Townsville in Queensland. ensure the coast remains pristine.
The Ravensthorpe project is based on three laterite nickel orebodies, which
will be mined by open cut. Those deposits, Halleys, Hale-Bopp and Shoemaker- The multi-user nature of the infrastructure
Levy (named by original owner Comet Resources) contain a proved reserve of includes the upgrade of local roads, a new
125.3 million tonnes at 0.73% nickel and 0.032% cobalt; a probable reserve of shire airstrip, emergency services, education,
137.9 Mt at 0.57% nickel and 0.026% cobalt: sufﬁcient reserves for a mining power and other basic services.
operation lasting 25 years.
Project infrastructure includes a major
The ore will be treated through a hydrometallurgical process plant
chemical processing plant, accommodation
incorporating atmospheric leaching, to produce up to 50 000 tonnes a year
village, communications, internal mine and
of contained nickel and 1400 tonnes of contained cobalt in an intermediate
plant roads, construction camp and port
concentrate product known as mixed hydroxide product, or MHP.
facilities at Esperance.
Up to 220 000 tonnes of MHP will be exported each year from Ravensthorpe for
processing at the Yabulu reﬁnery, representing an increase in production at that BHP Billiton said the project created a unique
facility of 140% for nickel and 70% for cobalt, or 76 000 tonnes of nickel and 3500 opportunity to advance development on the
tonnes of cobalt a year. 4 south-east coast of Western Australia. P
Prospect June–August 2004 3
Project go ahead: Trial mining at Ravensthorpe proved robust economics. A heritage
The production process has been the subject of extensive testwork for the
past six years, during which time BHP Billiton has spent A$112 million on
deﬁning the mining reserve, pilot testing, engineering design, environmental
studies and land acqusition. There has also been wide-ranging community
consultation, and the company estimates about A$8 million has been spent
avensthorpe, now a small wheat
directly on wages and services in the shires of Ravensthorpe and Esperance. and sheep town, started life as a
And while the effects on the Ravensthorpe community will be wide-ranging, copper and gold mining centre.
the town of Esperance is also in line for a more intense time. The traditional port
and holiday destination, famed for its beaches and lifestyle, is already used to The district was ﬁrst settled in 1868 after
iron ore and nickel exports, but BHP Billiton’s plans will see a quantum leap. pioneer John Dunn became interested in
That will come from the import of about 500 000 tonnes a year of prill, (a type the area after being marooned there while
of sulphur) to be imported from Canada, 40 000 tonnes a year of magnesia from sealing off the coast. He was killed by local
Queensland and China and the shipment to Townsville of 220 000 tonnes a year Aborigines in 1880 after establishing a
sheep farm and his grave lies to the west
of the MHP product.
The project’s key strengths, said BHP Billiton, include low mining costs and
high feed grade. Ravensthorpe, it believes, has the best risk/reward proﬁle in But it was the discovery of gold by his
the world for a greenﬁelds laterite nickel project through the combination of brother Jim Dunn, pictured below, in 1898,
pressure acid leaching and the efﬁciency of Yabulu’s reﬁnery circuit. during Western Australia’s ﬁrst great
There are two distinctive ore types at Ravensthorpe: limonite and saprolite. gold boom, which saw prospectors and
The limonite is especially valuable in that it can be upgraded to almost twice the miners pour into the area to work the
mined grade through a beneﬁciation plant, while the saprolite ore can also be Phillips River goldﬁeld.
upgraded, although to a lesser extent. P
In 1900 Ravensthorpe was surveyed
and gazetted the following year, with a
population of 500. By 1908 the population
had reached 3000, supporting 53 gold
and copper mines in the region.
But by 1919 the smelter and mines had
closed and most prospectors had moved
away. Some mines continued to operate,
depending on the price of copper, until
the 1970s. P
Big winner: The port of Esperance will be upgraded for the new nickel development.
4 Prospect June–August 2004 Pioneer: Jim Dunn.
A Bright Future Planned for Investors in Victoria Petroleum N.L.
Victoria Petroleum N.L. looks set to increase oil production
after joining the ranks of Australia’s oil producers. Participant
in onshore North Perth Basin 5 MMBO Jingemia Oil Field
production testing at 2100 bopd in 2004.
4 Development drilling program in Jingemia Oil Field with
aim to increase production to 4000 bopd in 2nd half
4 Largest exploration acreage holder in South Australia and
Queensland Cooper/Eromanga Basin
4 Five well drilling program in South Australia Cooper Basin
in mid 2004 against industry background activity of
27 wells in 2004
4 Industry exploration success in SA Cooper Basin of 40%
4 Testing potential 1 TCF Coal Bed Methane play in Wyoming
USA in June 2004
4 Australia and US net oil production of 125 bopd in 1st Qtr
2004 with 14 wells planned in 2004
4 Exploration drilling well funded with $5 million cash on
hand at start 2004
CONTACTS John Kopcheff Managing Director Chas Lane Exploration Manager
PHONE 08 9220 9800 FACSIMILE 08 9220 9801 E-MAIL email@example.com
ADDRESS Level 36 Exchange Plaza, 2 The Esplanade, Perth Western Australia 6000
VICTORIA PETROLEUM ASX CODE: VPE FOR MORE INFORMATION PLEASE VISIT www.vicpet.com.au
DHA - VP0103
Westonia poised for a new life
he adage that great old mines BY MARK DIXON While the Edna May deposit is
don’t disappear, but get better Westonia has bought the 2.2 million ﬁrmly the focus for Westonia,
with age and a reasonable gold tonnes/year Big Bell treatment plant the company has been active in
price is once again being proved in the and is relocating it from its Cue base, topping up its landholding in the
Yilgarn district of Western Australia. in a move estimated to ﬁll more than region, now controlling more than
Westonia Mines Ltd intends pouring 500 semi-trailer loads. The company 700 square kilometres of the Westonia
its ﬁrst gold from its namesake mine intends to add a gravity circuit to greenstone belt.
in the middle of next year, the fourth recover the free gold which is a feature It has also had a couple of intriguing
production phase for the mine, 350 km of the non-refractory orebody. sniffs of nickel mineralisation, which
east of Perth. At a current resource of On latest ﬁgures, Westonia has an led to a brief share market ﬂurry last
more than one million ounces, with a indicated resource of 18.9 Mt to a depth year before follow-up drilling proved
minimum open cut life of six years and of 300 metres, which at a grade of 1.33 disappointing. But Mr Drummond is
a rich underground potential, Westonia g/t yields 810 000 oz. At the same grade, conﬁdent about the prospectivity
is emerging as one of the bright stars on including the inferred category, of the region for gold and nickel and
the gold mining horizon. the project is looking to 24.3 Mt for says the ﬁrst potential satellite gold pit
It is the sort of overnight success 1.04 million ounces. Underground has been targeted.
story that has taken nearly a century to potential, which has been initially There have also been a couple of
reach fruition. First mined in 1911 as a tested to 700 metres depth, has intriguing challenges to overcome,
high-grade (more than 20 grams/tonne) encouraged the company to think not the least being the rare plant
underground deposit, it has taken a long-term, probably based on a species eremophilla resinova rearing its
broader outlook of the commercial mechanized mining approach. head. Not an especially attractive plant,
feasibility of a bulk-tonnage, low-grade with a small pink ﬂower, it grows on the
operation to bring Westonia back
The Westonia mine has historically
produced more than 600 000 ounces of
gold from the deposit, centred on the
Edna May orebody. Westonia Mines is
aiming for around 90 000 oz/year from
the open cut, mining dirt at a cut off
grade of about 1.3 grams/tonne.
With a A$40 million capital cost,
the mine will directly employ about
100 people, who will be housed in the
hamlet of Westonia and the nearby
town of Merredin and bussed to work
for what is likely to be a ﬁve-day
Westonia is negotiating ﬁnancing
for the project, based on a debt to
equity mix of 60:40, which will include Fresh start: The old open pit at Westonia. Above: The original head frame.
sufﬁcient production forward sold to
satisfy the bankers. Managing directory It is underground where Westonia’s Westonia leases and few other places.
Andrew Drummond is bullish on the mining heritage comes up trumps for A management plan, which included
subject of the bullion price, believing the new company. There is an existing close work with the Kings Park Board,
at current prices Westonia has a robust workable decline to 264 metres, Western Australia’s principal botanical
economic future, with any gold price courtesy of previous owner ACM authority, secured the plant’s future and
increase the icing on the cake. Ltd, which Mr Drummond said will paved the way for mine development.
“We know we have a great gold be extended to depth. Underground The company’s major shareholder
system here,” Mr Drummond said. resources have yet to be estimated, is the respected Lion Selection
“We have a robust resource, good but the overall system contains about Group, with 36% of the capital, a stake
ground conditions and very favourable 5000 oz/vertical metre. it acquired before Westonia listed
stripping ratios.” in 2002. Issued capital is currently
101 million shares. P
6 Prospect June–August 2004
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Underground option looms large at Argyle
By JOHN McILWRAITH
W estern Australia’s diamond industry,
one of the world’s biggest, is poised
for a second wave of growth as the giant
quality, although much of the rest is cut
and polished in India for jewellery that
can be afforded by most people.
and three years ago bought, for a very
modest sum, tenure of the Ellendale
prospects. Mining began two years ago
Argyle mine moves closer to a major However, the sprawling AK1 open cut and in the ﬁrst year 240 000 diamonds
phase of development, and new near Kununurra will be exhausted within were recovered, totalling 47 931 carats at
projects emerge. three or four years; it is hoped that an an average price of about A$220 a carat,
Rio Tinto, owner of Argyle Diamond underground mine, developed from the much higher than the ﬁgure used in the
Mines Pty Limited, is carrying out a ﬂoor of this huge hole, will prolong the mine’s feasibility study.
A$70 million feasibility study into an project’s life until at least 2020. Last year the company began work
underground mine below the vast open Rio Tinto is optimistic about the on a 2.2 Mt/a production plant and next
cut in the Kimberley region, a venture prospects for the second stage of year a second mining and production
which would prolong the project’s life by development, but factors such as the centre will be commissioned at Ellendale ,
at least 13 years. strength of the Australian dollar will greatly increasing diamond production.
Kimberley Diamond Company is be crucial. There are a number of attractive
expanding its existing mining operations At least in the short term, the rise in prospects at Ellendale and nearby Blina,
in the region, and plans a new company to world diamond prices has more than which Kimberley Diamonds plans to
exploit discoveries near Ellendale, the site offset the stronger local dollar, according exploit, partly through a new company.
of the ﬁrst major discoveries nearly three to Kimberley Diamonds and Striker In late May, Kimberley announced
decades ago. Resources. it had found the ﬁrst new economically
Argyle has been a legendary repository As they establish new mines in the viable diamond pipe in 30 years on the
of diamonds, the biggest producer, by Kimberley, they are encouraged by high Ellendale project and would move to
volume, in the world for nearly two average prices for the relatively small mine it as soon as possible. Although
decades and a powerful inﬂuence on parcels they have sold so far. Prices have small, the pipe, named Kimberley 28,
world markets. risen by at least 10% in recent months. had a grade estimated at 5.07 carats/100
The operators not only successfully Kimberley controls the Blina diamond tonnes and an average value per carat of
marketed much of their huge output project, located in the lamproite-rich more than US$300. All three previously
independently of the Central Selling Ellendale region of the Kimberley region, known economic pipes at Ellendale were
Organisation, but also played a vigorous some 100 km east of Derby. discovered by CRA in the 1970s.
role in creating new markets in the But it has also had great success Striker Resources is about to launch
US for its diamonds, in conjunction with in reviving the fortunes of the nearby a major trial mining operation on its
the Indian jewellery industry, one of its Ellendale diamond prospects, which Seppelt-2 prospect, one of a number in
main customers. launched Australia’s ﬁrst diamond boom the Kimberley regarded by the company
By last year, Argyle had produced a 30 years ago. as highly promising.
staggering 130 tonnes of diamonds, in The pegging rush, that followed the About 20 000 tonnes of ore near
an industry where production is usually announcement of discoveries there, by a the surface is expected to yield more
measured as a few carats per hundred consortium which was the forerunner to than 15 000 carats of diamonds worth
tonnes of ore (a carat is a ﬁfth of a gram). the group which later launched Argyle, A$1 million and a 1000-tonne sample
When Argyle diamonds were ﬁrst sold was reminiscent of the hectic gold and will also be extracted from the
in Antwerp, the volumes were so great nickel booms of previous decades. Seppelt-5 deposit.
that millions of dollars worth of the stones The rush to the remote hinterland of Striker Resources will also be mining
were wheeled through the streets in large Derby came to nothing, and the Ellendale from the Merlin group of orebodies in the
trunks, with a nonchalance that startled consortium decided the diamond values Northern Territory (formerly operated
the austere traders. were insufﬁcient to justify mining, by Ashton Mining) and it has plans to
Such a gesture was possible because a decision reinforced when, soon after, examine many attractive prospects
although the volumes were huge, the they found the Argyle treasure trove. in the Kimberley. P
value per carat was modest in most cases. The management of Kimberley
Only 5% of the mine’s output is good gem Diamonds were more optimistic,
8 Prospect June–August 2004
Western Australian diamonds
Clean and free of conﬂict
Love and emotion have long been associated with the marketing of diamonds. But, it is a different story
at the pit face in some parts of the world, with blood and misery often linked to these sparkling gems of
the earth. DoIR’s JOHN TERRELL expands...
t is a troubled world out there with A spokesperson for Argyle Diamonds
tension and conﬂict at seemingly said conﬂict diamonds were essentially
every point of the compass. an African problem reﬂecting poverty,
The resources sector has not escaped conﬂict, corruption and lack of
the turmoil, with some commodity prices governance. While they accounted for less
ﬂuctuating wildly over the past year. than 4% of world production, they still
For the diamond industry, the word affect the global image and acceptability
conﬂict is signiﬁcant. The term of diamonds.
“conﬂict diamonds” has sinister “As a result of the conﬂict diamond
undertones in some parts of the issue, we have seen a heightened interest
world, and is something from which in the development of brands which offer
Australian diamond producers are keen Legitimate diamonds: Western Australian a guarantee as to their country of origin,”
to distance themselves. diamond producers, Argyle Diamonds and the spokesperson said.
According to the United Nations, Kimberley Diamonds, clearly support the latest “Clean and green is rapidly emerging
conﬂict diamonds or “blood diamonds” international diamond certiﬁcation process. as a potential marketing advantage.
as they are sometimes called, are uncut Argyle Diamonds and our sister mine
stones traded by rebel movements to target systematic and organised theft in Canada are well placed to use
ﬁnance weapons, fuel and other materials as well as offer support to companies to this advantage.”
that are used to undermine legitimate resolve security problems. Argyle Diamonds began mining its AK1
governments. Western Australian diamond orebody in 1985 and has since produced
For example, in Sierra Leone, companies Argyle Diamonds and more than 650 million carats of diamonds,
a vicious rebel army terrorised civilians Kimberley Diamonds are right behind ranging from gem quality to industrials.
by systematically hacking off their limbs. the certiﬁcation process, which requires Currently, the Argyle mine produces
Many of the victims were children. documentation of rough diamond about 30 million carats per annum,
In 2000, ministers from several African shipments to provide a paper trail from or about 25% of the world’s rough
countries met in Kimberley, South Africa, the mine to the retailer. diamonds by volume. Sales of rough and
where they agreed to take collective The process has been likened to polished diamonds from Argyle are worth
action to stop the ﬂow of smuggled registered mail, where the origins and about US$370 million annually.
diamonds. They came up with an destinations of parcels of diamonds are Australia has introduced import
international diamond-tracking scheme certiﬁed as they pass along various stages and export controls on rough
called the Kimberley Process, which of the supply chain. Participants agree diamonds in order to participate
not only protects the interests of big to keep documentation on ﬁle for no less in the Kimberley Process.
diamond exporting countries like South than three years. Since January 2003 every shipment
Africa, Australia and Canada, but also less While many jewellers say conﬂict of Argyle rough diamonds must be
well-off countries which rely heavily on diamonds are not a major issue for their accompanied by a certiﬁcate issued by
diamond trading for their economic and customers, the retailers, like most others the Federal Department of Industry,
social development. The process, ratiﬁed in the diamond trade, are keen to sell Tourism and Resources. This certiﬁcate
by the World Diamond Congress in 2002, diamonds that are sourced legally. speciﬁes that the shipment of diamonds
now embraces 60 countries involved The illicit diamond trade constitutes is of a non conﬂict nature and has
in extracting, processing and trading only a small percentage of the total been handled in accordance with the
diamonds. The control system is industry. It is said to be in the order of 3% Kimberley Process Certiﬁcation Scheme
largely self regulating. to 4% of global diamond production, or for rough diamonds.
At a state level, a new Western about US$8 billion per year. In a nutshell, both Argyle Diamonds
Australian Police Service Unit, named the Conﬂict diamonds are usually mined and Kimberley Diamonds are always
Diamond and Pearl Investigation Unit, in African countries that lack strong striving to achieve best practice in
has been formed to focus on investigating central governments, allowing warlords their industry, and they clearly support
crime and identifying security issues and terrorists to raise tens of millions of the latest international diamond
speciﬁc to the diamond and pearling dollars to undermine governments and certiﬁcation process. P
industries. The unit will speciﬁcally place civilians in danger.
Prospect June–August 2004 9
as new top cat on historic belt
Fast tracking: After intersecting massive sulphides containing 4.3% copper, 16.1% zinc
and 173 g/t silver during the discovery drill hole at Jaguar, north of Leonora, Pilbara Mines
Limited is now gearing up to commercialise the resource.
ne of the most productive copper, 169 690 tonnes of zinc and 4.73 Bore between 1980 and 1985,” he said.
mineral belts in Western million ounces of silver. Mr Comb expects the Jaguar operation
Australia, the 300 km stretch Mining of the Jaguar orebody will will have a similar ﬁve to six year mine
between Wiluna and Leonora, has be carried out though a standard life as Teutonic Bore, and employ about
turned up another highly promising decline access method and mechanised 100 people full time when operating.
mineral resource that should come into mining, using contractors. The old He envisages it will take
production as a fully ﬂedged mine later Teutonic townsite, 2 km from that approximately nine months for
next year. mine, will form the basis for the Jaguar to get into production, once a
It’s the Jaguar base metal prospect, Jaguar camp and the new plant go ahead is given, meaning that a likely
54 km north of Leonora and about will be built on the old plant site start-up date is around September or
4 km south of the historic Teutonic Bore to minimise environmental and October 2005.
base metal mine. rehabilitation issues. Since the nickel boom of the late
Found by Pilbara Mines Limited Similar to other base metal 1960s and early 70s, the North Eastern
during a regional drilling program in operations in the area, the plan is to Goldﬁelds has proved itself to be one of
early 2002, Jaguar is now the subject truck concentrates to Leonora and have the most productive base metal regions
of a bankable feasibility study, them railed to Esperance for export. in Western Australia, hosting mines
but work to date has indicated viable The Goldﬁelds gas pipeline passes such as Mt Windarra, Leinster,
project economics. 20 km to the west of Jaguar, Mt Keith, Teutonic Bore, Cosmos,
“The (prefeasibility) study indicates which opens the possibility of a Murrin Murrin, and, more recently,
that the high-grade Jaguar copper, zinc cheaper power source than a diesel exciting new discoveries at Waterloo
and silver resources at Teutonic Bore ﬁred station. and Jaguar.
will support a robust underground Pilbara Mines managing director There have also been a number
mining operation over a six year mine Gary Comb said the Jaguar deposit of signiﬁcant gold discoveries
life,” the company said. was amenable to an underground in the area during the last 30 years
The A$43.4 million project was operation, starting at a depth of around including Bronzewing, Mt McClure,
forecast to generate a proﬁt of 250 m, and dipping at about 76 degrees Granny Smith, Sunrise Dam and,
A$87.7 million over the life of the mine, to a depth of around 600 m. more recently, Thunderbox. P
at an exchange rate of A$0.76 to the “Jaguar is a totally sulphide
US dollar, based on a 1.87 million tonne orebody, almost identical to the deeper
resource containing 55 400 tonnes of sulphides that were mined at Teutonic
10 Prospect June–August 2004
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Emeralds: The envy of many
meralds, prized since ancient trending towards establishing a world
times as a symbol of immortality wide outlet for ﬁnished jewellery.”
and power, have hardly been a Emerald is the transparent gem
glittering success on the mining front in variety of the mineral beryl, with the
Western Australia. green colour resulting from trace
However, given the State’s sound amounts of chromium.
production record for diamonds and Most of the world’s commercial
other precious and semi-precious production currently comes
gems, it could be only a matter of time from Colombia.
before local emeralds are mined and In Western Australian occurrences,
marketed in a signiﬁcant way. beryl in pegmatite veins is altered by
Emeralds were ﬁrst discovered in contact metamorphism when the veins
Western Australia at Poona, near Cue, intrude typically ultramaﬁc rocks
in 1912. Since then, the main emerald (the source of the chromium). The
production sites have been Poona and resulting emeralds are found in both
Wonder Well, near Menzies. the contact schists and the pegmatite
Intermittent production until 1980 veins. Another mode of occurrence
totals 48 165 carats (9633 g) with a for emerald, exhibited by the world’s
recorded value of A$109 000. Between ﬁnest Colombian varieties, is in low-
1986 and 2001, recorded production temperature veins in sediments.
was 14 409 g with a disclosed value of At Poona, initial mining exploited The difﬁculty of separating the
A$36 000, with most having been mined near-surface material with the emeralds from the mica schists made
at Wonder Well. Western Australian gemstones weathering out of the the mine uneconomic and led to its
emeralds mined to date have tended to rock matrix. Only in 1979 did the Aga closure in 1980. Production for the two
be small and of low unit value. Khan underground mine commence years was 2 505 carats, valued at about
At Wonder Well, owner Roger operating in unweathered rock. A$85 000. P
Lindsay has hopes of starting a
commercial operation. In 2002 he took
a sample of emeralds to Thailand in
search of a marketing deal. His visit
coincided with a downturn in world
economic conditions, but the Wonder
Well emeralds attracted praise as being
of similar quality to those from the
Munzo mine in Columbia, regarded as
the best in the world.
Wonder Well has been deﬁned
to a depth of 30 metres, but similar
geological structures in Zimbabwe
and Brazil give Mr Lindsay conﬁdence
it extends to at least 100 metres.
Preliminary production has yielded
2 200 grams of emeralds from a
270 tonne parcel, with a market value of
A$226/tonne or A$28/gram.
Marketing holds the key to the future
of the mine.
“I believe we have a world class
emerald deposit waiting to be
developed to its full potential,”
Mr Lindsay said. “The next step is
to establish a satisfactory marketing
arrangement followed by expansion of
operations moving up to value adding Wonder Well: New commercial hopes emerge at Western Australia’s sole emerald mine
of the high quality emeralds and near Menzies.
12 Prospect June–August 2004
...on the boil
Expansion proves a catalyst for growth
major infrastructure upgrade George. It could ultimately also see The port is hampered to a degree
in the Mid West town of Geraldton, currently the second by having just one shiploader, a factor
Geraldton is expected to spark biggest throughput tonnage grain which may have to be addressed should
a strong economic upturn for the port in Australia, become a minerals- the export expansion continue at the
region, becoming the catalyst for the dominated port with exports including expected rate. For example, once iron
development of several important iron ore, lead concentrate, copper, ore has been loaded on board,
resources projects. ilmenite, talc and garnet. Potentially, the shiploader must be washed
A recently completed A$103 million depending on the successful down, a process which takes up to three
port upgrade has already seen the development of new oil ﬁelds in the days. The ideal option, according to the
successful development and export of Perth Basin, it could also become the port, would be to have a separate, iron
iron ore from the new Tallering Peak base for oil exports to Asia and Europe. ore-dedicated, loader.
hematite mine, the ﬁrst iron ore to The upgrade has, in effect, The Western Australian State
be exported from the Mid West in unplugged a stoppage which could lead Government has forecast that the
30 years. More importantly, it allowed to a torrent of investment. “Previously,” new wave of expansion could see
the creation of export agreements with said Mr George, “We couldn’t even load Geraldton’s population double to
China which are expected to underpin Handymax ships” which have a draft 50 000 within 10 years. It also provides
long-term growth of the Mid West iron of between 9.5 and 12.4 metres and the Mid West region with a focused
ore industry. a deadweight of up to 50 000 tonnes. facility for export which apart from
The upgrade of facilities is being Even the smaller Handysize ships allowing new resource developments
boosted by an A$88 million transport (draft 7.7–11.5 metres and deadweight could potentially lead to value-adding
corridor, providing a new southern up to 35 000 tonnes) were often partly industries as crucial project economics
rail and road link into the city and loaded in the port and then sailed are enhanced by more efﬁcient
overcoming a serious bottleneck south to other ports in the State to be transport costs.
imposed by the existing foreshore “topped up”. “The port expansion has opened
system. This will also have the beneﬁt Handymax ships now taking on the ﬂoodgates for its ability to cater for
of removing the physical barrier iron ore from the new Tallering Peak the whole Mid West region, said the
between city and sea which has been a project are also an ideal ﬁt with city’s mayor, Vickie Petersen. “The port
blight on Geraldton’s development for their destination ports in China’s itself has been inundated with inquiries
decades. Work on the corridor, Yangtze delta, an important factor in from potential users.” The A$88 million
by Thiess Pty Ltd, began in March the export deals struck by Tallering southern transport corridor allowing
with practical completion expected owner Mt Gibson Iron. “It has made the associated redevelopment of the
in April 2006. a huge difference,” Mr George said. Geraldton foreshore was regarded as a
The port upgrade, which included In targeting its services to Mid West major incentive for the community.
deepening the harbour and the creation enterprises, over alternative ports “It is amazing to be part of Geraldton at
of new berths, has put Geraldton port on Esperance, Kwinana or the Pilbara, the the moment,” Ms Petersen said. P
par world-wide for handling medium- port is promoting potential land and
sized vessels, according to Geraldton sea freight savings.
Port Authority chief executive Peter
14 Prospect June–August 2004
China bound: Tallering Peak iron ore being shipped from Geraldton at a rate of 1.65 Mt/a.
Mount Gibson the face of the future
he new face of the resources Ore is currently mined from the T4 pit, “What has changed in the past couple
industry in Western Australia’s with an on-site workforce of 50 on a of years has been the huge growth of steel
Mid West was unveiled in February 10 day on–four day off roster, and trucked production in China,” Mr Johnson said.
as the Fei Feng Shan sailed out of 80 km to the Mid West town of Mullewa In particular, that production has
Geraldton harbour with 38 000 tonnes to be railed 100 km to Geraldton. become more technically sophisticated,
of iron ore destined for Nanjing, China. Tallering ore is a high-grade product with with blast furnaces requiring more pellet
The ﬁrst shipment in 30 years, the low phosphorus by Australian standards feed in their burden, or blend as it is
boat to China carrying the Tallering Peak and low sulphur content. All production known in the trade. It is that scenario
hematite iron ore represented a key step has been forward sold to the Hong Kong- which forms the basis for Mount Gibson’s
in the development of deposits which based Asia Iron. long-term plans. Those plans include
have lain dormant for decades. It also “Tallering Peak is our ﬁrst mine. potential magnetite operations at Mount
marked a coming of age for producer We’re now moving to develop the Gibson, where 200 million tonnes of
Mount Gibson Iron Ltd. hematite resource at Mount Gibson, resource have been positively identiﬁed
Tallering Peak was to have been where we will produce 1.5 million and a further possible billion tonnes
the cornerstone of a billion dollar tonnes a year for at least 10 years,” considered as a potential resource.
development by the controversial Mount Gibson managing director Brian That future development plan would
Kingstream/An Feng consortium, Johnson said. Mount Gibson, 85 km from be based on beneﬁciating the ore on
beneﬁciated then shipped through a Perenjori, should be on steam by next site and piping slurry through a 300 km
new port at Oakajee. When that proposal year and will also be exported through pipeline to Geraldton.
failed, it left the deposit untapped until Geraldton, with the ore forward sold for “At that stage we would also look at
picked up by Mount Gibson. the life of mine to Stemcor Pte Ltd and a direct reduction pellet plant in the
Tallering Peak, where mining Sinom (Hong Kong) Ltd. Mid West,” Mr Johnson said.
operations commenced in October 2003, However it is the voracious Chinese The company is also, in conjunction
has a resource sufﬁcient for a mine life demand for steel mill feed which paves with Asia Iron, looking to develop the
of a minimum of ﬁve years, based on the way to the future for Mount Gibson, Walla Walla iron ore deposit and the
producing 1.65 million tonnes of iron the company. It has signed a deal with old Koolanooka deposit, 40 km north
ore for export a year. Like the former Asian Iron to sell 10 million tonnes of of Perenjori. P
“Mount” Whaleback at Newman and the magnetite iron concentrate per year for
former “Mount” Tom Price, both now a minimum 15 years to supply a planned
mined to vast open pits, the Peak should four pellet plants in China.
simply be known as Tallering by then.
Prospect June–August 2004 15
New golden glow over the region
wo new gold projects in Western soil cover and Troy claimed it as a said the chairman, Peter Jermyn.
Australia’s Mid West could victory for persistent geologists on the “This is similar in size to the belts
substantially add to the region’s complex Sandstone greenstone belt. hosting the Plutonic and Big Bell gold
existing healthy output, which has Its proximity to Troy’s existing mines. We have a chance for a world
already been given a major boost by Bulchina treatment mill also had class discovery.”
two important recent discoveries at analysts pencilling it in for almost AXG hopes to prove sufﬁcient
Wiluna and Sandstone. immediate development. Company resources for a stand-alone project,
The discoveries, by Agincourt chairman, John Jones, said drilling had and has earmarked A$1.5 million in the
Resources and Troy Resources proved mineralisation over 210 metres ﬁrst two years for the hunt, but has
respectively, have been acknowledged strike length and was conﬁdent it several existing plants within trucking
as among the most signiﬁcant in those would be extended to at least distance should early cashﬂow need
areas for many years. Agincourt struck 500 metres. Lord Nelson also to be generated.
almost immediate reward with its new appears reasonably high grade, AXG commissioned Geoinformatics
high grade Calais orebody, which is with drilling including 17 metres at Exploration Australia for the review,
between the East Lode and Bulletin 7.67 g/t gold, 16 m at 9.5 g/t and 24 m which identiﬁed 30 targets after
orebodies, both of which host more at 9.86 g/t. conducting an extensive survey of
than one million ounces of gold. Three ﬂedgling projects are Batavia’s the Warda Warra greenstone belt.
Regarded as potentially the most Gullewa gold/copper development It also found about 50% of the area was
important strike since Bulletin was near Yalgoo, AXG Mining’s Western under transported cover and strongly
discovered in the 1990s, Calais was an Queen near Mt Magnet and Goldcrest leached regolith materials, which AXG
unexpected ﬁnd and came less than Resources’ re-evaluation of the historic said presented an excellent opportunity
two months after Agincourt completed Youanmi ﬁeld. for new discoveries.
a management buyout from former Batavia’s exploration program (See regolith article, Page 23).
owner Newmont Mining. at Gullewa has outlined a resource The historic Youanmi ﬁeld is once
It is just 100 metres from existing equivalent to 319 000 oz of gold with again under the microscope, this
underground workings in an area that drilling at the Deﬂector deposit aimed time by Canadian company Goldcrest
was not considered a major target. at proving up more than 500 000 oz which is searching for reoccurrences
Managing director Tim Sugden said the equivalent. Bankable feasibility work of the rich Penny West deposit in the
discovery would add to reserves and was due to be completed at the end 30 km corridor between that mine and
lower overall gold production costs at of the June quarter ahead of Youanmi.
Wiluna, where gold was ﬁrst discovered a decision to commence mining. Goldcrest has inherited the village
in 1896. Calais includes bonanza zones The resource so far consists of and gold plant, including the bacterial
of 18.5 metres at 26.9 g/t gold. 1.42 million tonnes at 4.7 g/t gold, oxidation plant, but would
Further drilling results reported in 1.1% copper and 8.1 g/t silver. initially target oxide resources,
May showed the strike length at Calais AXG, which ﬂoated and joined the said Mike Higgins, the company’s
exceeded 1000 metres and remained ranks on the Australian Stock Exchange vice-president of exploration and
open at the north, south and at in May, is bringing into play a new business development.
depth. More importantly, the orebody analysis of 30 years of geophysical, “It’s a challenge,” he said,”But the
appeared to be strengthening in both geochemical and geological data from beauty of the Penny West/Youanmi ﬁeld
grade and width towards the previously the Warda Warra (Western Queen) is that it is high grade.”
unexplored southern zone. The latest belt, 80 km northwest of Mt Magnet. Head grades at Penny West ran to
hits included 65 metres at 4.49 g/t. The Western Queen, with the around 22 g/t and were notable for
Troy’s Lord Nelson discovery Western Queen South deposit, has their abundant visible gold. Goldcrest
at Sandstone has been hailed as gold resources of 130 000 oz, with both also has a remaining 40 000 to 60 000 oz
containing more than 0.5 million deposits open at depth and along strike. of gold in an oxide resource left when
ounces of gold and is amenable to “The company has identiﬁed previous mine owner Gold Mines of
development by low cost open cut. numerous other targets earmarked for Australia shut up shop in 1997. P
The discovery was hidden under heavy immediate RC and RAB drilling,”
16 Prospect June–August 2004
Garnet proves its cutting edge
quiet success story on the Batavia Two years later Target was approached an ilmenite by-product. In 2002 GMA
coast continues to develop with by a syndicate which held leases acquired the ISO accreditation for its total
the Port Gregory garnet sands containing garnet a few kilometres inland operations.
mine proving its worth on world markets. on Lynton Station. At that time garnet was GMA is now jointly owned by Garnet
In a highly competitive ﬁeld the regarded by the mineral sands industry International Resources Ltd and Barton
mine, operatd by private company as little more than a nuisance mineral of International Inc, which distribute the
GMA Garnet Pty Ltd, has demonstrated no value and traditionally garnet used for product throughout the world.
the Western Australian product sandpaper, grinding powders and other The company in 1998 required a new
can match it with the best, despite abrasive uses wet plant capable of increased
aggressive price under-cutting by came from hard rock resources in the production rates to meet growing
south Indian producers. United States. demand. That led to a facility,
Garnet sand of the type mined near But trial batches of Port Gregory known as the Hose plant, to be built on
Port Gregory (almandine garnet) is highly garnet sand prepared for market nearby land, which has since its inception
regarded for its abrasive properties as a evaluation drew positive responses exceeded design expectations.
sandblasting medium although in more from both local and overseas potential Although GMA faces increasing
recent years the use of garnet sand for customers leading to a decision for overseas competition in its operations,
water-jet cutting has emerged as another a commercial operation. made worse by current unfavourable
important market. The mine from then went through exchange rates and high shipping costs,
The project is centred on the Port several major upgrades, with wet- its long-term reputation for consistent
Gregory resource, about 100 km north processing equipment at the minesite quality of product and reliability of
of Geraldton, where the founding and dry-processing equipment in supply is helping to meet the challenge. P
company Target Minerals NL ﬁrst pegged Geraldton being continually improved to
several mining tenements for mineral treat the exceptionally rich Lynton ore.
sands in 1971. By 1997, the deposit was also yielding
MORE THAN $60m RAISED
INVESTMENT MARKET LEADERS
In the current ﬁnancial year, Montagu has raised capital in excess
of $60 million for emerging companies, including the following:
A1 MINERALS LIMITED • AUSMET MINERALS LTD • BATAVIA MINING LTD
UNIVERSAL RESOURCES LTD • NAMAKWA DIAMOND COMPANY LTD
RED METALS LTD • SANDFIRE RESOURCES LTD • TANAMI GOLD LTD
LEGEND MINING LIMITED • SHERLOCK BAY NICKEL CORPORATION LTD
DE GREY MINING LTD • KIMBERLEY DIAMOND COMPANY LTD
adam davey If you would like to receive further information or one of our Research
Managing Director Reports call us on (08) 9225 2800.
Citibank House, Level 2, 37 St Georges Tce Perth Ph (08) 9225 2800 Fax (08) 9325 4311 PO BOX Z5005 Perth, St Georges Tce WA 6831
AFS LICENCEE NO. 238333
an Australian adventure
oodside was born out of the
oil fever that gripped the
nation in the months following
Australia’s ﬁrst oil discovery at Rough
Range near Exmouth in Western Australia
in December 1953.
Beginning life on 26 July 1954 as
Woodside (Lakes Entrance) Oil Co NL,
the company was one of many speculative
junior explorers to raise money and start
the uncertain search for black gold.
Taking its name from the South
Gippsland town of Woodside, it was a
favourite among many farmers in the
region, and the initial 375 000 pound
(A$750 000) share issue in September 1954
was over-subscribed by more than
200 000 pounds (A$400 000).
Its ﬁrst oil exploration permit covered
520 sq km of coast along the Ninety Mile
Beach, near the small hamlet of Woodside,
in Victoria. In 1956, it secured the ﬁrst
offshore exploration licence to be granted
in Victoria – a 2600 sq km stretch of the
Ninety Mile Beach that took it 2 km into
Shell later sold half its share to what is now In September 1980, Woodside signed
ChevronTexaco, while Burmah sold half its an agreement with the State Energy
At the time, it was looking at drilling
share to BP. Commission of Western Australian that
in water up to 60 metres deep,
Exploration drilling began in 1967, included a 95% take-or-pay provision that
an unremarkable depth today, but a
and it was not until 1971 that Woodside was critical to the project proceeding.
world-record drilling depth in the 1950s
made the major gas and condensate On 16 August 1984, the ﬁrst deliveries
with the then record at just 33 metres,
discoveries at Scott Reef, 425 km north of gas were made to Perth via the
and that from a jetty-mounted rig in the
of Broome, and North Rankin and Angel, commission’s 1500 km pipeline from
Gulf of Mexico.
north of Dampier. In 1972 the Goodwyn Dampier to Bunbury.
The company had looked at extending
gas and condensate ﬁeld was discovered The coming of age for the North West
the acreage further into Bass Strait, but the
to the west of North Rankin. Shelf project and for Woodside came on
technology to explore such rough water
In 1979, the project participants signed 28 July 1989 with the ﬁrst liqueﬁed natural
did not then exist.
an agreement with the Western Australian gas cargo departing for Japan from the
Fate, it seems, had determined
Government for the development of Burrup Peninsula.
Woodside’s future to be on the other side
the North West Shelf project and the Today, Woodside is a leading Australian
of the continent.
Commonwealth Government issued a resources company and one of the nation’s
In June 1963, Woodside received
permit to export liqueﬁed natural gas for most successful explorers, developers and
permits for more than 367 000 sq km
20 years from 1986. producers of hydrocarbon products.
off the Western Australian coast.
This led to Woodside raising a massive Underpinned by world-class Australian
Under no illusion about the magnitude
A$1.4 billion loan to fund its share of assets and people who have highly
of the task ahead, Woodside set about
the development. This was the biggest competitive professional skills it is
selecting potential joint venturers. A joint
unsecured loan for a private company in poised to grow into a truly international
venture agreement was signed in January
the world, and set a record that stands business. P
1964 with Burmah Oil and Shell, each
today, ensuring Australian operatorship
taking a one third share.
and participation in the project.
18 Prospect June–August 2004
the future GOING GLOBAL
A ﬁfth LNG train, with China
supply to begin in 2006,
and an increased domestic
gas market are on the cards
for Woodside Energy.
The company’s game plan
also intends to increase the
North West Shelf reserves
base through exploration and
sustain the oil production
levels of Cossack Pioneer.
oodside is no longer just a local
That comes after a busy year, company. explore for oil and gas over about 20 000 sq km,
one in which Woodside has Algeria where the company’s ﬁrst revenue
set several key objectives, By building its existing business, turning has begun ﬂowing from non-Australian
including maximising discoveries into new projects and creating operations, and the Canary Islands,
production and further new business, it has more than A$4 billion in Kenya and Sierra Leone.
reducing unit costs while it investment planned over the next few years. Woodside’s Australian exploration program
commissioned its second These include the: covers 62 permits and retention leases and 15
trunkline and brings the LNG • A$1.5 billion Enﬁeld Oil Project, 130 km west production licences covering more than
Train 4 on stream. of Onslow, with start-up expected in late 185 000 sq km. Internationally, Woodside’s
2006; portfolio covers 165 exploration blocks – 34 in
Outside of the North West Africa, 129 in the Gulf of Mexico, and two in
Shelf venture, Woodside’s • A$500 million Blacktip gas project, off the
Papua New Guinea.
share of combined reserves Wyndham coast, which will supply natural
Woodside’s strength is underpinned by the
of the Enﬁeld and Vincent oil gas to the Alcan alumina reﬁnery in Gove in
North West Shelf Venture, one of the world’s
discoveries, about 130 km the Northern Territory by 2007;
premier LNG projects.
west of Onslow, increased last • A$750 million Otway Basin project, in
As one of Australia’s major oil and gas
year to 171.5 million barrels at Victoria, which is expected to supply up
companies, Woodside operates facilities that
the proved category. The lift to 10% of south east Australia’s current gas
account for more than 40% of Australia’s
came largely through technical demands from 2006;
and commercial studies • Development of a ﬁfth production train on Its expansion together with a number of
associated with the Enﬁeld the North West Shelf; and other projects in Australia and the Timor Sea
development. • The Chinguetti oil and gas ﬁeld off will see Australia will remain central to
Mauritania in west Africa, one of the world’s Woodside’s operations, accounting for 70% of
Further exploration drilling most promising new petroleum provinces. its production by 2015 even with the expansion
is planned with Woodside
Elsewhere, Woodside is working on gas of overseas activities.
planning for a start-up in the
market development in the Timor Sea through This growth strategy was one of the factors
fourth quarter of 2006.
the Sunrise gas project, 450 km north west of that led Don Voelte to join Woodside in April
A shorter time frame is Darwin, and the Browse gas project off the 2004 as Chief Executive Ofﬁcer and Managing
planned for the Mutineer- Kimberley coast, 425 km north of Broome. Director. US born, Mr Voelte has extensive
Exeter oil project, 150 km In the United States, it is working to develop global experience in the oil and gas industry,
north of Dampier, with the Midway gas project and the Neptune oil having held senior positions in Mobil and
development drilling leading to project in the Gulf of Mexico. Atlantic Richﬁeld Company. P
an expected project start-up In Africa, exploration is centred on Libya,
in the middle of next year. P where Woodside has a 30-year agreement to
Prospect June–August 2004 19
Celebrating 50 years of an Aussie icon
ustralia’s premier oil company As well, it has several Australian-based employs about 2100 people and has
celebrates its golden projects under development, and a its headquarters in Perth.
anniversary in July. rapidly expanding international business. In 2003, the company’s revenue from
Starting as a junior explorer in The company has doubled in the past LNG, natural gas, LPG, condensate
Victoria’s Gippsland, Woodside Energy is ﬁve years. Today, it is the operator and crude oil totalled A$2019 million.
now the operator of Australia’s of more than 40 joint ventures on behalf Operating cash ﬂow after tax and net
single biggest resource project, the A$14 of 34 participants and has interest was A$1203 million, and net
billion North West Shelf project. grown from its single-asset base on the proﬁt after tax (before signiﬁcant
North West Shelf to interests across three items) was A$527 million. Return on
continents. average capital employed (before
Woodside is Australia’s biggest signiﬁcant items) was 14.9%.
publicly listed independent oil and gas Woodside’s core areas of focus
exploration and production company are Australia, the United States
and is one of the nation’s most successful and Africa.
explorers, developers and producers of In Australia, the company’s producing
hydrocarbons. assets are based on the North West Shelf
The company, which is listed venture, where it produces LNG, natural
on the Australian Stock Exchange, gas, LPG, condensate and oil from ﬁelds
off Western Australia. Woodside also has
major exploration and development
interests in Western Australia, including
the major new oil province based on the
offshore Vincent, Enﬁeld and Laverda
ﬁelds, and signiﬁcant gas discoveries
in waters off Victoria and the Northern
In the United States, Woodside has
interests in several deepwater and
shallow water exploration blocks in the
Gulf of Mexico, including the Neptune oil
and Midway gas discoveries.
In Africa, Woodside is operator of the
Chinguetti, Tiof and Banda oil and gas
discoveries in offshore Mauritania.
It also has exploration interests in Libya,
Kenya, Sierra Leone and the Canaries,
and is a partner in major producing gas
and condensate ﬁelds in Algeria.
Woodside operates two ﬂoating
production, storage and ofﬂoading
facilities, including the Northern
Endeavour which is based on one
of Australia’s largest oil ﬁelds, Laminaria
and Corallina in the Timor Sea, and the
Cossack Pioneer based on the North West
Shelf. It also operates the Legendre,
North Rankin and Goodwyn platforms off
Western Australia. P
Prospect June–August 2004 21
Perth showcase for GAAP
as is the rapidly emerging The Western Australian Premier,
fuel of choice, with the Dr Geoff Gallop, has endorsed the
Australasian-Paciﬁc region event. “Perth is rapidly emerging as
showing some of the strongest a centre of technological excellence
demand in the world for natural gas and business for the region’s oil and
and Western Australia fast becoming gas industries,” he said. “Our location
the regional hub for trading in the and record for reliable supply
energy source. make Western Australia an ideal That is expected to be driven by
location of ﬁrst choice for basing industrial and consumer demand of
In the region there are seven major additional gas processing business, the major regional economies such
suppliers and the same number of operations and research to service as Japan, China and the United
major buyers. All will be represented the region’s markets.” States, where natural gas demand
at a major event being staged in Perth is growing at an unprecedented rate
from the 11th to the 13th of October, Organisers point to the very prompting the nation to search for
the Gas AustralAsia Paciﬁc Exhibition signiﬁcant gas projects either under new suppliers.
and Conference. way or at the point of implementation
as representing real opportunities For more details contact Colin
With a theme of expanding horizons for growth for companies supplying Swain (Exhibition Manager for the
and developing opportunities, it to the gas industry. Demand for CWC Group, London) by email,
will be the ﬁrst international gas LNG alone is expected to double firstname.lastname@example.org or Renee
conference and exhibition to be held in the region by 2010, with the Asia Ralph in Perth on +61 8 9389 5833,
in the State’s new convention centre Paciﬁc area responsible for 69% email email@example.com or
and is bringing together a global of world trade. visit www.gaap2004.com P
group of speakers, delegates and
New hot spot survey
he Western Australian
Government and a wide range
of industry are working together
wins wide support
Key goals for the survey include:
to support research, identiﬁcation, PIEC recommended that this
management and recording of • Data on distribution of the ﬂora
information be recorded in a database
biological data in the Pilbara. and fauna in the region,
and that CALM should be the data
The Department of Conservation • Appraisal of the biodiversity
custodian. CALM scientists are
and Land Management (CALM), conservation in the region,
progressively undertaking the data
assisted by the Western Australian • A list of threatened species and
capture of these reports.
Museum, has commenced a ecological communities and look
Industry is supportive of both the
A$12.5 million ﬁve-year biological at recovery programs,
survey and database and recently
survey program for the Pilbara region. • An improved basis for assessing
contributed funds towards maintaining
The survey involves four years environmental impacts of
the database with additional
of ﬁeld research followed by one development proposals.
funding support coming from
year of analysis, interpretation and Complementary to the survey is
the Department of Industry and
documentation. More than 800 sample CALM’s bibliographic database that was
Resources on behalf of PIEC.
sites having a range of soil types and initiated by the Government’s Pilbara
The information being collated in
landforms, climate and vegetation Iron Ore Environment Committee
the survey and the bibliographic
communities will be selected to provide (PIEC) in 2000. The initial review
database will provide a useful
information about the ecological of all available biological survey
resource tool for industry operating
diversity of the Pilbara region. data and reports undertaken by
in the region.
The Pilbara region is a national Biota Environmental Services
For more information about the
biodiversity hot spot and the survey is on behalf of PIEC in 2000 indicated
Pilbara Biological Survey and the
necessary because the overall pattern of that approximately 1300 biological
bibliographic database, please refer
biodiversity knowledge in the Pilbara is reports had been produced for the
to CALM’s nature base website at
not well understood. Pilbara region.
22 Prospect June–August 2004
Rich rewards in and under the regolith
BY PAUL ATHERDEN
DEPARTMENT OF INDUSTRY AND RESOURCES
egolith, the technical term for Many organisations are involved also play critical roles in developing an
the layer of younger, weathered in the generation, dissemination and understanding of the Earth’s often taken-
rock and dirt that overlays the application of this knowledge. for-granted, blanket of dirt.
Earth’s bedrock, continues to provide Western Australian government agencies One highly respected institution is
a huge slice of Western Australia’s play an important role, with the the Cooperative Research Centre for
resource pie. Department of Industry and Resources Landscape Environment and Mining
The Department of Industry and (DoIR) in particular maintaining Exploration, whose name is often
Resources estimates that last year and providing access to volumes of shortened to LEME. LEME recognises
more than 40% of the State’s mineral hard-won data through its web site. that exploration geoscientists need to
production was extracted from this At www.doir.wa.gov.au you can understand chemical, physical and
disordered layer of transformed, often interrogate data stores such as WAMEX biological processes acting in geological
transported material. time, so that they can
This production included interpret ﬁeld data such
more than A$10 billion as drill cores, geophysical
worth of iron, alumina, surveys and regolith
mineral sands and lateritic mineralogy. Scientists
nickel, as well as a portion working under LEME’s
of the State’s gold. Mining Exploration arm
In recent decades, can identify the traces and
however, geoscientists and effects of desert processes
explorers have become and of ancient rivers and
convinced that the regolith lakes, both fresh and
hides mineral riches in corrosive, enabling them
quantities that dwarf the to explain, eliminate and
tonnages already extracted. predict areas of mineral
For more than a century prospectivity.
geologists, prospectors and They use ﬂuid
savvy investors have known dynamics, elemental
that huge tracts of Western microanalysis and
Australia are covered by sophisticated mapping
a rich layer of broken techniques and
and weathered material. collect state of the art
The residue of millions electromagnetic, magnetic
of years of erosion, the and gravity data from
regolith varies in depth airborne equipment.
from centimetres to several Data derived from
hundred metres. While it helicopter-based electro-
contains valuable mineral magnetic technology
deposits, it casts an earthen (HOISTEM) was recently
veil over the unbroken integrated with other
bedrock below, the source exploration data to
of the regolith’s riches produce a holistic
and host to undisturbed approach to regolith
primary deposits. mining in the manganese-
Dealing with Western Reading the regolith: This Hills-hoist like antenna dangling rich Woodie Woodie area.
Australia’s regolith is a beneath the helicopter probes deeply into wide areas of regolith, LEME geoscientists
huge task and many identifying hidden ore bodies and structures. and those working with
dedicated people in a other local organisations are
diverse range of organisations are which contains detailed exploration developing innovative techniques to “see
striving to see into it and through it, activity data. You can also buy through” the regolith in a bid to identify
to unravel its secrets and exploit its books addressing regional geology the rich mother-lodes in the underlying
riches. Because exploration practices and use sophisticated mapping primeval bedrock. Their efforts in
developed overseas are often of limited software (GeoVIEW.WA) to view and developing world-class exploration
use in penetrating Western Australia’s print a seamless regolith map of any techniques are signiﬁcantly enhancing
regolith, methods and technologies part of the State. the prospectivity of Western Australia,
based on locally developed knowledge Universities, mining companies and reinforcing its impressive ranking as one
are required. cooperative research centres (CRCs) of the world’s great mineral provinces. P
Prospect June–August 2004 23
R2D3: May the force be with you
t’s not a new generation Star Wars, technology for the oil and gas industry, “And who knows what can be achieved
but still a new frontier for modern initially covering integrated reservoir when Australia’s largest publicly listed
energy technology with R2D3 being characterisation and management to oil and gas company joins forces with
launched in Perth. optimise recovery rates. Australia’s biggest scientiﬁc research
agency and the two leading Western
It has come about through three leading It will also focus on gas utilisation, Australian universities?”
research institutions and Australia’s including gas-to-liquids, small-scale
biggest publicly listed oil and gas LNG technologies and gas compression Woodside’s chief operating ofﬁcer,
company joining forces for the creation of engineering to improve methods for Keith Spence, said the joint venture
a world-class energy research centre. extracting and transporting gas. would allow the company to better
direct its research spending.
The partnership, between CSIRO, Under the agreement the partners will
the University of Western Australia, Curtin share in the administration costs of R2D3, “It will also result in Western Australia
University of Technology and Woodside which will be based at the Australian emerging as a key centre of Australian,
Energy, establishes R2D3 – which stands Resource Research Facility regional and if not world research into
for “Research to Discover, Develop and at Technology Park in Perth. cutting-edge oil and gas technologies,”
Deploy energy solutions for he said.
a sustainable future”. CSIRO Petroleum chief professor
Beverley Ronalds said the three research The agreement marked a signiﬁcant step
Woodside views the move as a way institutions had recognised the need forward for the State, said Professor
to better direct more than A$25 million to collaborate as companies such as Mark Bush, the Dean of UWA’s Faculty
it expects to spend over the next ﬁve Woodside sharpened focus on delivering of Engineering, Computing and
years on oil and gas research. high-value research and development for Mathematics.
The alliance will focus on research their business.
and development, training and “This agreement builds on the individual
competitive technical intelligence. “Business today expects a strong research strength of each institution
emphasis by research institutions on to create the critical mass required to
R2D3 is expected to have a budget this deploying technology to realise returns on advance the potential of one of WA’s
year of up to A$5 million. Research and investment,” Professor Ronalds said. most vital resource industries,” he said. P
development is to centre on developing
WESTONIA MINES LIMITED
BFS Base case pit to recover ~ 500,000oz
300m Decline to 264m
+1m oz resource to 300m
Hole No. Hole Depth From (m) To (m) Grade (g/t Au)
WDD043 416 370 371 32.0
393 396 33.8
WDD054 484.5 410 415 15.6
439 440 12.5
WDD055 512 256.8 258.7 8.6
403 404 8.0
520.9 525.9 7.2
582 587 5.8
WDD096 695 632.7 652 7.6
703 705 18.2
Image Source: GEOVIZ Contact: firstname.lastname@example.org
24 Prospect June–August 2004
Equipment & Services
• Air compressors Zone II & Rigsafe • Fuel and water tanks
• Steam Generators •PLighting
• Generators • Access Equipment
• Booster Compressors • Safety Gear
• Toolstores • General equipment & accessories
AMITY OIL LIMITED
INCREASING REVENUE THROUGH
Amity Oil Limited has a proven track record as a
successful international oil and gas exploration &
2004 will see Amity pursuing its strategy of growing its
international presence and creating multiple revenue
streams to deliver dynamic growth opportunities and
Amity’s core focus is to capture new reserves through
exploration and acquisition opportunities in Turkey,
Australia and the United States.
Amity Oil Focused on Creating
Areas opened for exploration
estern Australia’s highly- The Perth Basin releases, of which
competitive oil and gas search
is set to intensify with the latest
availability of exploration areas.
there are two to the south of the so-called
Dennison Corridor, are regarded as
prospective mainly for gas. They are
of land at
Six petroleum exploration areas,
ranging from highly-prospective to
L04-4 and L04-5, made more attractive to
the exploration industry by the existing
frontier, have been released. and under-utilised Parmelia gas pipeline.
he Oakajee industrial estate
In March, the Department of Industry So far 12 commercial hydrocarbon may yet be developed but
and Resources released three blocks ﬁelds and numerous other signiﬁcant the ball has been placed
in the offshore Carnarvon Basin, discoveries have been made in the squarely in the court of private
two in the onshore Perth Basin and onshore northern Perth Basin, with by far enterprise.
one in the underexplored Ofﬁcer Basin. the biggest being the Dongara ﬁeld which
The release, which closes at the end originally contained 508 bcf of gas and The Western Australian
of September, is expected to attract wide 104 million barrels of oil. Government has rezoned the
interest, especially in the Carnarvon The frontier of petroleum exploration site Industrial Investigation to
Basin region. in Western Australia is represented by the recognise its potential to back
The northern Carnarvon Basin release of L04-6, in the remote Ofﬁcer a deepwater port may one day
acreage centres on Area L04-1, Basin, which has been made available at be realised. Under the scheme
10 km east of the producing Varanus the request of the industry on the basis of a private developer would be
Island production area and less than its potential for oil. required to meet all associated
25 km from the Stag oil production The basin is considered underexplored infrastructure costs.
licence. The combined areas L04-2 because of its age and remoteness, but is
The move means Oakajee,
and T-04-1 are immediately adjacent relatively close to major infrastructure,
25 km north of Geraldton,
to to Airlie Island production facility including the Goldﬁelds Gas
is effectively placed in reserve
and immediately to the north of the Transmission pipeline. Potential markets
should it one day be required. P
Thevenard complex. from an Ofﬁcer Basin discovery include
The Department said water depths mining centres along the pipeline,
are less than 50 metres in the release Alice Springs in central Australia and
areas, which would prove ideal for the coastal ports such as Esperance. P
use of jackup drilling rigs. There is good
coverage of 2D seismic and partial
coverage of 3D seismic in the areas.
When small is beautiful
mall miners are the unsung So where do those owners,
heroes of the Western Australian and potential owners, have access
resources scene. to the knowledge-at-a-glance which
could mean the difference between
Trying their luck in a hostile, unforgiving bankruptcy and bonanza? Until now, and plats,
environment, dependent on vagaries nowhere. But there is a new publication the drives, the stopes and
of luck and orebodies and without which addresses the issue in such developing the orebody. There’s even
the resources of laboratories and a practical way it should become as a mention on what bushtucker is best,
engineering workshops, the myriad essential to small operators as their though personally I draw the line
of small shows in WA is legion… pick and shovel. at galah.
Frank Bojesan has been an The book also has a praiseworthy
Legend because many of those small underground miner for more than eye to safe development, based on
operations have gone on to become 30 years in his own and others’ shows common sense. It is not aimed at
some of the nation’s biggest producers in Western Australia and overseas and part-time prospectors or weekend
over more than a century, taken on by from the tone of his book Small Scale gougers, but rather at small
some of the world’s biggest miners on Underground Mining there is little he syndicates with a base amount of
a scale which would have left many of hasn’t experienced. knowledge wanting to get serious
the original owners stunned. about successfully developing a
It is a step-by-step guide to prospective orebody.
But at the other end of that scale there successfully developing a small
were many which just constituted underground show: How to set up the This entertaining publication is
a nice little earner for their owners, camp (including the dunny, both above available through Hesperian Press.
maybe developed over a level or two, and below ground), establish the shaft (www.hesperianpress.com) P
a stope or three.
Prospect June–August 2004 27
the big picture 8
Global recovery continues Japan sees a long-awaited broadening of growth
Over recent months the world economy has continued to The outlook for the Japanese economy now looks brighter than it
recover at a rapid pace and, in aggregate, is now expected has for a long time. GDP growth lifted to 1.6% in the December
by the International Monetary Fund (IMF) to grow at 4.6% in quarter of 2003 for an annual growth rate of 3.6%.
2004. This represents a robust growth rate when compared with Business investment has been a key driving force behind Japan’s
average growth over the past 30 years. Importantly, while a year recovery and has occurred in a climate of strong proﬁtability.
or so ago there were some signiﬁcant downside risks causing Exports growth has been the other factor lifting overall economic
major concern (such as the persistent weakness of global growth. As with many economies in the region, including
equity markets, and the potential for deﬂation) these risks have Australia, it is Chinese demand that has driven exports growth
subsided. Replacing these fears is a concern that world growth in Japan, though the recovering US economy has been another
may surprise on the upside, provoking inﬂationary fears and important source of export growth.
consequently, higher interest rates.
Indicators of business conditions suggest that growth should
A major factor driving the more positive outlook is that, with the continue, with the Tankan business survey and the Shoko Chukin
exception of a relatively weak recovery in the euro area (driven survey of small business suggesting that conditions in the
largely by softness in Germany), the recovery is becoming more manufacturing sector are as good as any time during the past
synchronised across the global economy, reducing the risk that 15 years.
over-reliance on US recovery might stall global growth.
While industrial production and exports growth have leveled out
Global and Regional Growth Prospects – Annual GDP Growth in the ﬁrst months of 2004 they remain at high levels. Critically,
there has been a lift in activity in the services sector indicating
2002 2003 2004 2005 a broadening of the recovery. An extension of activity into
IMF forecasts (April 2004) the services sector has been a missing link in past, tentative,
United States 2.2 3.1 4.6 3.9 Japanese recoveries.
Euro-area 0.9 0.4 1.7 2.3 Another missing link in past recoveries has been household
Japan -0.3 2.7 3.4 1.9 spending. Consumers now appear to be responding to
China 8.0 9.1 8.5 8.0 improvements in the labour market with signs of improved
Other East Asia 4.6 3.7 5.4 5.1 consumer sentiment and higher spending. The improvement
World 3.0 3.9 4.6 4.4 in the labour market has seen employment rise over the past
year and job vacancy indicators suggest further improvement
Source: Reserve Bank and IMF
over the short-term. As a result of better employment growth,
unemployment has fallen from its recent peak of 5.5% in
The US recovery lifting its labour market
January 2003 to 4.7% in March 2004.
While the US economy has been recovering since mid-2003
under the stimulus of accommodative monetary and ﬁscal policy, Two key factors holding back recovery in Japan appear to
the sluggishness of the labour market has been the weak link in be relenting.
the recovery. • Deﬂation, which promises lower prices in the future thus
GDP in the March quarter of 2004 grew strongly by 1% to give deterring consumers from buying now, is easing and
annual growth of 4.9%. Importantly for the sustainability of household consumption appears to be strengthening.
the recovery, activity in the March quarter was broadly based. Consumer prices fell only marginally in the year to March
Household consumption rose strongly, supported by low interest – compared with falls of 1% a year earlier. Indicators of
rates, rising household wealth as house and share prices lifted, wholesale and producer prices have also stabilised in recent
and tax cuts. Business investment rose by 1.7% in the March months in part due to a lift in global commodity prices which
quarter to be 9.4% higher than a year earlier with information feed into Japanese production through imported input prices.
technology investment continuing to grow strongly as the • Japan’s banking sector, which has laboured under the burden
software replacement cycle gains pace. Low interest rates and of non-performing loans and low levels of loan demand,
solid consumer demand are providing an attractive climate for seems to be recovering. Non-performing loans now account
further growth in investment. Strong proﬁtability, with the proﬁt for around 7.5% of bank lending, substantially lower than
share of GDP at well above its long-term average, has also their early 2002 peak of 9.5% and small business demand for
boosted business conﬁdence signiﬁcantly. loans has picked up signiﬁcantly.
Strong productivity growth and modest wage growth have meant Non-Japan Asia continues its strong expansion
that inﬂation remains at relatively low levels, allowing the Federal Since the SARS-induced slowdown experienced in the ﬁrst half
Reserve to maintain a stimulatory monetary policy, notwithstanding of 2003, East Asia has grown strongly. This strength reﬂects
some mild suggestions by Federal Reserve Chairman Greenspan expansionary monetary and ﬁscal policy and the impact of the
that eventually interest rates will begin to rise. recovery in US demand for the region’s exports, notably in the
Softness in the labour market has been unexpected given the lift electronics sector. A number of regional economies have their
in growth that the US economy has experienced since mid-2003. exchange rates linked to the US$, and the depreciation of the
Non-farm payroll increases appear to have picked up recently latter has given a signiﬁcant boost to the competitiveness of
however, with growth of around 300 000 and revisions to earlier regional exports.
months lifting average jobs growth to around 100 000 a month.
Domestic demand has recovered rapidly from the SARS period
Forward indicators are looking positive with the Institute of
and there have been some concerns that growth rates are back
Supply Management’s employment index at 20-year highs.
at pre-1997-98 Asian crisis levels.
Stronger employment growth should assist in sustaining
consumption growth adding further impetus to the US economy.
28 Prospect June–August 2004
C o m p i l e d b y D o I R ’s E c o n o m i c s A n a l y s i s B r a n c h
In China for example, growth of 9.7% in the year to the March quarter
follows rates at a similar level in the previous year. Exports have eased
back from the 43% rates experienced over 2003 but remain at high
Chart 1: Real GDP growth levels. Such rates of external growth have contributed to industrial
production growth of around 20% in the year to December quarter 2003.
Household consumption spending continues at a rapid rate.
In response to concerns of overheating and to assist in sustaining
Chinese economic growth, the Chinese government has indicated
that it will act to restrain credit growth and encourage a shift in
2.0 2.0 spending away from areas of investment in which there is the potential
1.0 1.0 for excess capacity expansion, notably the steel industry, towards
0.0 0.0 household spending.
-1.0 -1.0 The effects of exchange rate depreciation in tandem with the US$,
-2.0 -2.0 a stronger global economy and demand from China, which has boosted
intra-regional trade, have lifted industrial output and exports across
US Euro-zone Japan
the region. Stronger stockmarkets and falling unemployment have also
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 stimulated retail sales and business investment. Helping to sustain
Source: RBA strong activity, inﬂation has remained reasonably low to date, though
there are signs of price pressures building in economies such as China
Europe remains the laggard
Europe’s economy remains moribund with only tentative signs of
recovery, particularly in the case of Germany. Exports have provided
most of the stimulus to activity over the past year, though the
strong appreciation of the euro against the US$ is showing signs of
Chart 2: Global sharemarkets constraining even this source of growth.
Index: June 1999=100
Domestic demand remains sluggish, with consumption spending very
120 US Japan Euro-zone Australia
weak and business conﬁdence plateauing in the early months of 2004.
110 As a consequence European industrial production has fallen a little over
100 the past quarter.
90 On the brighter side, business investment recorded its fastest rise in
80 three years in the December quarter 2003, though it is hard to see how
this can be sustained given weak consumption growth. Part of the
explanation for constrained consumption growth has been the weak
60 labour market though there have been some signs of stabilisation of
50 unemployment at 8.8% in recent months.
40 In contrast to mainland Europe, the United Kingdom has seen
Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04
strong economic growth, lifted by rising wealth generated by
rising house prices and a buoyant labour market. In terms of the
latter, unemployment is at its lowest in nearly 30 years. Household
consumption is the current mainstay of growth. There are currently
concerns about the sustainability of growth given surging housing
prices and an associated rise in household indebtedness. It was partly
in response to these concerns that the Bank of England raised interest
rates by 25 basis points in early May.
The A$ gives back some of its strong gains
Chart 3: Exhange rates against A$ The strong rises in the Australian dollar’s value against the US$ over
TWI, Yen US$, Euro 2002-03 to the peak in February 2004, reﬂected a relatively strong
90 TWI Yen US$ Euro 0.90 Australian economic growth rate vis-à-vis that of the US and the
85 0.85 associated positive interest rate differential. Since February 2004,
80 0.80 when the A$ peaked at around US$ 80 cents, perceptions of these
0.75 factors has changed.
70 It is now expected that the US economy will be stronger than earlier
65 expected, and expectations for a rise in US interest rates have recently
60 been brought forward. At the same time it is likely that the Australian
55 economy will slow modestly and there is an increasing expectation that
50 0.55 domestic interest rates may have peaked following two 25 basis point
45 0.50 rises in late 2003.
40 0.45 In consequence, by early May 2004 the A$ has fallen by around 12%
May-99 Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03 May-04
Source: RBA against the US$ and, to a lesser extent, by 5% against the euro, by 7%
against the yen and across currencies by around 9% against the
Prospect June–August 2004 29
the big picture 8
High pressure on oil prices
The price of crude oil surged US56c on 5 May 2004 to reach a 13–year high of
US$39.93/barrel, a rise of 12% from the 30 March 2004 price of US$35.78.
High prices have been attributed to tight supplies in the US and the terrorist
Oil price pressure
attack on Westerners working for an oil contractor in Saudi Arabia. Oil analysts US$/bbl(WTI)
are concerned that terrorist attacks may increase during the year on the world’s
largest supplier of crude oil, thus causing further volatility to the price of crude.
Other important macro reasons for the price rise include global political and
economic uncertainty, periodic disruptions to Iraq’s oil supply, spare capacity,
diminishing stocks and volatile weather patterns. Furthermore, robust energy 35
demand from the Chinese mainland and the expanding economies of Asia is also
boosting oil prices. 30
The decision by OPEC to cut one million barrels per day (mbd) from
1 April 2004, coupled with low inventories has also had a signiﬁcant impact on 25
prices. Australian Mineral Economics (AME) reports that OPEC is seeking higher
prices to negate the impact of a weaker US dollar and the attendant revenue 20
losses and could adjust its price of crude oil upwards in the next few months.
There is a consensus among analysts that the price of oil will in the short-term 15
trade above US$30/bbl. However, oil prices are forecast to fall over the medium
term due mainly to an increase in world production.
Source: EIA (Official Energy Statistics from the US Government)
On 10 May 2004, the Saudi Minister for oil stated that his Government felt that
the price of oil had increased enough, and that in view of this he would be asking
OPEC to increase production.
The Saudi Arabian Minister said that the principal reason for this initiative was
that high oil prices would inhibit global economic growth, which in turn had the Nickel – coming off a high?
potential to reduce the demand for oil. US$/t
Gold price slips, but remains high…
Gold has again dropped below the US$400/oz level, trading at US$388.50/oz 17,000
as at 30 April 2004. The fall in the price of gold is a reﬂection of the weakness of
the US dollar mainly against the euro, which had a signiﬁcant impact during the 15,000
course of 2003.
Exchange rate adjustments had a major impact on gold production and producer 13,000
cost rankings. This was clearly demonstrated in 2003 when the South African rand
appreciated by 39% against the US$ increasing cash costs by around 40-50%. 11,000
To offset some of the negative effects of exchange rate realignments, a new
agreement, which will replace the Central Bank Gold Agreement, has been agreed
to by the principal participants, which includes the European Central Bank and
twelve other Eurozone banks. The new agreement will cap central bank gold 7,000
sales at 500 tonnes a year, 25% higher than the previous agreement and will be
reviewed in 2009. 5,000
According to AME, for the remainder of calendar 2004, the impact of an assumed
weaker dollar is expected to be negated by the effect on gold prices of
a reduction in investor concern over uncertainty about world economic recovery. Source:Metalprices
In view of this reduced uncertainty, a price of around US$410/oz for the average
price of gold has been forecast by analysts for the remainder of 2004.
Global economic and political issues, the relationship between the euro/US dollar
and market deregulation will be the key determinants to the future price of gold. Gold prices bouyant
Copper prices have improved, but are vulnerable 450
The price of copper as at 30 April 2004 was US$2752/tonne, down 10% from the 430
US$3060/t price at the beginning of March 2004. The major reason was concern
that US interest rates will rise, strengthening the dollar and making metals more 410
expensive in other currencies. 390
However, there is general agreement that as US economic growth gathers
momentum and the Japanese economy gradually improves for the ﬁrst time in
many years, the outlook for copper and other base metals demand looks positive. 350
Furthermore, with a substantial deﬁcit forecast in copper over the next couple of 330
years, the price of copper is expected to improve. 310
It is estimated that world reﬁned copper consumption grew at around 4% in 2003 290
and growth is forecast to improve to about 6% in 2004. Westpac has forecast an
average copper price of US$2750/tonne for calendar 2004. However, the bank 270
states that the projected prices may prove conservative given the possibility of a 250
supply shortfall, which could disrupt the demand/supply equation.
30 Prospect June–August 2004 London PM Fix
C o m p i l e d b y D o I R ’s E c o n o m i c s A n a l y s i s B r a n c h
Lead and zinc
After stagnating for a period of 18 months, world zinc prices have increased
by around 29% since June 2003. However, zinc was selling at US$1028.50
Copper – shaky at the top tonne at the end of April 2004, down 7.7% from the 1 January 2004 price of
US$/t US$1115/tonne. The major reasons for the fall in the price of zinc are attributed to
3,750 speculative selling, as the demand for zinc has not been strong enough to reduce
Galvanising is the principal end use of zinc, accounting for almost half of total zinc
consumption. Expected growth rates in the construction and automotive sectors,
both signiﬁcant users of galvanised steel, are key indicators of zinc consumption.
In this regard, a sustained recovery in US industrial production appears to be
underway and has also boosted production and exports in Japan and other Asian
2,250 eonomies. Chinese consumption was a major factor in raising global consumption
by over 2% in 2003 and is again expected to underpin global growth of around
3% in 2004.
The underlying supply and demand fundamentals of the global zinc market are
forecast to be supportive of higher prices in the short term. On the supply side,
1,250 closures of both mine and smelting capacity in the past two years, speciﬁcally in
2003 and with only small amounts of greenﬁeld capacity planned for the future,
indicate that supply will increase only slowly in the short term.
Source:LME Cash Official The price of lead as at 30 April 2004 was US$735/tonne indicating price increases
of around 64% since June 2003. However, the price of lead has fallen 11.4% from
early January 2004 to the end of April 2004.
The global resources sector has been increasingly driven by China’s voracious
Lead and Zinc Prices demand for minerals, including lead. This is mainly due to the demand for lead in
US$/t (Zinc) US$/t (Lead) China by the burgeoning automobile sector, coupled with the idling of some world
Zinc Lead mining, smelting and reﬁning capacity.
Nickel prices are expected to be relatively high in 2004 as demand for the metal
continues to remain strong.
900 The LME cash price for nickel was US$7900/tonne at the end of April 2003,
compared to US$11 155/tonne in April 2004.
During 2004, improved economic conditions in the OECD are expected to lead
700 to increased growth in nickel consumption. Higher world economic growth
400 is expected to boost activity in the nickel intensive consumer sectors such as
600 catering, automobile and construction industries.
200 China is again expected to account for an increasing share of growth in nickel
consumption, because of the new stainless steel capacity coming on stream in the
next few years. The country continues to look for nickel supplies since domestic
30/01/02 30/04/02 30/07/02 30/10/02 30/01/03 30/04/03 30/07/03 30/10/03 30/01/04 30/04/04 production accounts for only around a half of domestic consumption.
Indicative Chinese consumption growth of 35% which was achieved in 2003,
Source:LME Cash Official continues to drive the market, however, a lower growth rate of around 15% is
forecast for the remainder of 2004.
Global nickel production increased by a marginal 1.5% in 2003 and is expected to
be up by about 5% in 2004. However, this will only meet demand which, in turn,
will be constrained by higher prices and limited stocks. Although nickel prices fell
Aluminium during April 2004, they are expected to improve over the remainder of the year.
The monthly price of aluminium on the LME averaged US$1433/tonne in 2003.
The average for the ﬁrst four months of 2004 was US$1669/tonne.
1,600 The price increases indicate an incremental build up in aluminium stocks.
With unreported stock also understood to be large, these prices could reﬂect
expectations of stronger demand growth and an easing in aluminium production
globally in the short term.
Higher energy prices during the ﬁrst part of 2004 continue to be of concern to
aluminium producers worldwide. Current spot alumina is at around 20% of the
aluminium contract price compared to normal levels of 13-14%.
Prospect June–August 2004 31
(for ﬁnancial year 2003/2004)
IRON ORE obtained conditional environmental approval in April port was announced on 23 February 2004. Current
2003 and is proceeding with mine and infrastructure production of 1.6 Mt/a will be increased to 2.2 Mt/a
East of Paraburdoo - Paraburdoo Eastern development. Mining of the new deposits by Q2 2005. The company intends to commission a
Ranges - Iron Ore commenced in Q1 2004. second hematite mine at Mt Gibson, about 300 km
HAMERSLEY IRON PTY LIMITED Expenditure: $20m. southeast of Geraldton, by mid-2005.
Hamersley Iron has joined with the Shanghai Baosteel Employment: Construction: 120; Operation: 35 Expenditure: $50m.
Group Corporation to develop the Eastern Range Employment: Construction: 80; Operation: 30
mine, which was ofﬁcially opened on 19 April 2004. Mining Area C - Iron Ore Mine
This joint venture partnership, known as the Bao-HI BHP BILLITON IRON ORE PTY LTD NICKEL
Ranges Joint Venture, will mine and export around BHP Billiton and the State approved the development Cosmos - Nickel Mine (sulphide ore)
200 Mt of high-grade iron ore to China over a 20-year of Mining Area C on 3 April 2002. Mining operations JUBILEE MINES NL
period. at deposit C commenced in Q3 2003. The product and A feasibility study based on the Cosmos Deeps
Expenditure: $64m. capacity expansion (PACE) project at Finucane Island ore reserve of 520 000 tonnes at 7.2% nickel was
Employment: Construction: 100; Operation: 100 was approved on 19 July 2002. completed in April 2001. The company completed
Expenditure: $1b. open pit mining in July 2003. After an 18-month
Koolyanobbing - Northern Expansion - Iron Employment: Construction: 500; Operation: 200
Ore Mine development program, underground mining at
Tallering Peak - Iron Ore Mine Cosmos Deeps commenced in Q3 2003. Based on
PORTMAN LIMITED MT GIBSON IRON LTD
Portman intends to increase iron ore production at current ore reserves, production will continue to 2010.
Mid West Region - Iron Ore Mine Expenditure: $30m.
its Koolyanobbing operations to 5-6 Mt/a through the Mount Gibson Iron Ltd commenced mining at
development of deposits located at Mt Jackson and Employment: Construction: 35; Operation: 30
Tallering Peak, 130 km northeast of Geraldton in
Windarling, north of Koolyanobbing. The company Q3 2003. The ﬁrst shipment of ore from Geraldton
(as at 2/6/2004)
BAUXITE/ALUMINA This work includes a new car dumper, new rail and through the upgraded port of Wyndham. The project
construction of two new berths with a new ship is expected to have a mine life of 5.5 years on current
Pinjarra/Huntly - Alumina Reﬁnery Efﬁciency loader as well as expansion of the stockpile facilities resource estimates. The project is estimated to
Upgrade — expected completion end 2005. produce 9000 t/a of contained nickel.
ALCOA Expenditure: $700m. Expenditure: $50m.
Alcoa commenced construction in April 2004 on an Employment: Construction: 800; Operation: 195 Employment: Construction: 150; Operation: 120
efﬁciency upgrade of its Pinjarra alumina reﬁnery.
Reﬁnery capacity will increase by 0.6 Mt/a to a total IRON ORE PROCESSING OIL & GAS DEVELOPMENTS
4.2 Mt/a (+17%). The additional capacity is expected Kwinana - HIsmelt Commercial Iron Making North West Shelf - Project Expansion - 4th
to come on-stream at the end of 2005. Plant LNG Train, Second Trunkline
Expenditure: $440m. HISMELT CORPORATION LIMITED WOODSIDE ENERGY LTD
Employment: Construction: 1000 HIsmelt Corporation, in a joint venture with Nucor Proposals by the NWS partners for additional LNG
Worsley/Boddington - Alumina Reﬁnery (25%), Mitsubishi (10%) and Shougang (5%), Trains 4 and 5, and a second trunkline and expansion of
Expansion announced plans to develop a commercial-scale the Domgas plant, received environmental approval in
WORSLEY ALUMINA PTY LTD HIsmelt process plant at Kwinana, near Perth. The 1998 and 1999. The LNG expansion is based on growing
BHP/Billiton’s Worsley Alumina Reﬁnery is expanding ﬁrst stage of the plant will produce 800 000 t/a of pig Asian energy markets. In April 2001 the joint venturers
its capacity from 3.1 Mt/a to 3.5 Mt/a at cost of $192 iron from iron ore ﬁnes, coal and ﬂuxes. Construction committed to develop a fourth LNG processing train
million. The “creep” program will expand the reﬁnery commenced in January 2003 with commissioning costing A$1.6 billion. Construction commenced in Q3
capacity to the maximum provided for by Worsley’s scheduled to commence in late 2004. 2001. In December 2001 the joint venturers approved
current environmental approval. Expenditure: $800m. expenditure for a A$800 million second subsea trunkline
Expenditure: $192m. Employment: Construction: 320; Operation: 65 linking the offshore production facilities to the onshore
Employment: Construction: 400 gas plant on the Burrup Peninsula. Construction
NICKEL commenced in 2002. First gas began ﬂowing through
GOLD Lake Johnston (Emily Ann/Maggie Hays) the trunkline in February 2004. Train 4 is scheduled for
Telfer - Gold Mine (Expansion) - Nickel Mine/s (sulphide ore) completion in Q3 2004.
NEWCREST MINING LIMITED LIONORE AUSTRALIA (NICKEL) LTD Expenditure: $2.4b.
Feasibility studies for the Telfer expansion have LionOre Mining is developing the Maggie Hays Employment: Construction: 2000; Operation: 70
identiﬁed a large low-grade resource in excess of 500 deposit as an integrated development with its nearby
Emily Ann mine near Lake Johnston. Construction PETROCHEMICALS/CHEMICALS
Mt and containing more than 26 Moz gold. Newcrest
commenced construction of the mine extension at Maggie Hays is progressing with the main decline Burrup Peninsula - Ammonia Plant
in late 2002, with commissioning scheduled in Q3 nearing completion. Mining at Maggie Hays is BURRUP FERTILISERS PTY LTD
2004 and full capacity to be reached by 2005. When planned to commence in Q4 2004 and will double Burrup Fertilisers is developing an ammonia plant
production commences it is estimated to average production from the region to about 10 000 to 12 000 at the King Bay/Hearson Cove industrial area on
800 000 oz/a of gold and 30 000 t/a of copper over a t/a of nickel. The concentrate will be shipped to Inco the Burrup Peninsula, near Karratha. Around 760
24-year period. Newcrest Mining is building a new Ltd of Canada under a life-of-mine offtake agreement 000 t/a of liquid ammonia will be produced and
17 Mt/a processing plant as part of the project . A negotiated for the Emily Ann mine. exported to India and other world markets for the
major component of the project will be a 440 km gas Expenditure: $28m. manufacture of fertilisers. SNC-Lavalin Australia Pty
pipeline from Port Hedland to the minesite. Employment: Construction: 25; Operation: 167 Ltd, is the EPC contractor and Sinclair Knight Merz
Expenditure: $1.2b. Ravensthorpe - Nickel Mine the environmental management consultant for the
Employment: Construction: 1222; Operation: 620 BHP BILLITON - RAVENSTHORPE NICKEL project. The Harriet Joint Venture has an agreement
OPERATIONS PTY LTD to supply 82 TJ/d of natural gas to the project.
IRON ORE Construction commenced on 30 April 2003 and
On 23 March 2004, BHP Billiton approved the
Pilbara - BHP Billiton’s Rapid Growth Project development of the Ravensthorpe Nickel Project that production is planned to start in Q3 2005.
BHP BILLITON will produce up to 220 000 t/a of mixed nickel/cobalt Expenditure: $630m.
In February 2004, BHP Billiton announced that it hydroxide to be processed at QNI’s Yabulu reﬁnery in Employment: Construction: 700; Operation: 60
would be spending A$145 million in expanding its Queensland. Plant construction is expected to take TIMBER
Pilbara iron ore business from 85 Mt/a in 2003 to 30 months and the ﬁrst shipment of product from
110 Mt/a by the end of 2004. The move will include a Neerabup - Laminated Veneer Lumber Plant
Esperance to Yabulu is to commence in early 2007.
50% increase in capacity of the Mining Area C (MAC) WESBEAM PTY LTD
operation, BHP Billiton’s newest mine. The company The Wood Processing (Wesbeam) Agreement was
Employment: Construction: 1000; Operation: 300
is currently undertaking studies for further long-term ratiﬁed by Parliament on 4 October 2002. The Agreement
expansions of its WA iron ore business. It has ﬂagged
Sally Malay - Nickel Project will facilitate the development of an A$80 million
SALLY MALAY MINING LIMITED laminated veneer lumber (LVL) plant at Flynn Drive,
an increase in excess of 145 Mt/a to feed China’s
Open pit mining commenced during Q1 2004. Plant Neerabup. Construction of the plant has commenced
strong demand for iron ore.
construction is progressing with commissioning on with ﬁrst production due in the second half of 2004.
schedule to be completed in August 2004. The ﬁrst Timber feedstocks will be pine trees harvested from State
shipment of concentrate to the Jinchuan Group in Government-owned plantations at Gnangara and other
Yandicoogina - Iron Ore Mine China is planned for Q3 2004. Sally Malay plans to areas. The project will sell LVL and other timber products
HAMERSLEY IRON PTY LIMITED employ both open-cut and underground mining to Australian and overseas markets.
Hamersley Iron is currently expanding the capacity methods to extract ore, which will be processed Expenditure: $80m.
of its port facilities at Parker Point (near Dampier) via a 750 000 t/a mill. A bulk nickel/copper/cobalt Employment: Construction: 200; Operation: 140
from 74 Mt/a to 95 Mt/a at a cost of A$685 million. concentrate will be shipped by road and exported
32 Prospect June–August 2004
Projects under consideration
(as at 2/06/2004)
AGRICULTURE GOLD Koolanooka, Western Australia - Iron Ore Mine
Mantinea Flats - Ord River Irrigation Scheme Boddington - Gold Mine (Wandoo Expansion) - Mid West Region
MIDWEST CORPORATION LIMITED
(Stage 2 Development) - Mantinea Flats BGM MANAGEMENT COMPANY PTY LTD
Midwest Corporation proposes to develop a number of
HENRY WALKER ELTIN LTD. Boddington Gold Mine is managed by BGM
iron and steel feedstock materials projects, including
The project consists of developing and servicing Management Company Pty Ltd on behalf of Newmont,
direct shipping iron ore from Koolanooka, Blue Hills,
approximately 80 farms (about 4200 ha total) at AngloGold and Newcrest. BGM has environmental
and Weld Range tenements; and an iron ore pellet
Mantinea Flats for irrigated intensive horticulture which approval for the expanded Wandoo project, based on
production project based on the magnetite resource
will then be offered for sale. Following an Expression mining the extensive bedrock that underlies the mined-
at its Koolanooka tenements. Shipping of ore from
of Interest process in late 1998, a consortium headed out oxide resource. The project includes a dedicated 100
Koolanooka is expected to commence in Q4 2004 at an
by Henry Walker Eltin Limited was mandated to carry MW gas-ﬁred power station. Project go-ahead will be
initial rate of 1 Mt/a.
out the development, subject to a successful feasibility subject to commercial factors.
study and associated approvals. The studies have been Expenditure: $500m.
Employment: Construction: n/a; Permanent: 295
deferred pending resolution of land access issues. Employment: Construction: 500; Operation: 350
Expenditure: $108m. Pilbara - Iron Ore Mine Rail and Port
Sunrise Dam - Gold Mine - Underground Development
Ord River - Ord River Irrigation Scheme Development FORTESCUE METALS GROUP (FMG)
ORD STAGE 2 M2 AREA ANGLOGOLD AUSTRALIA LTD
FMG is conducting a pre feasibility study into a new
The potential exists for a 30 500 ha irrigated agricultural AngloGold Australia Ltd began a three-year underground
iron ore development in the Pilbara (based on the Mt
development immediately to the northeast of the development in Q4 2003 at the Sunrise Dam gold mine
Nicholas, Tongololo Creek, Mt Lewin and Mindy Mindy
existing Ord Stage 1 development. The WA and NT to test the feasibility of later committing to a full-
prospects), to be serviced by a multi-user railway and
Governments are committed to investigating the scale underground operation. The study involves the
port infrastructure at Port Hedland. The company is
project feasibility and propose to consult with the local development of two declines totalling 9 km in the vicinity
undertaking a PER into the ﬁrst phase of the proposed
community before progressing the re-tendering of the of previously deﬁned reserves. The company expects
project, namely the north-south railway and port
Ord Stage 2 M2 area. Environmental approval has been to make a decision on whether to proceed to full-scale
facilities. The second phase of the project - the east-west
given for an irrigated agricultural project in the M2 underground mining in early 2007. A positive decision
railway and the mine developments - has also been set
area. Possible crops include sugar, cotton, leucaena or is expected to increase the life of the project to at least
a PER level of environmental assessment. A detailed
horticultural crops. 2012.
feasibility study is expected to commence in June 2004.
Expenditure: $600m. Expenditure: $87m.
Construction on the rail and port facilities is planned
Employment: Construction: 650; Operation: 550 to start early in 2005 to supply the Chinese market from
HEAVY MINERAL SANDS
West Kimberley - Water & Land Resources late 2006.
Jangardup South - Mineral Sands Mine
Development Project Expenditure: $1.8b.
CABLE SANDS (WA) PTY LTD Employment: Construction: 1000; Operation: 300
WESTERN AGRICULTURAL INDUSTRIES PTY LTD
Cable Sands has outlined a major titanium minerals
Western Agricultural Industries Pty Limited (WAI) was
appointed in August 1997 to carry out feasibility studies
orebody adjacent to D’Entrecasteaux National Park. IRON ORE PROCESSING
Feasibility and environmental studies are well advanced. Fortescue (Cape Preston) - Mine and Pellet
into establishing an irrigated agricultural industry
An environmental impact statement for the project is Plant
based on the ground and surface water resources of the
expected to be released for public review in early 2005. MINERALOGY PTY LTD
Canning Basin and Fitzroy River system. Results to date
Expenditure: $40m. The ﬁrst project based on the Fortescue magnetite
indicate that there is sufﬁcient potential to establish a
Employment: Construction: 100; Operation: 50 deposit is expected to be a 7 Mt/a pellet plant. The
20 000 ha groundwater-based irrigated cotton industry
in an area situated about 200 km south of Broome. Kemerton - Titanium Dioxide Pigment Plant project involves mining, concentrating through magnetic
Feasibility studies have been deferred pending resolution Expansion separation, pelletising and export through new port
of land access issues. WAI’s MoU with the State, which MILLENNIUM INORGANIC CHEMICALS LTD facilities at Cape Preston.
allows WAI to undertake its feasibility studies, has been Millennium has approval for a major expansion of its Environmental approval has been granted. Other
extended to 30 June 2004. Kemerton titanium dioxide pigment plant near Bunbury projects based on the Fortescue deposits could include
Expenditure: $1.9b. to 190 000 t/a. Environmental approval for the proposal an export DRI plant.
Employment: Construction: 500; Operation: 800 was given in April 1999. A decision to proceed to this Expenditure: $1.4b.
capacity is dependent on market factors. Employment: Construction: 2000; Operation: 400
BAUXITE/ALUMINA Expenditure: $470m.
Wagerup/Willowdale - Alumina Reﬁnery Train 3 Employment: Construction: 500; Operation: 200 KAOLIN
Expansion Kwinana - Titanium Dioxide Pigment Plant Thangoo (100 km SSE of Broome) - Kaolin Mine
ALCOA WORLD ALUMINA AUSTRALIA Expansion MANSFIELD MINING NL
Environmental approval was granted in August 1995 TIWEST JOINT VENTURE Mansﬁeld Mining NL plans to mine the Eaglehawk
to increase the mining rate and expand the Wagerup Environmental approval for the staged expansion of a Kaolin deposit, situated on Thangoo pastoral station
reﬁnery to 3.3 Mt/a by construction of a third production pigment plant capacity to 180 000 t/a has been given. about 100 km south-southeast of Broome in the West
train and round-out of total facilities. The round-out A decision to proceed with further stages within this Kimberley region of Western Australia. Proven reserves
was completed in 1999, but the third train was deferred. expansion is dependent on market conditions. total about 410 Mt. Once operating, the A$90 million
Alcoa is now considering seeking approval to expand to Employment: Construction: 108; Operation: 98 project could produce and export 700 000 t/a of kaolin
more than 4 Mt/a. Commitment to build the third train is and by-product minerals such as silica sand, ilmenite
dependent on a range of factors. IRON ORE and leucoxene.
Expenditure: $1.5b. Hope Downs - Iron Ore Mine Expenditure: $90m.
Employment: Construction: 1000; Operation: 150 Employment: Construction: 50; Operation: 130
HOPE DOWNS LIMITED
GALLIUM Hancock and Kumba have completed a feasibility LEAD
study of the Hope Downs project. The alliance is now
Pinjarra - Gallium Extraction Plant progressing project ﬁnance, joint venture and market
Wiluna (Magellan) - Lead Mine
GEO SPECIALTY CHEMICALS INC. MAGELLAN METALS PTY LTD
In March 2001, GEO Speciality Chemicals Inc of the USA The project is based on a lead carbonate (cerussite)
announced plans to construct a major new gallium metal deposit 30 km west of Wiluna. Following completion
Employment: Construction: 1000; Operation: 300
extraction facility at Pinjarra, south of Perth, on the site of a feasibility study and an independent review,
Koolan Island, Western Australia - Iron Ore construction is planned to commence in Q1 2005 to
of the former Rhodia gallium chloride plant. The facility
is planned to have an ultimate capacity of 100 t/a of AZTEC RESOURCES LIMITED produce concentrate for export through the port of
‘4N’ gallium metal. The gallium will be extracted from Aztec Resources proposes to develop a mining operation Geraldton. Proven and probable reserves total 12.1 Mt at
the Bayer liquor stream generated in Alcoa’s adjacent based on the ex-BHP Koolan Island iron ore deposits in a grade of 6.8% lead. Annual throughput is planned at 1.2
alumina reﬁnery. Timing is dependent on favourable the Yampi Sound, 130 km northwest of Derby in Western Mt/a of ore to produce over 100 000 t/a of concentrate. A
market conditions and statutory approvals. Australia. Aztec aims to become a producer of premium second stage will involve the production of lead metal.
Expenditure: $75m. grade iron ore at a production rate of 3-4 Mt/a. The Expenditure: $48m.
Employment: Construction: 150; Operation: 50 company plans to complete a feasibility study during Employment: Construction: 100; Operation: 80
2004 with mining due to commence in 2005.
Prospect June–August 2004 33
Projects under consideration
(as at 2/06/2004)
MANGANESE North West Shelf - Project Expansion - 5th as a fertiliser, while ammonia is used in fertilisers,
LNG Train explosives and as a chemical feedstock.
Kalgoorlie Region - Manganese Dioxide Expenditure: $900m.
WOODSIDE ENERGY LTD
Project - Stage 1 Employment: Construction: 1000; Operation: 130
Proposals by the NWS partners, for LNG Train 5 and
HITEC ENERGY LIMITED
a second trunkline, and expansion of the Domgas Burrup Peninsula - Dimethyl Ether Project
HiTec Energy Ltd proposes to produce electrolytic
plant, received environmental approval in 1998 and JAPAN DME LTD.
manganese dioxide (EMD) for alkaline batteries.
1999. The LNG expansion is based on growing Asian Japan DME Ltd, a joint venture of Japanese
The hydrometallurgical plant will be a brownﬁeld
energy markets. In April 2001 the partners committed companies comprising Mitsubishi Gas Chemical
development at Cawse, 55 km northwest of Kalgoorlie,
to development of the A$1.6 billion LNG Train 4. Company, Itochu Corporation, Mitsubishi Heavy
built around an existing electro-winning cell house
Train 5 development is contingent on future market Industries and JGC Corporation, plans to develop
and SX plant, acquired by HiTec in October 2003 . The
conditions. a world-scale dimethyl-ether (DME) plant on the
initial production of 14 000 t/a, planned for Q2 2005,
Expenditure: $1.6b. Burrup Peninsula near Karratha. DME is used
can be expanded to 23 000 t/a without signiﬁcant
changes to the existing plant. Manganese ore will be Scarborough (Carnarvon Offshore Basin) as an aerosol propellant and is a likely future
sourced from Consolidated Minerals’ Woodie Woodie - Gas Field environmentally clean fuel for the power generation
mine in the Pilbara, as well as manganese waste from EXXON MOBIL and transportation industries. The proposed plant
OMG’s Cawse nickel plant. The ﬁeld is located in 900 metres of water, 300 km will produce methanol for conversion into 1.7 Mt/a
Expenditure: $136m. offshore in the Carnarvon Basin with probable of DME from around 220 TJ/d natural gas. Detailed
Employment: Operation: 30 reserves of approximately 8 Tcf of gas. Evaluation feasibility studies are underway. The project was
work is being undertaken to assess options including granted Major Project Facilitation status by the
METHANOL standalone LNG development and supply to the NWS Federal Government. Environmental consultant,
Burrup Peninsula - Methanol Plant project as part of potential NWS expansion. Parsons Brinckerhoff (Aust) Pty Ltd, has commenced
GTL RESOURCES PLC work on obtaining environmental approval for the
Scott Reef/Brecknock (Browse Basin) - Gas
GTL Resources proposes to build a plant to produce 1 project. A commitment to proceed is expected by the
Mt/a of methanol by 2006. The plant will be situated end of 2004. Current planning is for the plant to be
WOODSIDE ENERGY LTD
at Withnell East on the Burrup Peninsula. On 17 operating by end of 2007.
In February 2001, recoverable reserves for the Scott
October 2001, GTL Resources signed a Memorandum Expenditure: $1b.
Reef/Brecknock project were upgraded to 20.49
of Understanding with Apache Corporation, Globex Employment: Construction: 1000; Operation: 150
Tcf of gas and 311 million barrels of condensate
Energy Inc and Santos Ltd for the purchase of 108 after multi-disciplinary studies incorporating the PLATINUM GROUP METALS
TJ/d of natural gas to supply the plant. Products results of drilling at Brecknock South. The ﬁelds are
will be sold to Swiss company Vitol for trading on Munni Munni - Platinum Deposit
considered commercially viable in the future, but
international markets. HELIX RESOURCES NL
ﬁrm development plans are dependent on signiﬁcant
Expenditure: $770m. Helix Resources NL has established an indicated
growth in domestic gas and LNG markets.
Employment: Construction: 600; Operation: 85 resource of 9.2 Mt at 2.9 g/t combined platinum,
Tern/Petrel (Bonaparte Offshore Basin) - Gas palladium, rhodium, and gold, 0.2% nickel, and 0.3%
NICKEL Field copper at its project site near Karratha. Preliminary
SANTOS LIMITED mining studies suggested a mining rate of combined
Mt Keith - Nickel Mine
The offshore Petrel gas ﬁeld, discovered in 1969, is open cut and underground production of 1.5 Mt/a.
WMC RESOURCES LTD
located about 250 km west of Darwin on the WA/NT Further activity was postponed in early 2003, as a
A feasibility study for an expansion of the Mount
seabed border in the Bonaparte Basin. The offshore result of poor exploration results and a decreased
Keith operation from 11 Mt/a to 14.2 Mt/a throughput
Tern gas ﬁeld, discovered in 1971, is located about palladium price. The project is under review.
has been conducted. Options for implementation,
300 km west of Darwin in WA waters in the Bonaparte
including an incremental expansion, are under RARE EARTHS
Basin. Field development options include installation
consideration in light of other nickel sulphide
of unmanned offshore production platforms with a Mt Weld - Rare Earths Operations
opportunities in the area.
pipeline to a gas treatment plant south of Darwin. LYNAS CORPORATION LTD
Debottlenecking of the Kwinana nickel reﬁnery will
The development possibilities for these ﬁelds have Lynas is planning to mine up to 200 000 t/a ore,
see production capacity increased from 67 000 t/a to
been enhanced by recent signiﬁcant discoveries producing 20 000 t/a of rare earths concentrate. In
70 000 t/a by the end of 2004.
by other parties nearby, which may provide tie-in phase 1, the concentrate will be exported to China
potential for Petrel and Tern to service domestic for toll processing into approximately 10 000 t/a rare
OIL & GAS DEVELOPMENTS gas customers. A conceptual plan involves initial earth oxides. Lynas will market all products from the
development of Petrel with a pipeline to an onshore downstream processing under the Rare Earths Direct
Gorgon (Carnarvon Offshore Basin) - Gas
gas plant and a subsequent phase that completes “RED” Brand. Lynas is also evaluating the feasibility
and Condensate Field
Petrel and develops Tern. of secondary processing rare earths carbonate in
CHEVRON AUSTRALIA PTY. LTD.
Expenditure: $1b. Australia.
The Gorgon Joint Venture is considering an LNG
(up to 10 Mt/a) and domestic gas development Whicher Range (Perth Onshore Basin) - Gas Expenditure: $40m.
at Barrow Island, based on gas from the Gorgon Field Employment: Construction: 100; Operation: 35
ﬁeld. The restricted industrial use of Barrow Island AMITY OIL NL
has been approved, in principle, by the Western The Whicher Range gas ﬁeld, located 21 km south of
Australian Cabinet after evaluation of environmental, Busselton, was discovered in 1968. Four previously Teutonic Bore - Jaguar - Base Metal Deposit
social, economic and strategic aspects. Gas reserves drilled wells conﬁrmed a signiﬁcant-sized gas ﬁeld, PILBARA MINES LIMITED
have been enhanced by positive results from an but gas ﬂow rates have been sub-commercial. Ongoing prefeasibility studies of Pilbara Mines Ltd’s
exploration program in the West Gorgon area. Subsequent work, including high-pressure injection Jaguar base metal prospect, 54 km north of Leonora,
Development decisions by the Gorgon Joint Venturers of carbon dioxide, to increase gas ﬂow rates from the have indicated a resource of 1.87 million tonnes
will be subject to market commitments. The joint extremely tight sands, has indicated the possibility of of zinc/copper. It is planned to develop a A$30-40
venture has applied for environmental approvals so it commercial development. The latest well (Whicher million underground mine, expected to have a 5-6
is in a position to start construction in late 2005. Range-5), completed January 2004, was suspended year life, with a possible start-up date of July 2005.
Expenditure: $11b. as a potential gas producer. Geo-mechanical studies Expenditure: $35m.
Employment: Construction: 3000; Operation: 600 have been undertaken to prepare and design a high- Employment: Permanent: 100
pressure diesel fracture stimulation program. This
Macedon/Pyrenees (Carnarvon Offshore
work is planned for July/August 2004.
Basin) - Oil/Gas Fields
BHP BILLITON PETROLEUM PTY LTD PETROCHEMICALS/CHEMICALS
These are two adjacent, but separate offshore Burrup Peninsula - Ammonia Urea Plant
hydrocarbon ﬁelds within the West Muiron structure, DAMPIER NITROGEN
about 50 km north of Exmouth. The Macedon gas The Joint Venture between Agrium Inc of Canada,
ﬁeld was discovered in 1992 by the West Muiron-3 Plenty River Corporation Ltd, Thiess Pty Ltd has been
well with a follow-up appraisal campaign in 1994. The terminated. Plenty River and Thiess have signed a
Pyrenees oil and gas ﬁeld was discovered in 1993 by Cooperation Agreement to develop the A$900 million
the West Muiron-5 well. Development of the Pyrenees ammonia and urea plant and have been given access
heavy oil accumulation would likely only proceed to the site on the Burrup Peninsula set aside for an
as part of a larger heavy oil project undertaking. ammonia/urea project. The plant would be world-
Macedon is under consideration for domestic market scale and produce around 1.2 Mt/a of granular urea
opportunities. and 100 000 t/a of ammonia. Urea is widely used
Employment: Construction: 35; Operation: 5
34 Prospect June–August 2004
Signiﬁcant resource projects underway or
planned in Western Australia
Get online and visit us
Iron and steel Prospect magazine is produced quarterly by the Department
Rio Tinto/Robe mine, rail and port expansion 1250 500 200 of Industry and Resources as an internationally-circulated
BHP Billiton’s rapid growth project 145 n/a n/a publication that showcases Western Australia’s mineral and
Hope Downs iron ore mine 1050 500 300 petroleum industries.
Mineralogy (Cape Preston) mine & pellet plant 1400 2000 400 And we are online. Figures show that Prospect attracts
Fortescue Metals mine, rail & port 1800 1000 300 about 18 000 website hits an issue, which signiﬁcantly
Kwinana HIsmelt pig iron and steel plant 800 320 65 adds to the more than 10 000 hard copies of the magazine
Koolanooka mine and potential DRI plant 540 n/a 295
Koolyanobbing iron ore mine expansion 20 120 35 Prospect is squarely aimed at industry executives,
Koolan Island iron ore mine 50 n/a n/a
ﬁnanciers, suppliers and other people involved in the world’s
most exciting industry.
Sub total 7055 4440 1595
Nickel/cobalt Prospect can be downloaded from the internet by visiting
the Department’s website at: www.doir.wa.gov.au
Mt Keith mine expansion 150 n/a n/a
Ravensthorpe mine 1400 1000 300
Lake Johnson — Emily Ann/Maggie Hays 28 25 167
Sally Malay 50 150 120
Sub total 1628 1175 587
Burrup Fertilisers ammonia plant 630 500 60
Japan DME — di-methyl ether plant 1000 1000 150
GTL Resources methanol plant 770 600 85
Dampier Nitrogen ammonia–urea plant 900 1000 130
Sub total 3300 3100 425
Gorgon project 11 000 3000 600
LNG Train-4 and trunkline 2400 2000 70
LNG Train-5 project 1600 2000 70
Sub total 15 000 7000 740
Alcoa Pinjarra alumina reﬁnery optimisation 440 1000 n/a
Alcoa Wagerup reﬁnery Train 3 expansion 1500 1000 150
Worsley reﬁnery expansion 192 400 n/a
Boddington Wandoo gold mine expansion 500 500 350
Kemerton titanium dioxide pigment plant expansion 470 500 200
Collie pulp mill 400 300 72
Telfer gold mine expansion 1200 1222 620
Kalgoorlie manganese dioxide plant 136 n/a 41
Sunrise Dam underground gold project 87 n/a n/a
Mt Weld rare earths project 40 100 35
Jaguar base metals 35 n/a 100
Various port upgrades 220 n/a n/a
Ord irrigation (Mantinea Flats) 108 n/a n/a
Ord irrigation (stage 2) project 600 200 825
Nifty Copper Underground expansion 148 160 90
Magellan Lead 48 100 80
West Kimberley irrigation project 1900 500 3000
Sundry projects — at least another 3000 1500 300
Sub total 11 024 7982 5863
TOTAL A$38 007 million 23 697 9210
* not available or not applicable
Prospect June–August 2004 35
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