UNFORTUNATELY for Tasmania, the 2012 Federal Budget indicates that the state will face a federal funding shortfall of $500 million during the next three financial years. This news has further compounded Tasmania’s fiscal woes as it struggles to bring an unhealthy deficit – expected to be more than $250 million this financial year – under control.
Furthermore, its unemployment rate is the nation’s highest at 8.3 per cent. The Australian Bureau of Statistics revealed a loss of 2500 Tasmanian jobs in April alone, hence the importance of the state’s small yet profitable mining sector.
Significant social and economic impacts
At the end of 2009-2010, Tasmanian mines employed 1646 people – the majority as direct employees – and spent about $456 million on goods and services. Of this, $323 million was spent on goods and services
from 347 state suppliers, and ranged from engineering works to environmental and safety consulting, transport provision, consumables and geotechnical services. Tasmanian Minerals Council chief executive officer Terry Long said mining’s reach into the Tasmanian economy was significant.
“It is fundamental to it. We have – in comparison to Western Australia – a small mining industry, but this year it will contribute around $50 million in royalties, which will enable the Government to employ about 650 nurses at around $75,000 each for a year,” he said.
“In a State Budget that is under water and is slashing across the public service, including health and education, any revenue is fundamentally important. “That is separate from the enormous amount of spending that the mines do directly. [In] the year coming out of the GFC [Global Financial Crisis] – 2009 and 2010 – the mines spent something like $330 million on goods and services, just within the state.”
For its size, Tasmania has among the richest mineral endowments of anywhere in the world and boasts world-class copper, gold, tin, silver, lead, zinc, iron ore and tungsten deposits. The west coast has a number of mineral deposits within in an arc of volcanic lavas. From Low Point in Tasmania’s southwest, this belt extends northwards through the historic mining areas of Mt Lyell, the Dundas mineral field, Henty, the Zeehan mineral field, Renison Bell, Rosebery, Savage River, Tullah, and Que River.
Tasmanian gold will be mined almost exclusively at Unity Mining’s Henty gold mine – which directly employs almost 200 people – when the Beaconsfield mine closes this month.
An underground mine that started operation in 1996, Henty is in the mountainous terrain of the upper Henty Valley. Unity has positioned itself to reach its 50,000oz production target this financial year, with continued exploration success increasing mine life for another five years. With strong potential to extend this even further, the company has continued with an aggressive and extensive $10 million exploration program.
Bluestone Mines Tasmania — a wholly-owned subsidiary of Metals X – operates the famous Renison Bell mine, which boasts one of the world’s biggest tin deposits. The company’s bottom line has benefitted from rising tin prices and lower operating costs at Renison during the March 2012 quarter, when it produced 1168 tonnes of tin metal in concentrates and 126t of copper.
Minmetals Resources’ (MMR) polymetallic Rosebery mine has become an important part of the regional economy and social fabric of Tasmania’s northwest coast. It has operated continuously since 1936, and its mine life has been extended to 2024. Despite its longevity, Rosebery’s mineral resource is at historic highs following the recent acquisition of nearby tenements, according to the company’s 2012 annual report. The mine has the capacity to produce approximately 700,000t of ore a year, which is then processed into zinc concentrate, lead concentrate, and gold and silver doré, as well as a small amount of copper concentrate.
Australia’s leading magnetite producer, Grange Resources, owns and operates the Savage River magnetite iron ore mine in the state’s northwest. This long-life asset has current reserves that could extend the mine life to 2028. Grange achieved record cash flow of $210.4 million in 2011 and is set for an equally impressive 2012, with the March quarter having met all expectations.
“Mining being undertaken in the main ore body in the North Pit is producing higher grades, higher concentrate production and lower unit costs when compared to the corresponding quarter last year,” Grange managing director Russell Clark said.
“Production at Savage River achieved 573,625 tonnes of concentrate, 64 per cent higher than in the corresponding quarter in 2011,” he said. Exploration and development Importantly, Tasmania’s exploration
sector has finally shaken off its GFC-induced pessimism, with almost 80 companies spending a record $38.7 million in 2011. These companies hold 194 exploration licences and another 15 are pending approval, with several companies progressing projects to near-term production.
WA-based Venture Minerals is one of 20 exploration and developmentcompanies with their eyes firmly set on the mining potential of the state’s northwest. Its 100 per cent-owned Mt Lindsay tin and tungsten project is 125km from the Port of Burnie, and is part of a tenement package that covers more than 360 square kilometres. Believed to be one of the world’s largest undeveloped tin deposits, Mt Lindsay has a defined resource of 120,000t of metal and is undergoing a bankable feasibility study that may pave the way to a potential 2014 production scenario. The company said the $150 million project would create more than 200 long-term jobs and up to 1000 construction jobs, pump about $250 million a year into the state economy and lift state exports by around 5 per cent.
The company has also moved to start mining hematite (iron oxide) direct shipping ore (DSO) by early 2013 at its low-cost, high-return Riley and Livingstone DSO deposits. Just 3.5km from Mt Lindsay, the recently discovered Livingstone DSO hematite deposit has an inferred resource of 2.4 million tonnes grading 57 per cent iron. The Riley DSO deposit, 10km from Mt Lindsay, was a major focus for the company during the March 2012 quarter. Following its discovery late last year, the company has moved rapidly to deliver a maiden inferred resource of 2mt grading 57 per cent iron.
With DSO in production – Venture has a target of 1mtpa starting in early 2013 – the company will be able to generate significant early cash flow, putting it in a strong financial position to develop the Mt Lindsay project.
Battle over the Tarkine Tasmanian mining’s key challenge during the past year – and one that directly affects Venture and a large number of other explorers and developers – has been land access. The possible heritage listing of a large part of western Tasmania dubbed the Tarkine could be problematic for local mining and the wider state economy.
The Tarkine covers about 6.5 per cent of Tasmania’s land mass and is heavily mineralised. Mr Long said that as existing mines were mined out or became uneconomic, new deposits and mines such as Mt Lindsay must be found or the industry would wither and die.
“There is a lot of ground taken up [in the Tarkine] but a lot of the explorers have gone back to the minimum requirements of the work programs while some of these environmental matters are sorted out,” he said.While a blanket heritage listing over the Tarkine is unlikely as parts of it have already been mined, the implications of restricted land access could be serious for the 10 mine proposals and 58 exploration licences covering much of the region. Importantly, it could lead to the stagnation of an industry that had export earnings in 2009-2010 of $765 million. This is considerably more than the combined value in the same year of Tasmania’s dairy, fruit and vegetable, live animal, meat, machinery and transport equipment exports.
While the miners are backed by the State Government, which is desperate for revenue, the final say on heritage listing and approval for the first mines rests with Federal Environment minister Tony Burke, who has toured the region with both conservationists and miners. His decision is pending.
“It’s the end game in Tasmania in terms of land lockups: we are now fighting over the bit that is left for exploration and mining,” Mr Long said.
“Federal and State Governments really need to decide whether we want a mining industry or not,” he said.
“It has been a significant economic contributor in a state that has a fairly narrow economy, so it is fundamentally important that we keep it in the long term.”
By Reuben Adams