Iron ore deal benefits WA and China

0 Comment
 10 Oct 2012   Posted by admin


ESTABLISHED to manage one of China’s largest investments in Australian resources, CITIC Pacific Mining (CPM) is headquartered in Perth. A subsidiary of Hong Kong-listed CITIC Pacific Limited, the largest special steelmaker in China, the company is developing the Sino Iron project in WA: the largest magnetite mining and processing operation under construction in Australia.
The CPM website stated that the project at Cape Preston, 100km southwest of Karratha, would add value WA’s economy through significant downstream processing, employment, community benefits and international technology transfer, while balancing social and environmental considerations.
Once the project is completed, CPM will become the first Chinese-owned mining company to ship iron ore products from WA to China.
“The Sino Iron project is a result of China’s rapid economic and industrial expansion that has altered international trade, investment and production patterns at regional and global levels,” CPM executive chairman Dr Dongyi Hua said.
“The project is a first-hand example of how this growth can be of benefit to Australia, particularly the resources sector in Western Australia. Australia is well placed to gain from China’s rapid industrial expansion because of its flexibility, dynamism and because of the complementarities between the two economies.”
About the project
The facilities at Sino Iron will include: a magnetite concentrator; a 450 megawatt combined cycle, gas-fired power station; and a 51 gigalitre desalination plant. CPM will also develop a new port facility
to accommodate Sino Iron materials.
The power station, which will primarily power the concentrator circuit, will generate an amount of electricity equivalent to the entire capacity currently produced by the infrastructure installed in the Pilbara.
Concentrate will be pumped via a slurry pipeline to port facilities where it will be dried and stockpiled, ready for export. “Once operating, the project will mine about 140 million tonnes each year and the processing plant will handle approximately 80 million tonnes of material. This material goes through in-pit crushers before being transported to the concentrator. The crushed ore then enters giant grinding mills, the most powerful in the world,” the CPM website stated.
“There will be six grinding mill lines, each using 44 megawatts of power and standing more than 17 metres high.
The mills will produce a fine ore stream which enters magnetic separators to become a concentrate. The concentrate will be thickened and stored before being pumped 25 kilometres to the port, where it is filtered to reduce moisture.
From there, the concentrate will be exported for use in steel making.” CPM has also secured the rights for an additional 3 billion tonnes of resources, which will lift production to 70 million tonnes per annum.
At peak construction the project will provide employment for 4000 people, with about 800 permanent positions on offer once the mine is operational.
“The Sino Iron project, while being relatively new, has achieved a great deal within a short time frame and I am confident of our collective ability to deliver this project,” Dr Hua said.
In the company’s May 2012 newsletter, CPM executive director processing Biao Xiao said the commissioning process for the in-pit crusher was expected to take between three and five months.
“This will be a significant achievement for the commissioning phase of the Sino Iron project,” he said.
CPM reported that areas still to be commissioned for the first production line included the concentrator, thickener systems, the dewatering system and the stockyard. Mechanical installation of the second in-pit crusher had been achieved, and installation of various systems and equipment was ongoing.
CPM is working closely with China Metallurgical Group (MCC), the principal contractor for mill lines 1 and 2, under a joint task force implemented to direct all work relating to the commissioning and safety aspects of the project.
CPM processing department deputy director Tony Yang said the joint task force had already proven to be a success, with a noticeable increase in efficiency achieved.
“Both parties are striving to complete the project as early as possible,” he said.
“I’m looking forward to further improving the functionality of this integrated team as we continue to execute the project.”
CITIC Pacific Limited stated in its announcement of results for the six months ending June 2012 that construction of the first production line had been completed and commissioning of all individual components was underway. Power was being generated 24 hours a day and the supply of fresh water from the desalination plant was expected to begin in a month. It reported that construction of common facilities for all six lines was nearing completion. Project delays
“We will not be able to meet our target of integrated commissioning and beginning trial production of the first production line by the end of August, despite the deadline that…[MCC] committed to. MCC is the contractor responsible for the processing area, which remains the primary cause of the delay,” CITIC Pacific Limited company secretary Ricky Choy Wing Kay said in the half-year announcement.
“Our team recently held another detailed review with MCC and went through all the milestones that need to be met in order to achieve first production. Based on our discussions, integrated commissioning of the first production line is planned to begin in October, and trial production is expected to start in November.”
The November date for trial production is two years later than initially predicted.
“The main difficulties in commissioning the project include the following: first, the commissioning process for an iron ore mine in Australia is very different from that in China. There are strict commissioning requirements, ranging from the certification of construction completion documents by licensed Australian engineers to meeting stringent safety regulation standards. Second, commissioning of control systems such as ‘e-houses’ must be done by qualified Australian electricians. Given the mining boom in Australia in recentyears, there has been a particularly acute shortage of these technicians.
Third, commissioning also requires the assistance of equipment service providers, of which there are hundreds, and the ongoing need to process the visas of these workers has continued to be complicated and time consuming,” Mr Kay said.
“As the employer of MCC, we do bear our share of the responsibility. But at this point, the end is in sight. We have been working closely with MCC to facilitate resolution of all remaining obstacles they face to meet their obligations to us. MCC has assigned many more personnel to the task, and many vendors have also sent experienced staff.
“We have also been recruiting to fill critical positions for the commencement of operations. The majority of people who will fill these positions have been recruited from within Australia. Additionally, we have secured the services of a number of magnetite processing experts from China, who will play a key role in the transfer of the requisite specialist skills and knowledge.”
Resources tycoon Clive Palmer, who will receive royalties from the project through his company’s (Mineralogy) ownership of the Sino Iron tenements, told media that he blamed Australia’s strict approval processes and rising labour costs for the project’s delays and cost increases.
The project was originally estimated to cost US$2.5 billion, but that figure has now risen to US$7.5 billion. Mr Palmer told The Sydney Morning Herald that he expected the project to reach full production rates within two years of its trial process.
He also said that criticism of CPM’s performance on the project — which is over budget and over schedule — was unfair, as the dimensions of the project had changed several times, rendering the original guidance irrelevant.


Leave a Reply

Your email address will not be published.