Mining in South Australia: Renewed optimism

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 05 Jun 2017   Posted by admin


Prominent Hill mine. Image: OZ Minerals.

 

BY ELIZABETH FABRI

 

WITH a history dating back to the 1800s, the South Australian resources sector is a continued force in Australian mining, boasting a portfolio of world-class projects and new exploration prospects for the next generation of mining.

 

South Australia is a proud mining region, with many noteworthy accolades to its name.

To begin, the State is home to the world’s largest known uranium deposit and Australia’s largest underground mine, Olympic Dam.

It also hosts 68 per cent of the country’s copper resources, 80 per cent of its uranium resources, 28 per cent of the economic gold resources, and more than 14 billion tonnes of iron ore.

In 2016, the region even ranked as the second most attractive investment destination for minerals exploration in Australia, behind WA, according to The Grant Thornton Jumex Survey, and was in the world’s top 10 for overall mining investment, according to the Fraser Institute.

SACOME chief executive Rebecca Knol said upward movement in the sector through 2016 has continued into 2017, mustering a renewed optimism.

 

“South Australia’s history and prosperity is inextricably linked to the success of its minerals and energy sector and its services supply chain,” Ms Knol said.

 

“The sector contributes $4 billion to the States’ export revenue annually, delivering a further $208 million to the State in royalties and directly employs 10,000 people while supporting a further 16,500 people in the Mining Equipment, Technology and Services (METS) sector.

“Continued development of sophisticated discovery and extraction technologies will strengthen the State’s position as an exporter of copper, gold, uranium, iron, steel, nickel, mineral sands, oil and gas.”

The region also maintained more than 700 exploration licenses and more than 20 advanced projects in exploration, feasibility and resource definition phases, signifying great promise for the future.

 

Key projects to watch

South Australia’s world-class projects include Olympic Dam, Prominent Hill and Kanmantoo, with many more scheduled to begin production in the next few years.

OZ Minerals’ Carrapateena project is one of the most anticipated projects in development with construction on the access decline now underway.

The feasibility study sees first commercial production in the second half of 2019.

In April, OZ Minerals announced it would be accelerating the involvement of major contractors at Carrapateena with requirements for local and Indigenous participation.

“The progression of Carrapateena copper-gold project is proceeding at pace and a brilliant example of the stimulus the PACE exploration initiative has made towards unlocking South Australia’s precious resources, with the deposit discovered through a collaborative drilling grant in 2005,” Ms Knol said.

Further details of the project are expected to be announced later this year.“OZ Minerals is also looking at constructing a high-tech copper concentrate treatment plant (CTP).

“The CTP creates a high grade copper concentrate that will be an attractive feed and blend stock for smelters.”

Other projects in the planning pipeline included Iron Road’s $4.5 billion Central Eyre Iron Project, which was granted State Government approval in May.

Set to create nearly 2000 jobs during construction and 700 jobs over the 25 year life of the mine, the project will include construction of a new 145km rail link and deep-water port at Cape Hardy, near Tumby Bay.

The port will also be able to be used to export other goods from the region, such as grain.

Iron Road is now looking to secure the remaining project financing by December 2017.

State Premier Jay Weatherill said if Iron Road met the approval conditions this project would create thousands of jobs and have a significant, lasting impact on the South Australian economy.

“Connecting the Eyre Peninsula to the world’s markets through a modern rail link and deep-water port that can be used by other businesses will also enable this important region of our State to grow,” he said.

Established projects such as Prominent Hill and Challenger were also performing well, while Olympic Dam was progressing at a slower pace after power outages were experienced at the mine following State black outs in September, and unplanned maintenance at the refinery in December.

“The Prominent Hill copper-gold-silver mine, produced 116,882 tonnes of copper in 2016, meeting its annual copper guidance for the second consecutive year,” Ms Knol said.

In the 2016 financial year Olympic Dam achieved its highest production since 2006 and exceeded its forecast, delivering 203,000 tonnes.

Despite BHP’s operation facing a number of challenges during the current financial year, including the State-wide black outs in September and maintenance and investment in infrastructure to maintain underground material movement, the operation will soon produce first ore from the high-grade Southern Mine Area, which contained 70 per cent of the previously untouched orebody along with investing in critical infrastructure projects, including the Smelter Campaign.

While the Smelter Campaign will be delivered in a relatively short time-frame, the business has recently announced that it was recruiting 350 people for its ongoing operations, with a strong focus on diversity and inclusion as it sought to build the foundations for future growth.

In 2016, the State’s uranium mines also reported near-record production of $499 million from the sale of 5493 tonnes of uranium oxide, which represented about 75 per cent of Australia’s national output.“Olympic Dam accounts for about two-thirds of the state’s uranium production with the remainder production from Four Mile owned by Quasar Resources and processed at the nearby Beverley plant by affiliate company Heathgate Resources,” Ms Knol said.

“Four Mile goes from strength to strength as more resource pockets are discovered and developed.”

Honeymoon uranium mine was also set to be brought back online after being on care and maintenance since 2014.

“Under new owner Boss Resources, latest exploration across three project areas in the region point to the new Honeymoon project having some of the highest grade resources held by an ASX-listed uranium developer – with a combined total project resource of 28, 800 tonnes contained equivalent U3O8 across three project areas,” Ms Knol said.

“Technical studies into uranium processing options are underway and a feasibility study is planned to start this year into the recommencement of production, and an expansion of operations.

“Latest results for the Jason’s prospect confirm its high prospectivity.”

Other projects included the proposed $40 million Kookaburra Gully graphite mine on the lower Eyre Peninsula; and prospective mining projects in the Curanmona province and Yorke Peninsula.

Ms Knol said the Curnamona province had generally “flown under the radar” when it came to its copper-gold credentials, but times were changing.

“Proof of its prospectivity is the production from the State’s newest gold mine Portia and nearby identification of copper resource at North Portia, Kalkaroo  (Havilah Resources) and Mutooroo,” she said.

 

Olympic Dam mine. Image: BHP

 

Accelerating exploration

Over the last few years, the South Australian Government made significant contributions to promote mining sector growth.

On 30 November 2015, it introduced a two-year $20m PACE Copper plan, which was coined the ‘rebirth’ of exploration in the Gawler Craton region.

The plan aimed to deliver the world’s largest high-resolution airborne geophysical and terrain imaging program; industry-government collaborative drilling on new targets; and world-class data and interpretation.

In February 2016, the Premier introduced a broader plan for the State’s copper industry with the launch of a dedicated Copper Strategy, which set out to triple copper production in the next 15 years and position Australia as the world’s third-largest copper producer.

 

“The strategy, which has set a target to triple copper output to 1mtpa by 2030, has gained momentum through its first year, as the sector unites to implement its action themes directed to accelerate exploration, discovery and information;  develop innovative infrastructure, services and research; and engage to build industry and community capacity,” Ms Knol said.

 

“The forthcoming Copper to the World Conference (27 June) will throw the spotlight on the progression of this important initiative.

“Currently 125 companies are exploring or investigating opportunities for new copper mineral targets of the State, so there are plenty of opportunities to partner with them in the search for copper.”

Last year, the State also awarded $3.5m in grants to 26 mineral exploration projects through its PACE Discovery Drilling program; which included grants of up to $250,000 – an increase from the $100,000 offered in previous rounds.

A magnetite strategy was also introduced in May last year, as well as a The South Australian Geophysical Reference Model (SAGRM) to allow exploration companies to view the State’s geophysical data in 3D.

 

Community engagement

Ms Knol said two of the biggest challenges the State’s resources sector faced was community engagement and access to land.

“We are no longer in an era of unabated land access, limited environmental concerns and limited community interest in project,” she said.

“The industry has changed dramatically.

“Communities are galvanised globally and leverage off social media to spread their message.

“At the same time, we must acknowledge that a lot of activities taking place in our sector are also impacting the agricultural sector and must ask ourselves whether we are engaging with this sector adequately.

“What are the issues we have in common and how can we work together?”

Ms Knol said communication was crucial in these areas, between Government, local communities, and the public.

She said a review of the State’s mining laws was underway to maintain its relevance to business and the community.

“This review has involved wide consultation and seeks to bring forward the economic and social benefits of the state’s mineral wealth for all,” Ms Knol said.

“While it will strengthen South Australia’s one stop shop model, it will also improve transparency in land access, engagement, negotiation and resolution processes.

“On this basis we will continue to attract leading, responsible miners that build strong relationships with the community.”

Ms Knol said the outlook for South Australia was positive and SACOME was well positioned to lead the mining and energy sector in South Australia as it transitioned to a digital future.

“New technology will help to guide us into a new era, but we must value the ingenuity of our skilled workforce to help deliver desirable outcomes,” she said.

“Our people are the lifeblood of our industry and their skills and creativity should be given the chance to flourish as this transition takes place.”