Mining in the Territory: Opportunities for growth

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 03 Feb 2017   Posted by admin

Image: Department of Primary Industry and Resources, Northern Territory Government.

By Elizabeth Fabri

FAMED for its red earth and desert landscapes, the Northern Territory is arguably Australia’s most ‘under-explored’ mining region with only a handful of major mines operating across the 1,346,200sqkm expanse. But with government backing and major projects in the pipeline, things are looking up for the country’s top end.

The Northern Territory, also known as the ‘Red Centre’, contains a wealth of minerals, including Australia’s largest deposits of uranium, zinc-lead, bauxite, gold, phosphate and manganese.

In 2015/16 the territory produced $3.05 billion worth of minerals, of which gold accounted for 29 per cent and manganese 27 per cent of the total value.

Employment was on the rise, with 6528 people directly engaged in the NT’s mining sector in November 2016; a 19 per cent increase from the 5508 people employed in 2015.

But, despite healthy figures, the territory has taken a hit from lower commodity prices forcing a string of mines into care and maintenance, and poor investor sentiment.

“Since 2012, the Territory’s mining sector has been impacted by the same factors that have led to a global downturn in the industry, particularly lower commodity prices and a lack of investor confidence in the sector,” Northern Territory Primary Industry and Resources minister Kenneth Vowles said.

“This led to the closure of our iron ore mines in 2014, and a significant reduction in exploration activity for most commodities.”

However, Mr Vowels said the Territory was still faring better than most jurisdictions, with its five largest mines all continuing to operate and values of mineral production across the Territory remaining near record levels.

“Mining employment and royalty figures have been increasing over the past year [and] with commodity prices now recovering, we see a bright future ahead for the industry,” he said.

“The past year has seen a strengthening of our gold and base metals sector, a boom in exploration for lithium, and a pipeline of new projects progressing towards production.

“In 2015-16, the mining sector accounted for 12.8 per cent of the Territory’s Gross State Product (GSP), compared to 6.8 per cent of the national economy.

“Following completion of the Ichthys LNG construction project and the commencement of production, it is likely that mining will again become the single largest industry in the Territory.”

Major projects

While not large in quantity, Northern Territory’s major mines are making up for their lack of numbers in performance.

“Most of the Territory’s mining operations are performing well,” Mr Vowles said.

“For example, Newmont’s Tanami Operation is now one of Australia’s best performing gold mines, and is currently undergoing a $120 million expansion, with development of a second decline.”

Located 540km northwest of Alice Springs in the remote Tanami desert, the mine has been owned by Newmont Mining since 2012, and operational since 1983.

The current expansion included the construction of a second decline and building incremental capacity in the plant to increase profitable production, add three years of mine life, and serve as a platform for future expansion.

“The project is on budget and schedule to deliver additional production in mid-2017,” Newmont Mining stated in its September quarter report.

“The expansion is expected to maintain Tanami’s annual gold production of between 425,000 and 475,000 ounces per year at CAS of between $600 and $650 per ounce.”

South 32’s Groote Eylandt Mining Company (GEMCO) manganese mine was also a top performer, recently undergoing an expansion and gaining access to new leases that have the potential to substantially increase mine life.

The deposit itself accounted for 99 per cent of past manganese ore production and 90 per cent of identified manganese ore resources in the Territory, and was one of the largest and lowest-cost manganese ore producers in the world.

 Glencore’s McArthur River zinc mine was also on the world-map as one of its largest providers of zinc in bulk concentrate form, with an estimated mine life out to 2038, and Rio Tinto’s Gove bauxite mine and Kirkland Lake Gold’s Cosmo project were also going strong.

Glencore’s McArthur River mine is one of the world’s largest providers of zinc in bulk concentrate form. Image: Glencore.

Industry challenges

The Northern Territory still has a long way to go to lose its ‘under-explored’ tagline.

In CommSec’s October State of the States report it stated the Northern Territory was “losing momentum” in terms of exploration, stating when key resource projects were completed, activity levels would slow unless a lift in investment took place.

In August 2016, the Northern Territory Division of the Minerals Council of Australia Agenda for Growth document stated more than $ 95.7m was spent on Northern Territory exploration in 2014-15 but “more investment was needed to restore exploration to peak levels”.

Mr Vowels said there were a number of issues facing the sector, primarily the ongoing uncertainty in global markets and commodity prices, given the reliance of commodity prices on growth in the Chinese economy.

He said the region also faced difficulties in attracting sufficient investment from the market to fund exploration, project feasibility and construction, a lack of transport infrastructure in some areas that impacted project economics, and breaking down international perceptions of Australia as a high-cost jurisdiction.

“The Territory is certainly underexplored, in comparison with the rest of Australia and many parts of the world,” he said.

“But we see this as a competitive advantage for the Territory, as this means there are tremendous opportunities for further mineral discoveries.

“We have already seen an increase in the Territory’s share of Australian exploration expenditure in recent years, but we will keep working to encourage industry to invest their exploration dollars here in the NT.”

Mr Vowels said the main barriers for exploration and investment included a lack of infrastructure in remote areas; lack of outcropping (visible at surface) geology and limited historical exploration in many parts of the Territory, making greenfields exploration inherently high-risk;  and difficulties for small to mid-size exploration companies to raise funds from the market for greenfields exploration.

“The Territory Government is working to address some of these challenges through programs such as the CORE initiative,” he said.

Initiatives for change

The Territory Government’s $23.8m Creating Opportunities for Resource Exploration (CORE) initiative was the most notable initiatives for growth, designed to attract and support investment into the exploration sector, and maximise opportunities.

The four year program was launched in 2014, and has been working towards providing new geoscience datasets to the exploration industry that identify new areas of potential and lower the cost and risk of exploration; supporting and rewarding innovation by industry in greenfields areas through collaborative industry grants for drilling and geophysics; and assisting industry to attract investment from international markets.

“Under the initiative, the NT Geological Survey has substantially upgraded the coverage of the Territory with modern geophysical data, and undertaken geological studies, 3D modelling and studies of prospectivity to give explorers a much improved understanding of the Territory’s geology and resource potential,” Mr Vowels said.

“CORE has developed a strategic partnership with the CSIRO Minerals Resources Division, with two CSIRO post-doctoral researchers now embedded in the NT Geological Survey to apply CSIRO technology to better understand the Territory’s mineral potential.”

He said there has also been a focus on improving accessibility of data and information for the global exploration industry with Geoscience NT (NTGS) making every industry report on exploration since 1901 (23,000 reports) accessible online.

In the most recent Fraser Institute global survey of mining companies, the Territory was ranked fourth in the world for the quality and accessibility of its geological data.

Moving forward, Mr Vowels said the outcomes from CORE were set to increase further.

“Our geological team have worked with Geoscience Australia to design a major new program of geoscience activities in the coming three years to investigate the resource potential of the Barkly region, as a partnership between the Commonwealth’s $100 million Exploring for the Future initiative and the Territory’s CORE initiative,” he said.

“This is likely to be the most intensive program of new geoscience for exploration ever undertake in the Territory.”

The granite mill on-site at Newmont’s Tanami operation. Image: Newmont.

Future developments

Despite an investment shortfall, the Northern Territory future looked promising with a number of key mining project moving towards production in the next three to five years.

“Emmerson Resources is moving to redevelop the Edna Beryl gold resource near Tennant Creek and Australian Abrasive Minerals’ garnet sands project is moving into commissioning,” The NT Department of Mines and Energy chief executive Ron Kelly said.

 “A number of other projects are proceeding through the environmental impact assessment process, including TNG’s Mount Peake vanadium-titanium-iron project, Arafura’s Nolans rare earths and phosphate project and Tellus’s Chandler salt and storage project.

“Existing gold operations also continue to perform well with Newmont’s Callie mine undergoing an expansion and Newmarket’s Cosmo project identifying new ore zones.”

Feasibility studies were also underway at Verdant Minerals’ Ammaroo phosphate project east of Barrow Creek, and KGL Resources’ Jervois copper project was also in the pipeline.

“The Territory’s resources industry has a bright future,” Mr Vowels said.

“There are real opportunities for the Territory to substantially grow and diversify its mining sector, into new commodities such as copper, vanadium, lithium, phosphate and rare earths, as well as strengthening our existing industries in commodities such as gold and zinc.

“Our diverse mix of commodities located so close to the rapidly growing Asian markets suggests that, notwithstanding the inevitable fluctuations of commodity prices, the Territory’s mining sector should continue to grow and expand its role in our economy.

“The Territory Government will continue to work with industry to address impediments to exploration and development, and provide a regulatory framework that gives certainty to industry whilst ensuring that the community has confidence in the environmentally and socially sustainable growth of the sector.”