MMG’s Dugald River zinc mine near Cloncurry, QLD. Image: MMG.
BY CAMERON DRUMMOND
INITIATIVES by the Queensland Government to boost exploration and support employment diversification aim to attract investment and protect employment in the region from the cyclical nature of the resources sector. However some feel that addressing high energy prices as a priority may do more to lift North West QLD’s economy.
Covering 10 local government areas, the 375,000sqkm North West Minerals Province (NWMP) contains major copper, lead, zinc, silver and phosphate deposits and well defined rare earths potential.
The NWMP is home to about 34,500 residents, mostly based in Mt Isa, with 60 per cent of jobs that directly or indirectly support the mining industry.
The significance of the mining industry and the remoteness of the region has meant the NWMP has traditionally been exposed to fluctuating commodity markets.
The Province recently went through some tough economic challenges, as end-of-life or uneconomic operations closed their doors and investment into the resources sector dried up.
These challenges prompted the QLD Government to establish the North West Minerals Province Taskforce in November 2015 to identify issues affecting the mining industry and plan a way forward.
The taskforce identified the need for more efficient uses of existing infrastructure, improved exploration and mining approvals processes, greater exploration success, and strategies to attract fresh investment capital.
Those recommendations helped structure the QLD Government’s Strategic Blueprint for Queensland’s North West Minerals Province, a $39m funding package released in mid-2017 aimed at building on existing economic and community strengths in collaboration with industry, business, and community leaders in the Mt Isa and Cloncurry regions.
It facilitates continued resources sector development, and the cutting of red tape to help get projects off the ground.
QLD Natural Resources and Mines minister Dr Anthony Lynham said the blueprint also had a second objective; a stronger economy through diversification.
The State Government would collaborate with other levels of Government, business and industry groups, and communities to support a more diversified and sustainable economy by leveraging existing economic and community strengths.
Strategic Resources Exploration Program
In support of the NWMP blueprint, QLD’s Department of Natural Resources, Mines and Energy will spend $27m over four years to boost exploration and support new mine developments.
Led by the University of Queensland (UQ), the Strategic Resources Exploration Program will focus on providing the tools, datasets and knowledge needed by explorers in North West QLD to drive a new wave of mineral discoveries.
The initiatives include $4.3m for mineral geophysics to pinpoint the locations of potential new mineral prospects over wide areas; $1.45m for mineral geochemistry programs; $5m for mineral synthesis; and nearly $1m for national research into advanced discovery techniques.
Professor Rick Valenta of UQ’s Sustainable Minerals Institute (SMI) and the WH Bryan Mining and Geology Research Centre said this new compilation and data collection collaboration would take a more holistic approach to the way the industry tackles challenges.
“The North West Queensland region has one of the most highly endowed belts of copper, zinc, lead and silver in the world, and yet less than a third of the region has been effectively explored,” Professor Valenta said.
“The challenge of exploration under sedimentary cover has meant that industry has not been able to maintain the required rate of discovery, and mineral explorers need the best possible data and knowledge to be able to improve success rates in that environment.
“There is an untapped resource of geological information available from public and industry sources, and our objective is to put this information into a form which maximises its usefulness for exploration, and applies best practice analytical techniques to extract full value from it.
“We aim to carry out new studies which will help explorers to target and drill new orebodies in the region.”
Other participants in the program include the Geological Survey of QLD, Geoscience Australia, James Cook University, University of Tasmania, University of Western Australia, University of Adelaide, and the CSIRO.
Mount Isa Mayor Joyce McCulloch said her council was pleased with the early engagement with the program.
“We are very pleased to see the North West Minerals Province at the forefront of the excellent work of Geoscience Australia, mapping mineral resources in our region and sharing the data with prospective investors,” Mayor McCulloch said.
“There is no doubt over time this will pay dividends for the Mount Isa economy and generate jobs in our community.”
$3.6m will fund the QLD Government’s Collaborative Exploration Initiative (CEI), designed to stimulate investment in under-explored parts of North West QLD, and test innovative exploration using a broad range of techniques.
The CEI encompasses drilling and non-drilling activities including seismic, airborne and ground geophysics, and geochemical surveys.
Eligible activities added to drilling include mobilisation, pad preparation, and selected downhole analysis.
The first round of CEI grant funding ($1.13 million) was awarded in December 2017 to 9 companies, including Capricorn Copper and Minotaur Resources.
Missing the Mark
While the funding is a welcome injection into North West QLD – and buoyant commodity prices have spurred a rejuvenation of some projects – miners and community representatives in the region have cited energy prices as a major factor deterring investment.
State member for Mt Isa Robbie Katter said the blueprint was a step in the right direction, but $39m would not address the immediate issues facing the economy in QLD’s North West.
“The costs and handling of energy, transport and water supply are the main issues holding back investment,” Mr Katter said.
“If I had to choose one issue that causes the biggest problem its energy, both gas and electricity.
“Since 2012 I’ve been speaking in parliament about the negative impacts the LNG industry could have on the domestic economy.
“Unfortunately we have exceeded even the worst expert forecasts of how high local gas prices could get.
“It’s not uncommon to hear of companies who were paying $4-$6/GJ to be offered up to $20/GJ for new contracts.”
Glencore, which employs about 2000 personnel at its mining and smelting operations in Mt Isa, stated in mid-2017 that the high cost of energy could force it to shut down its operations.
In a May 2017 letter to the Federal and QLD governments, Glencore’s former copper director Aristotelis Mistakidis warned that the miner couldn’t guarantee the long-term future of its copper plants if electricity prices continued to rise.
“If electricity prices continue to rise, Glencore will be forced to consider the future of our copper processing assets across north QLD, as well as future investment in energy-intensive operations,” Mr Mistakidis said.
“Given the current electricity prices add uncertainty around future supply, we need to consider options for shutting our smelter and refinery and ship copper anodes direct to market and/or refine at one of our other plants offshore.
“While our business acknowledges the efforts of the QLD Government to consider options for maintaining and extending our smelting and mining operations, the investment environment in Australia has materially changed.”
The price of copper has trended up quite substantially since that time, but the Federal and QLD governments have begun implementing measures to increase domestic gas supply to lower prices; including domestic supply agreements with major gas producers and construction of the $800m Northern Gas Pipeline.
In February, Santos signed a $100m agreement to supply natural gas to New Century Resources’ Century zinc mine near Mt Isa.
“The gas sales agreement we’ve reached is innovative in both its flexibility and pricing, making it commercially attractive for both parties,” Santos marketing and trading executive vice president Phil Byrne said.
Securing gas in the currently tight Australian east coast domestic market was identified early by New Century management as a key risk to the successful development of the project. The entry into this gas supply agreement allows the company access to gas fired power generation for the operations, as opposed to more expensive on site diesel generation.
“After a highly competitive tender process for the supply of gas, we are thrilled to have entered into a long term contract with our partners at Santos and look forward to a strong working relationship as we transition into full operations at Century,” New Century utilities manager Michael Pitt said.
Mayor McCulloch said Mount Isa was also eager to become part of the solution to shortfalls in gas supply and help attract industry back to the region.
“We believe there is a lot of upside to the gas industry in our region,” Mayor McCulloch said.
“We’d like to see more thinking from government and industry about how to leverage these developments to help position Mount Isa as a substantial national gas hub and attract new gas exploration and production companies to the North West QLD region.”
MMG’s Dugald River Zinc Project
Capricorn Copper JV Copper Project
Glencore’s Lady Loretta Zinc Project
CuDeco’s Rocklands Copper Project
New Century Resources’ Century Zinc Project
Altona’s Cloncurry Copper Project
Status: Near Completion