The Carrapateena mine will enter production in 2019. Image: OZ Minerals.

 

BY ELIZABETH FABRI

 

THE South Australian resources sector has had a strong year. But dwindling exploration points to a far greater issue for the State, as it looks to ramp up production and continue the search for the next Olympic Dam-style deposit.

 

More exploration is needed in South Australia: that is the message Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce had for delegates at the recent South Australia Resources and Energy Investment conference (SAREIC) in Adelaide.

“Greenfields mineral exploration, the heartbeat of mining, is flat lining in South Australia,” Mr Pearce said.

“Nationally mineral exploration has been rebounding since 2016, but the numbers out of the Australian Bureau of Statistics paint a concerning picture for the state of South Australian mineral exploration.

“The numbers have essentially been flat since March 2013.”

The copper-rich State, home to BHP’s mammoth Olympic Dam project and OZ Minerals’ Prominent Hill project, will next year welcome OZ’ Carapenteena mine to its ranks.

Carrapateena will add a potential 65,000t of copper per annum to State copper production, which totalled 261,684 tonnes in 2017.

But there was still a long way to go if South Australia was to reach the former State Government’s 2030 1mtpa copper target.

Newly appointed South Australian Mining minister Dan van Holst Pellekaan said the opportunities for developing copper projects in the State remained abundant.

“While exploration activity has declined in recent years, we are confident that exploration expenditure will recover in response to rising commodity prices and an expected pick up in copper demand in the next couple of years,” Mr van Holst Pellekaan told The Australian Mining Review.

“AMEC’s analysis partly reflects the wider downturn in the commodity prices that is now being reversed.

“South Australia is well positioned with a huge pipeline of precompetitive data and renewed interest across more than 400 mineral tenements to leverage the nascent recovery in commodity prices.

 

“Our expectation is that once this data being released by the Geological Survey of South Australia and CSIRO is carefully scrutinised for new targets, you will see an upsurge in exploration investment not just in existing prospects but in new greenfield targets.”

 

Currently, South Australia has a sizable gap between the largest (Olympic Dam) and second largest copper deposit (Carrapateena), and time will tell if another Olympic Dam-style deposit will be discovered.

Mr van Holst Pellekaan said it was “absolutely” possible the State could host another deposit of this size and grade.

“We have the right type and age of rocks to host large mineralisation, and while there is a large gap between Olympic Dam and our next biggest deposit, international experience suggests that these gaps in our copper inventory are waiting to be discovered,” he said.

“The early results of the Gawler Craton Airborne Survey and the Auslamp Magnetotelluric survey are showing some areas of potential for explorers to search for these world-class deposits.

“The Department for Energy and Mining is working with industry and researchers to develop some copper prospectivity models using the range of data collected in this highly prospective region.”

However, industry has urged Government to commit to increased funds under the Plan for Accelerating Exploration (PACE), which had been cut to about $1 million per annum from 2018 through to 2021.

Total mineral exploration expenditure in the State was now sitting at about $49 million, compared to a peak of $328 million in 2011-12.

“It is important that the State Government reinvest in the highly successful Plan for Accelerating Exploration (PACE) program to attract greater investment in greenfields mineral exploration,” AMEC’s Mr Pearce said.

“Each new drill hole could lead to a future mine; and each new mine brings more jobs, royalties and revenues for local communities in regional South Australia.”

OZ Minerals’ $916 million Carrapateena project was one example of the 182 successful projects discovered through PACE since 2004.

Minister van Holst Pellekaan said the State Government was steadily releasing data from the Gawler Craton Airborne Survey, which covered rich copper-bearing mineral systems including the IOCG deposits of Olympic Dam, Prominent Hill and Carrapateena.

At the recent SAREIC conference, Mr van Holst Pellekaan announced the first data release of rock depth from the survey, which will be one of 16 packages published in the next 12 months.

Mr van Holst Pellekaan said the Geological Survey of South Australia (GSSA) had worked closely with survey contractors during the process to ensure the highest possible levels of quality and integrity from the raw survey data.

“Undertaken over two years, this high-resolution data is being been meticulously collected with low-flying planes and helicopters that will cover more than 1.8 million line kilometres of data across 320,000sqkm once completed,” he said.

“It doesn’t end there. We have partnered with CSIRO to use smart processing and heavy duty mathematics and modelling that has delivered reliable depths of target.

“You cannot underestimate the value to industry of this level of data and how it will save them time and money in developing exploration programs and better identify targets.

“Through this kind of ground-breaking value-added analysis, South Australia is ensuring that we are ahead of the game in attracting interest in our highly prospective geology.”

Mr van Holst Pellekaan said the Government was also releasing Coompana GeoScience through a New Frontier program in a previously underexplored region of the State, as well as the results of extensive AusLamp Magnetotelluric work carried out in collaboration with GeoScience Australia.

“In addition we are supporting innovation in exploration through the MinEx CRC and we look forward to the Commonwealth Government progressing the national Road Map for Exploration Under Cover, known as the UNCOVER initiative,” he said.

 

 

                                                                                               Olympic Dam. Image: BHP.

 

Attracting Investment

 

The next hurdle for South Australia was attracting investment into the region.

It hit the jackpot last year with global company GFG Alliance buying out Arrium’s struggling South Australian mining business.

Through the Arrium takeover, GFG Alliance inherited its 1.2mtpa Whyalla steelworks and 10mtpa iron ore mining operations in South Australia’s Middleback Ranges; Whyalla port and rail; the OneSteel steel Scrap Recycling business; 4mtpa OneSteel secondary steelworks;  Australian Tube Mills; and OneSteel Reinforcing, ARC and OneSteel metal centres.

GFG’s South Australian mines, to be operated under its SIMEC mining business, comprised the Iron Baron, Iron Knob and South Middleback Ranges mine sites, which collectively produce hematite and magnetite iron ore.

Earlier this year, the State Government also approved two new mining leases for SIMEC’s Iron Sultan and Iron Warrior mines in the Middleback Ranges.

Then, in June, SIMEC announced it had agreed to complete due diligence at Havilah Resources’ Maldorky and Grants iron ore projects, while advancing its various State-based renewable energy investments.

Minister van Holst Pellekaan said GFG’s purchase of the Whyalla steelworks and associated mining business has “been a great boon for the State, the confidence of the industry and for the people of Whyalla”.

“Having heard GFG Alliance chief executive Sanjeev Gupta speak on a number of occasions, it is clear that South Australia will play a significant role in his vision for his business,” Mr van Holst Pellekaan said.

“To attract investment of this type, the Government has a plan to make South Australia exploration and mining industry competitive on the world scale.

“Our Energy Plan is one way we are working to help industry reduce its cost with electricity accounting for a major cost of mining operations, and the newly announced interconnector to NSW and the Virtual Power Plant will go a long way to putting downward pressure on power prices.”

The minister said the Government had also introduced amendments to the Mining Act to ensure it regulated the industry “in a contemporary way”.

“We also continue to provide world-class pre-competitive data such as the Gawler Craton Airborne survey and the Coompana Mineral Systems drilling program, while partnering with industry to understand its needs,” he said.

“We are also exploring new opportunities for South Australia through the delivery of the Hydrogen Road Map and the developing a Battery Value Chain program.”

 

 

    Prominent Hill. Image: OZ Minerals.

 

 

Outlook

     

All in all, Mr van Holst Pellekaan said his outlook was “optimistic” for the near and long-term.

“With several major mining projects underway and the emergence of potential new developments, there will be a lot of opportunities for South Australians in this sector for many years to come,” he said.

BHP was planning to develop the Southern Mine Area and increase production through a brownfields expansion; OZ Minerals has extended the life of Prominent Hill and will soon bring Carrapateena online; and GFG Alliance continues to seek out new opportunities in the Middleback Ranges, Eyre Peninsula and Braemar Province.

Iluka Resources has also resumed mining at Jacinth – Ambrosia; Boss Resources has initiated a three-stage strategy to resume production at Honeymoon uranium mine; and Hillgrove Resources remains positive about extending the life of the Kanmantoo operations.

Mr van Holst Pellekaan said there was also promising graphite projects from Archer Exploration and Renascor Resources on the Eyre Peninsula; copper-cobalt opportunities by Havilah Resources in the east of the State; and some gold proposals from Tyranna Resources and Marmota Energy continuing to progress through the development pipeline.

“Furthermore, the government continues to facilitate the development of the Mining Engineering and Technical Service (METS) sector that is a huge jobs generator and has the potential to emerge as an exporter of these services to an expanding global mining industry,” he said.

Advertisement