Australia’s first block cave for iron ore

Far from the Pilbara in the northwest region of WA lies a powerful integrated iron ore mining and pellet production business close to the city of Burnie in the northwest region of Tasmania.

Grange Resources (ASX: GRR) owns and operates the Savage River magnetite iron ore mine, 100km southwest of the city, which produces some of the highest iron- concentrated magnetite in Australia with minimal impurities.

The mine has been in operation for more than 57 years, extracting magnetite from a series of open pits, with its downstream processing facilities including a concentrator on-site and a pelletising plant at Port Latta, 70km northwest from Burnie.

Grange is quietly but surely propelling its broader 2024 priorities, including the delivery of a sustainable life-of-mine plan for Savage River, potential decarbonisation opportunities and a “green premium” for its products.

North Pit underground mining development project

In CY23, the company produced 2.59mt of magnetite concentrate and 2.34mt pellets from its series of open pits at Savage River but a completed definitive feasibility study (DFS) earlier this year confirmed the technical and economic viability of going underground.

In February 2024, the Board approved the plan to transition the current North Pit open cut mine to an underground block cave mine.

The integration will see the current North Pit open pit mining become an underground sub-level and block cave mine over the next five years.

The feasibility study highlights a few of key points for Grange.

It forecasts production of approximately 64mt of ore, producing 28mt of concentrate at iron grade of more than 66%, thereby supporting the mine life at Savage River beyond 2037.

The study also confirms a 30% average reduction in the long-term unit operating costs compared to the current open pit mining costs. These are in line with the pre-feasibility study (PFS) findings.

A massive ESG win from the study is that an 80% reduction in carbon emissions at the Savage River mine can be achieved, in line with Grange’s decarbonisation plan.

Based on the progression of the study, Grange has awarded the underground development to PYBAR Mining Services to extend the current exploration decline by 1500m in 2024.

This will provide access to the extraction level horizon and provide essential data to finalise mine designs to a construction- ready stage.

The extension will also provide new underground drill platforms that Grange plans to utilise for further underground exploration with a view to enhance the long-term underground mining opportunities.

Production from underground will ramp up over the five years with forecast sales of 2.9mt of iron ore products from 2029.

The total estimated open cut and underground production over 15 years is 40.8mt of magnetite concentrate.

A spokesperson for Grange Resources says this transition from open cut to underground mining demonstrates innovation and adaptability for the company and Savage River mine itself.

“The transition extends the site’s operational life to 2039, ensuring long- term employment and economic stability for the region,” the spokesperson said.

Grange employs about 680 full-time staff and this move will see Savage River become a sustainable long-life mine.

“The underground mine will transition North Pit from open cut to an underground block cave and sub level cave mine over the next five years,” Grange’s spokesperson said.

“This transition will result in a reduction of carbon emissions by 80% in the mine to develop green pellet production.

“Savage River’s block cave will also be a first for iron ore in Australia.”

The future reduction in operating costs is a natural by-product of going underground, the spokesperson added.

“One of the challenges is that as the pits get deeper, dumps get further away and operating costs continue to increase with more equipment and diesel required,” the spokesperson said.

“The block cave requires a substantial capital investment, but once the caving commences and ore is extraction begins, the operating cost is significantly lower.

“Operating costs have been reduced through strategic investments in advanced technology and efficient mining practices, resulting in significant savings and increased productivity.

“This change also reduces the amount of waste material mined, as we are able to draw ore directly from the lower parts of the ore body.”

Decarbonisation roadmap & energy alternatives

With the world moving to a low carbon future, Grange has developed a carbon reduction roadmap across its operations.

This involves the reduction in energy used per tonne of product, upgrades to furnaces, recovery of heat in the pellet plant, application of technology and electric vehicles in the mining operation, as well as alternative fuel sources.

Grange’s spokesperson says the company is pushing towards its goals of reducing carbon emissions by 50% by 2030 and achieving net zero by 2035.

“The shift towards electric mining equipment and materials handling systems, specifically with the underground conveyor, is part of Grange’s commitment to reducing carbon emissions,” the spokesperson said.

Grange is also positioning itself as a front runner in the steel industry’s decarbonisation plans and, along with the evolution of the green steel market, there is a potential for the company to include a green premium for its low CO2 high-quality products,

Early in 2020, Grange identified that its two biggest contributors of carbon emissions were diesel usage from Savage River’s mining fleet and natural gas usage at its Port Latta pellet plant furnaces.

Anthracite was identified as having the highest emissions per joule of energy, with a furnace efficiency upgrade program to remove the requirement for anthracite.

In 2023, Grange reduced anthracite usage by 1,646t, reducing the emissions produced by the burning of coal by 4307t. Grange also became a founding member and core partner of the Heavy Industry Low Carbon Transition Cooperative Research Centre (HILT-CRC) in late 2021.

The company works with HILT-CRC to investigate  decarbonised  production of green iron products from magnetite ores, encompassing the consideration of technologies, data and demonstration at sufficient scale to support end-use adoption of products.

Examples include:

• low-carbon induration routes, including partial to full replacement of natural gas with hydrogen and electrically generated heat;
• increased domestic pre-processing of magnetite concentrate prior to export;
• unlocking new ore bodies through low-carbon processing routes using low-carbon heat sources (hydrogen, electrification or solar thermal; and
• new methods to lower the energy requirements and CO2 intensity for beneficiation, calcining and induration for green pellets (BF and DRI), spanning blending, use of renewables and

That same year in 2021, Grange completed a study on the use of hydrogen at Port Latta, co-funded by the Tasmanian Government, to investigate the feasibility of converting natural gas to green hydrogen at the operation.

The study, also done in collaboration with Hatch, concluded that it was technically feasible but key drivers were required to make the project commercially viable.

Grange extended the research into hydrogen as a heat source, determining that heat could be recovered from pellets discharging from the furnaces.

This, combined with electrical resistance heaters and supplemented by hydrogen, could achieve the required heat input for pellet induration.

Southdown project in WA

Grange also owns a major magnetite development project at Southdown, near Albany in the Great Southern region of WA.

The Southdown magnetite project is an advanced project with over 1.2bt of high- quality mineral resources, including ore reserves of 388mt.

With an initial mine life of 28 years, Southdown is expected to produce about 5mtpa of magnetite concentrate and will be exported to international markets.

Currently, Grange has a combination of spot and contracted sales arrangements in place to deliver its pellets to customers throughout the Asia-Pacific region