hazelwood hardens in vietnam

Hazelwood Resources Ltd has started ferrotungsten production from its
facilities in Vietnam, a project which is
expected to generate revenue of $140
million per annum at full capacity.
Hazelwood, formed towards the end
of 2006, acquired a majority interest in
Asia Tungsten Products Company Ltd
(ATC) in May 2010. ATC has since constructed the Vietnam plant and commenced hot commissioning in early
April.
The plant has a design capacity of
4,000 tpa of ferrotungsten (3,000 tpa
contained tungsten).
Wogen Resources has an existing
sales agency and financing agreement
with Hazelwood for all ferrotungsten
metal produced.
Quite a rarity in today’s economic
climate, Hazelwood came in under its
original capital budget forecasts for
construction of the plant.
Managing director Terry Butler-Blaxwell said while Hazelwood had been
able to take advantage of favourable
rates in Vietnam the company had built
the project to a very high standard by
international measures.
“When we originally bought into the project
we did thorough due diligence including the
derivation of a capex estimate as a check
against that provided by the vendor. Our
capex estimate included Aussie rates which,
as we found, only apply in Australia,” ButlerBlaxwell told Paydirt.
“When we started construction we made
certain assumptions about the cost of the first
fill materials that are used to hot commission
the furnace. We ended up with a favourable
budget variance on those items too.”
The Vietnam plant is based on a Chinese
design, with Hazelwood having made some
improvements to the model which included
upgrades to the material handling systems,
power management and emission control
systems.
“There is only one other significant ferrotungsten plant outside of China and our
design is a generation ahead of that,” ButlerBlaxwell said.
Hazelwood holds two advanced stage primary tungsten projects in Western Australia
which are potential future sources of feedstock for the Vietnam smelter.
The company’s Big Hill project in the east
Pilbara is at the feasibility stage while its Mt
Mulgine project, 350km north-east of Perth
and 300km east-south-east of Geraldton is at
the resource definition stage.
Butler-Blaxwell said the company would
wait until investment conditions were right to
implement these projects.
“In our minds we think it is more efficient
to start with our downstream value-adding
refinery, which does not depend on a mine
to achieve a reasonable level of return. From
our observations, mining projects in the western world are relatively high cost in terms of
capex, delivery times and operating costs.
This becomes less of an issue for Hazelwood
which is now in the market with product, and
any mine we build would be for the purpose of
providing feedstock to help increase production at our downstream refinery.”
Demand for ferrotungsten has staged a
good recovery from GFC levels according to
Butler-Blaxwell.
“Pre-GFC, we estimate consumption outside of China in steelmaking applications
was approximately 5,000t contained tungsten
(equivalent to about 6,500t ferrotungsten consumption) and then ferrotungsten reached
an all-time price high of around $US60/kg in
2011.
“The overall tungsten market has since
softened a bit and ferrotungsten was at a
28-month low just recently, but still way above
historical price levels. The price has recently
increased again as buying resumes and supply remains tight. The annual quantity of demand is trending back towards pre-GFC levels,” he said.
Butler-Blaxwell said the stronger prices
were being driven by supply side factors.
“It follows a decision in 2008 by the Chinese Government to impose heavy export
tariffs on the material and also a number of
other restrictions such as production quotas.
There is only limited production of ferrotungsten outside of China so if the production of
high speed steels, tool steels and temperature resistant alloys remains at healthy levels,
then so does demand for our niche product.”
China has come to dominate the tungsten
industry, providing 80% of supply globally.
Although China has a high degree of vertical integration between mines and downstream processors, Butler-Blaxwell says the
situation for the commodity in China is not as
favourable as it once was.
“The high-grade tungsten reserves are running out, and now their mining is switching to
lower grades and higher costs.
“The Chinese Government has also been
taking steps to protect the environment, which
they have enforced through the closure of illegal mining operations and setting of restrictive
production quotas. Their restrictions on the
exports of raw materials like tungsten concentrate, and the relatively limited mine supply
outside of China has created a situation that
has pushed up prices and many of the processors outside of China run their plants on
recycled tungsten scrap, which can account
for up to 90% of their production capacity.”
Butler-Blaxwell said the priority for Hazelwood this year was to get traction in the market to become a leading supplier of the master
alloy.
“Once we achieve a satisfactory level of
performance, we will consider the upstream
mine option. There are many other specialty
metal processing opportunities available to
us, but I think it best to stick to our knitting for
the immediate future.”
– Bree Swift

http://www.hazelwood.com.au/files/57uapEfeEJ3LdG2W.pdf