Grange resumes Australia’s Southdown magnetite iron ore

Published date: 11 August 2021

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Chinese-owned Australian iron ore producer Grange Resources has restarted work on its stalled Southdown magnetite project in Western Australia (WA), based on expectations of firmer demand for high-grade iron ore over the medium term.

Grange has scaled down its plans for Southdown to 5mn t/yr of high-grade magnetite from the 10mn t/yr project that was shelved in 2018 and prior to that in 2012. The firm expects to finish studies into the smaller project, which will produce magnetite concentrate to export to China and Japan, by the end of this year.

Iron ore prices have eased over the past three months but are still much higher than the $65/t for 62pc Fe in August 2018. Argus yesterday assessed the ICX iron ore price at $162/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis, down from $184.25 on 3 August, from $220.50/dmt on 19 July and from a high of $235.55/dmt on 12 May.

Grange, with the backing of its major shareholder Chinese steel producer Shagang, holds 70pc of Southdown, with the remaining 30pc held by joint-venture partners Japan's Sojitz Resources and Kobe Steel. Southdown, which is 90km northeast of Albany, has almost 400mn t of iron ore reserves and a Joint Ore Reserves Committee resource of around 1.2bn t. It is one of several small-medium iron ore projects proposed for Australia to take advantage of higher iron ore prices.

Grange produced 655,000t of pellet at its existing operations in Tasmania during April-June, up from 616,000t for January-March and from 641,000t in April-June 2020. It sold 653,000t of pellet for April-June, up from 556,000t in January-March and from 642,000t during April-June 2020.

Grange reported an average realised price of $287.15/t fob Port Latta for April-June, up from $228.52/t during January-March and from $112.72/t in April-June 2020. Argus yesterday assessed the iron ore blast furnace pellet price for 64pc Fe and 2pc Al at $200/t cfr Qingdao, down from a high of $280/t on 18 May and from $204/t at the beginning of January.

Grange's operating costs of A$90.16/t ($66.20/t) in the latest quarter were down from A$113.11/t during January-March and from A$97.23/t a year earlier, partly because of higher sales volumes.

Grange plans to rebuild its fifth pellet furnace during October-December, as it looks to lift pellet quality and cut energy consumption at its Port Latta facility in Tasmania.

By Jo Clarke

Blast furnace pellet prices ($/dmt)

Iron ore prices ($/dmt)