Thanks Jacko, it’s very kind of you to share your practical...

Thanks Jacko, it’s very kind of you to share your practical understanding of what goes on at the various mines.
I was reading Fortescue’s seeking the same WA government pay outs as Ian Palmer gets on the new Iron Bridge magnetite project ...story in AFR a couple of weeks back.
But that it is unlikely to happen....
“WA to deny Fortescue same royalties relief as Chinese
MAY 16, 2019Mr McGowan ruled out a similar assistance package for new magnetite projects, including Fortescue’s new $US2.6 billion ($3.76 billion) Iron Bridge mine.
Fortescue approved development of Iron Bridge in April in conjunction with partners Formosa and Baosteel Resources.

Important investment in WA
Fortescue chief executive Elizabeth Gaines said Iron Bridge was an important investment in WA, set to employ 3000 people during construction and creating 900 full-time positions once operational.
“We support a level playing field and international competitiveness for all projects in WA and expect that applicable royalties will be applied consistently and will reflect the beneficiation and processing required to produce a high-grade, low-impurity magnetite concentrate product,” she said.

Mr Palmer has highlighted the royalties discount in his row with both CITIC and Mr McGowan over the future of the Sino Iron mine, which sits on tenements controlled by Mr Palmer’s Mineralogy and is a major source of his wealth.
Mr McGowan has flagged using Parliament to alter a state agreement covering the mine to take Mr Palmer out of the equation as CITIC seeks to expand a tailings dam that is fast reaching capacity.
Sino Iron, which produced 19 million tonnes of magnetite concentrate last year, is working around the clock to build up the tailing dam walls to allow operations to continue but expects to run out of room within two years, putting about 3000 jobs at risk.
CITIC has been unable to get Mr Palmer to agree on expansion as required under the existing state agreement.
CITIC broke its silence on a series of attacks from Mr Palmer on Thursday, accusing him of using claims about a $500 million shortfall into a mine site rehabilitation fund as a smokescreen for his actions which had put the Sino Iron mine and jobs under a cloud.
The Hong Kong Stock Exchange-listed company said it continued to comply with all obligations for site remediation under relevant environmental legislation, the state agreement and other agreements related to Sino Iron.”


Meanwhile more weekend reading for those interested;
. From the sustaining tonnes of iron ore NRW ‘bread and butter’ arena, some excerpts from a story by Nick Evans in yesterday’s Weekend Australian.
It’s about the direction in which the big Three and emerging producers have set their sails given current high pricing, the potential resurrection of Vale and the emerging scrap steel industry and more in China .


https://www.theaustralian.com.au/bu...n/news-story/cf1667986cb716b1ee16b8cfd3a7230b
“Price spike could spur iron ore competition
.MAY 25, 2019
.... “With bad weather and bad luck stripping about 22 million tonnes from Pilbara production this year and Chinese steel production up, topping a billion tonnes for the first time in a 12-month period, a genuine shortfall of iron ore supply has emerged, tipped by UBS analyst Glyn Lawcock this week at about 70 million tonnes in 2019.

The key question for iron ore miners is how long that shortfall will last, and with it the higher iron ore price.

Existing operations can always be expanded faster and more cheaply than building new ones. And, while not at the levels of the great iron ore expansion of 2010 to 2015, major projects are already in the works for the Pilbara majors.

Fortescue is building a new mine at Eliwana, estimated to come on line by 2020, Rio Tinto has a major new project under construction at Koodaideri, due by 2021. The same year BHP will bring its South Flank project online.

But all are designed to replace production from fading mines elsewhere in the Pilbara and, of the three WA majors, only Fortescue plans to expand production, through its 22 million tonne a year Iron Bridge magnetite project, where first concentrate will be delivered in early 2022.

BHP had no appetite for an expansion of its Pilbara operations, capped at 290 million tonnes a year by constraints at its operations at Port Hedland, Mr Beavan told analysts.

He said the Vale operations were likely to come back by the time BHP was able to bring any expansion online, making a decision to spend on expansion difficult.

Rio is considering increasing its export tonnes, according to its chief executive, and will make a decision by the end of the year whether to push its operations beyond 360 million tonnes a year.

That study rests on a decision on whether to accelerate development of Koodaideri beyond the 43 million tonnes needed to replace fading operations elsewhere, and bring on a 70 million tonne a year operation early.

Citi analyst Paul McTaggart last week estimated it would cost Rio about $US2.4bn to $US2.8bn to expand its mines, rail network and ports to an annual capacity worth 400mtpa.

But the complication for the Pilbara iron ore miners is that as China’s steel industry has matured from the peak of the boom, the needs of its steel mills have changed.

Rio’s oft-repeated “value over volume” mantra is not just about withholding of supply to sustain prices.

It’s a reflection of the fact that, as China’s steel mills have become more efficient and productive, their tolerance for impurities in the product they buy has fallen.

The issue for Rio is not whether you can throw another 20 or 30 million tonnes out the door in a hurry to capitalise on a sudden price spike, it’s about whether it can do so while maintaining a consistent product quality that nets it — it says — a premium to the benchmark iron ore price.

That quality issue also faces BHP, and sits at the heart of Fortescue’s decision to spend $US2.6bn on Iron Bridge, which will produce a high-grade (65 per cent iron) concentrate with low impurities.

Gina Rinehart’s decision to buy struggling Atlas Iron last year now looks exquisitely timed, given it gives the mining magnate the option of building a new 50 million tonne a year berth in Port Hedland, a genuine expansion option for her privately-owned miner Hancock Prospecting — but even that would take several years to build, assuming she also has the mines to sustain the tonnage.

With short-term options from the Pilbara limited, apart from some additional tonnage from the likes of Chris Ellison’s Mineral Resources and Atlas’s existing operations, analysts suggest the gap is likely to be filled by swing producers in higher-cost exporters such as Iran, Indonesia, Malaysia and India that were significant suppliers to China at the height of the boom, but have all dropped off as prices fell.

Higher cost Chinese domestic mines could also plug some of that gap, as much as 20 million tonnes a year, according to RBC analyst Tyler Broda in a note to clients yesterday. But many of those mines were closed on environmental grounds, which remain in place as a major restriction on domestic supply.

The major threat, which worries the Pilbara majors most, is the emergence of a far larger scrap steel industry in China.

As its economy develops, scrap is becoming more available. Until now it has been cheaper to buy seaborne iron ore, as collecting, sorting a cleaning pre-used steel is difficult and the blast furnaces that dominate China’s steel industry can use only a limited amount of scrap. But high iron ore prices could provide an incentive for scrap merchants to scale up their businesses, and for steelmakers to invest more heavily in the electric arc furnaces that make steel from scrap to take advantage.

That trend already poses a threat to iron ore use, according to UBS, and could accelerate through the impact of current supply constraints.

“Our base case suggests that scrap supply will push iron ore demand down 22 per cent by 2030,” Mr Lawcock said in a client note this week.”

NICK EVANS
RESOURCE WRITER
Nick Evans has covered the Australian resources sector since the early days of the mining boom in the late 2000s. He joined The Australian's business team from The West Australian newspaper's Canberra bureau, w... Read more