Cockatoo Island mine. Credit: John MacFadyen / Pluton Resource/John MacFadyen / Pluton Resource
Cockatoo Island’s historic iron ore mine could be back in production before the end of next year after a Hong Kong-based private entity struck a deal to take control of the asset following more than a year of complex negotiations.
Cockatoo Island Mining, which is owned by Madam Lai Kuen Choi, will look to resume operations as soon as possible to take advantage of prevailing high prices for the steel-making product.
Operations at Cockatoo Island ceased in 2015 after former owner Pluton Resources collapsed amid a weak market for iron ore.
The company’s failure left the State Government facing a potentially costly environmental clean-up bill, given the mine hangs off the side of the island, separated from the sensitive waters of the Yampi Sound by a sea wall.
Cockatoo Island sits in the Buccaneer Archipelago off the Kimberley coast and is surrounded by coral reefs, close to a major whale migration route, in an area identified as a future World Heritage site.
Since the end of mining at Cockatoo, the open pit has filled with seawater that previously had to be pumped out to allow the below-sea-level operations to continue.
Cockatoo Island mine. Credit: John MacFadyen / Pluton Resource/John MacFadyen / Pluton Resource
Several parties have expressed interest in restarting the mine since Pluton’s collapse but until now none had been able to negotiate the complex legacy issues associated with the former owner’s demise, which have involved as many as 15 insolvency specialists.
As part of its agreement to take control of the mine, Cockatoo Island Mining had to repay secured creditors including the bill of Pluton’s first receiver KordaMentha which was owed $8m for its services.
The company had to cough up $4m in unpaid royalties owed to the State Government and an $18m cash-backed bond to the Mine Rehabilitation Fund.
A mess of forfeiture applications and caveats over the tenements also had to be settled.
Pragma Lawyers managing director Aaron McDonald, whose Perth firm helped effect the transaction, said the acquisition of the mine involved complex insolvency law and was regarded by many as a deal “that couldn’t be done”.
“The interplay of all those elements made it quite complex to get the transaction across the line,” he said.
Cockatoo Island mine. Credit: John MacFadyen / Pluton Resource/John MacFadyen / Pluton Resource
Cockatoo Island Mining chief executive Frank Meng said hundreds of jobs would be created in the initial refurbishment and ongoing operation of the mine, which would also return significant royalty to the State.
“Cockatoo Island has for a long time now been a potential environmental issue for the State,” he said.
“Today’s deal ensures that Cockatoo is now responsible for guaranteeing that environmental impacts of mining operations on the island.”
Cockatoo Island will employ people directly to work on the mine under manager Steve O’Dea.
The company is also drafting a land-use agreement with the local Dambimangari Aboriginal Corporation and will need to submit a mine plan to the Department of Mines, Industrial Regulation and Safety.
BHP began mining operations at Cockatoo Island in 1951 and ceased operations in 1984.
By 1954, it was shipping 2 million tonnes of 67 per cent iron ore a year, making it one of the highest grade operations in the world.
At its peak, 350 people called the island home with BHP building accommodation for workers and their families.
The mine has had a number of owners since BHP including the most recent entity, Pluton.
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