Iron giant looks overseas for a partner
Saturday, 19th October, 2013
By By Andrew Robertson
A giant iron project with the potential to spark the “rebirth of mining” in Broken Hill will be downsized in a bid to attract a major development partner, possibly from overseas.
Carpentaria Exploration yesterday announced plans to halve the size of its flagship Hawsons project, 60km southeast of Broken Hill, in response to “tightened capital markets”.
The project, the largest of its type in NSW, originally had a forecast capital cost of about $3 billion, based on a 20 million tonne per annum operation that would have seen up to 1500 jobs created.
But in his address to Carpentaria’s annual general meeting yesterday, chairman Nick Sheard said a study that was being finalised was investigating a start-up operation half that size.
Newly-appointed managing director Quentin Hill told the BDT that reducing the capital cost “would increase the potential pool” of investors who could fund the project.
He said the search for a major partner was focussing mainly on China and the Middle East, but also India.
“A $3 billion hurdle, if you reduce that down to less than two million that’s increasing the amount of investors greatly.
“So what the joint venture has decided to do is see if we can investigate a smaller production aspiration, and that’s what we’re doing.
“We think it is very attractive for investors.”
There was even a good chance Hawsons could go the way of Cristal Mining, CBH Resources and, most recently, Perilya and become wholly foreign owned.
“Ultimately that is the logical progression for this project - to have an end user take a significant stake in the project,” Mr Hill said.
“I think China and the Middle East are the obvious ones at the moment.”
Mr Hill said the company would likely release more information about its decision to resize the project by Christmas.
Significant reductions had already been made to previous cost estimates through reductions in the water required and the scrapping of high pressure grinding rolls, he said.
But despite plans to half its size, Mr Hill was also quick to defend the project’s state significance status.
“We’re still aspiring to 10 million tonnes per annum ... that’s still a pretty significant operation.
“When the minister (NSW Resources and Energy Minister Chris Hartcher) was out here the other week he said it was going to be the rebirth of mining in Broken Hill.
“We’re not talking about reducing it down to a small operation ... and the jobs and benefits for Broken Hill will be significant.”
He also pointed to the company’s lodgement of a mining application with the NSW Government as evidence the project was progressing, unlike many others elsewhere in South Australia and WA.
“We’re the only one in NSW but a lot of these projects, as the market had tightened, have either been shelved or the infrastructure supporting them has been shelved. So they’re stranded.
“Our project in that time has secured further investment from Pure Metals and we are moving forward, and the mining lease application demonstrates that very clearly.”
Joint venture partner Pure Metals, which owns a 40 per cent stake in Hawsons, took over management of the project on July 1.
Work on a tin and tungsten project near Broken Hill will be put on hold meanwhile, as the company concentrates its resources on Hawsons and a gold project in the east of the state.
“We need to be careful if we can contribute to funding if required at Hawsons so we’re analysing where we spend our capital very carefully,” Mr Hill said.
“So while the tungsten project is still an attractive one, we’re shifting focus to our higher priority targets.”