Chinese link to local prosperity
Monday, 29th December, 2014
By Michael Murphy
A former local who introduces exploration companies to Chinese investors is optimistic about the future of mining around the Silver City, despite a slump in the price of iron ore.
Robert Williamson, the Managing Director of the Red River Group, has worked as an advisor to Carpentaria Exploration and Impact Minerals, two explorers with significant prospects near Broken Hill.
Carpentaria Exploration is a 60 percent shareholder of the Hawsons iron ore project 60 kilometres south of Broken Hill.
Last week, the Federal Department of Industry cut its iron ore price forecast for next year by a third, from the $94 a metric ton forecast in September to just $63.
Prices nearly halved this year as BHP and Rio Tinto ramped up production, but Mr Williamson said oversupply was not the only factor impacting price.
“There is a belief that the Chinese are subsidising their steel industry to help bring the prices down,” Mr Williamson said.
“They can’t do it forever, at the same the time they themselves mine a billion tonnes of iron ore a year which is generally of a low grade.
Mr Williamson said Impact Minerals was another company attracting Chinese interest.
Impact is currently drilling for copper and platinum group elements at the former Red Hill mine site, 15 kilometres south of Broken Hill.
The world’s biggest state-owned utility, the State Grid Corporation of China, needs copper, so the Chinese are buying copper mines.
The State Grid Corporation of China also has a significant slice of the Australian energy market.
The rise of the internet and electronics in China has also increased the demand for copper, and the increase of Chinese wealth has also increased the demand for platinum luxury products.
Just before Christmas, Impact Minerals announced it had acquired an 80 percent interest in the Broken Hill venture.
Impact has discovered several near surface zones of high-grade copper and platinum group elements together with nickel, silver and gold within a 32 metre thick zone of mineralisation.
The company believes there is potential for a significant discovery near Broken Hill.
“To keep the balance, they can’t keep subsidising one industry over another forever ... the steel industry over the mine industry.”
He said China was rapidly changing and major projects that were stalling at the moment would become attractive to Chinese authorities in the near future.
“The urbanisation of China is something that is going to be very hard to put the brakes on,” he said, adding that they needed steel for everything from buildings and bridges to knives and forks.
He said Hawsons was an attractive proposition for investors because it was near a city with a skilled mining workforce, and a railway to a port.
He said other similar magnetite deposits were sitting in Western Australia but they needed massive investment in railway infrastructure to ship the ore out.
Mr Williamson, who is also an advisor to the Association of Mining and Exploration Companies, began his career as an apprentice electrician at the Zinc Mine, where his father Tom Williamson worked in the plate shop for most of his working life.
Mr Williamson’s Red River Group produced the Australia China Minerals Investment Forum for Austrade in Beijing and led a delegation of 30 to a China Mining Conference in Tianjin.