The Australian Mining Review - - FRONT PAGE -

With dis­counts for lower qual­ity iron ore in­creas­ing, Car­pen­taria Re­sources’ Hawsons project – the high­est grade un­de­vel­oped iron ore project in the world – is ready to cap­i­talise on grow­ing de­mand from Chi­nese steel­mak­ers for high grade prod­uct.

Cameron Drum­mond spoke with Car­pen­taria man­ag­ing di­rec­tor Quentin Hill about the project’s Su­per­grade ® prod­uct and his out­look on the fu­ture of the iron ore mar­ket.

Q. How is Car­pen­taria’s Hawsons iron ore project pro­gress­ing?

We drilled the first hole in 2009, and re­leased Hawsons first re­source in 2010.

It is a $US1.4 billion de­vel­op­ment cost over an 18-month pe­riod, and will pro­duce an ini­tial 10 mil­lion tonnes per an­num (mtpa) of 70 per cent Fe Su­per­grade ore for pro­jected an­nual rev­enue of $900m.

GHD per­formed an in­de­pen­dent anal­y­sis of Hawsons and on a 62 per cent Fe ba­sis, all-in sus­tain­ing costs are $23 per tonne, which puts us in the first quar­tile of the global cost curve.

Our plan is to be in pro­duc­tion by 2021, sub­ject to fund­ing.

We re­leased our pre-fea­si­bil­ity re­sults in July 2017. Since then, we have been fo­cused on keep­ing the project to sched­ule, which in­cludes EIS works and talk­ing to equity mar­kets and cus­tomers about rais­ing be­tween $25m and $30m for our bank­able fea­si­bil­ity study, of which we are mak­ing great progress on.

We have been on sev­eral in­ter­na­tional trips and cus­tomers have been look­ing through the data and re­sponses have been good.

While this has been hap­pen­ing, we have been tight­en­ing up our bank­able fea­si­bil­ity pro­gram and sched­ule. We are run­ning work­shops where we’ve got a team with vast ex­pe­ri­ence to help us to get the right or­gan­i­sa­tional struc­ture and im­ple­men­ta­tion strate­gies to take us through con­struc­tion and into op­er­a­tion.

Q. What makes the Hawsons prod­uct at­trac­tive?

The key point is that the de­posit and the ore is very dif­fer­ent to other mag­netites. The soft­ness of the ore means the pro­cess­ing costs per tonne of prod­uct are well be­low any other mag­netite project.

We are in a dif­fer­ent ge­o­log­i­cal do­main to what’s in the west. It’s the se­cret of the de­posit that makes Hawsons the world’s lead­ing un­de­vel­oped, high-qual­ity iron ore project.

The ore it­self is su­per soft, grinds su­per easy and has a very low amount of im­pu­ri­ties.

This gives us the Hawsons Su­per­grade prod­uct. The phys­i­cal prop­er­ties – be­cause it’s so fine – means it’s per­fect for pel­letis­ing.

Iron ore pel­lets are the most ef­fi­cient thing you can feed a blast fur­nace, and pel­lets are the pre­ferred feed for a direct re­duc­tion (DR) fur­nace.

It terms of the iron ore mar­ket it’s quite so­phis­ti­cated. When peo­ple talk about high-grade, they talk about pel­lets, which ac­cord­ing to CRU Global has the high­est growth rate in the iron ore mar­ket.

There isn’t enough feed out there and that’s where we come in.

The de­mand for DR spec­i­fi­ca­tion ma­te­rial is in­cred­i­bly tight, and the growth is sup­ply con­strained.

This is why we have over­sold 12 mil­lion tonnes of our 10mtpa ore in our ini­tial off­take agree­ments.

Q. Why the struc­tural mar­ket shift to­wards higher grade ore?

It goes back to the Chi­nese in­dus­try re­struc­ture, which started when the iron ore price crashed. They wanted to close a lot of old, pol­lut­ing steel mak­ing fa­cil­i­ties – which they have done.

What this means is that ca­pac­ity util­i­sa­tion has gone from a low 60 per cent up to 80 per cent. Eco­nomics tells you that the mar­gins are go­ing to be high. If you have th­ese high mar­gins you want to pro­duce as much as you can.

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