BUST BOOM The dawn of a new mining era
AFEW short minutes after BHP told investors last week that it had made potentially one of the most significant copper finds in South Australian history, Lindsay Owler’s phone started ringing.
Initially Mr Owler, the managing director of exploration company Argonaut Resources, was a little confused as to why the broker he had spoken to just the evening before was on the blower again so soon, but it quickly became clear.
The South Australian copper rush was on again.
Mining is a classic cyclical industry: prices rise, investors get excited and pour money into miners and explorers, eager to take a punt on who might make the next big strike.
Then prices crash and your next taxi trip might be courtesy of a former geologist.
In the mid-2000s, South Australia was in the grip of a boom in interest in the sector.
New companies were listing on the stock exchange every few months, or even weeks, uranium was billed as the solution to climate change (pre-Fukushima) and the State Government was kicking in funding help for highrisk exploration.
A government target of $100 million in exploration spending soon looked unambitious and was easily surpassed, as explorers rushed to find the next Olympic Dam, and drill rigs couldn’t be had for love nor money.
Then the GFC hit, and while the bottom didn’t fall completely out of the exploration sector, it certainly lost its mojo, and in recent years has been very flat, with explorers struggling to keep the lights on.
The major achievement of that exploration boom was the discovery of the Carrapateena copper deposit by oneman band Rudy Gomez, with that project now being developed into a $916 million mine by OZ Minerals, set to start production next year.
Many other touted products, across commodities as diverse as iron ore, graphite, and cobalt have been progressing but have not yet been developed, and SA’s tally of operating mines sits at just nine.
The BHP strike at Oak Dam, of 180m of copper at a grade of 6 per cent, from about 1km underground, has fired up the sector again however, and other commodities such as iron ore are also generating interest.
Dr Paul Heithersay, chief executive of the Department for Mining and Energy, said SA’s copper potential has always been of interest (there is a State Government target to boost our copper output from just more than 260,000 tonnes to one million by the mid 2030s) but new discoveries helped generate international interest.
“The discovery of the Carrapateena deposit ... quickly drew the attention of Teck and other international mining companies that continue to explore the Gawler Craton for similar mineralisation,’’ Dr Heithersay said.
“This new discovery from BHP together with recent results from OZ Minerals will highlight to all copper explorers that South Australia is ‘elephant country’.
“A chart that was produced for the Copper Strategy shows that compared with the deposit inventory in other copper-producing jurisdictions, South Australia has a big gap between Olympic Dam and the other deposits, which suggested there are other worldclass ore bodies out there to be found.’’
Companies such as Argonaut Resources, which has tenements near the Oak Dam find, have experienced share price jumps in the past week, with shares in Cohiba Minerals, which has a tenement just 2km from the find, quadrupling in a couple of days.
On the iron ore front, Havilah Resources said this week it had found a potentially large, new iron ore deposit in the state’s east, found with financial help from Sanjeev Gupta’s GFG Alliance which owns the Whyalla steelworks.
Energy and Mining Minister Dan van Holst Pellekaan told the SA Exploration and Mining Conference yesterday that the industry was a strong economic contributor.
“Over the last financial year, your sector (minerals and petroleum) delivered $5.6 billion in production, $4 billion in exports, and provided $236 million to South Australia via royalties which help pay for our schools, health and other services, infrastructure and so on,’’ he said.
“I am pleased to say that mineral exploration of $21.6 million in the September quarter was the highest quarter expenditure since December 2014, with copper exploration accounting for more than half.’’
And on the production front, the Carrapateena deposit will become the $916 million Carrapateena copper and gold mine late next year, when owner OZ Minerals says it will begin producing copper. The mine is a good example of the sort of mineral riches that lie below the state’s surface, but with a time from discovery to mining of 13 years, it also an indication that in this industry, there’s no such thing as overnight success. PAGE 65: $1M PRIZE TO UNEARTH COPPER, GOLD DEPOSITS
This new discovery from BHP together with recent results from OZ Minerals will highlight to all copper explorers that South Australia is elephant country
PREPARATION: Oz Minerals’ $916 million mine is set to start production next year.