HAWSONS IRON ORE PROJECT
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.