Joint Select Committee on Northern Australia Development-...

Joint Select Committee on Northern Australia Development- Inquiry
Outback Way Submission ​

OUTBACK WAY = OPENS NORTHERN AUSTRALIA
& CLOSES THE GAP​

http://webcache.googleusercontent.c...ent-submission.html &cd=1&hl=en&ct=clnk&gl=au

A Summary
The Outback Way is included in the Coalition’s Northern Australia Policy which is highlighting a significant vision for Australia’s future. The Outback Way project is not just a road- keeping it open for business addresses some critical policy areas - productivity for a consolidating mining/freight sector, diversifies market access for the cattle industry, indigenous access & equity, and a new adventure self-drive tourism route. With the $66million being spent on the Outback Way from 2014-15- 2016/17, for both upgrading and sealing there will be significant improvements in all sectors throughout, feeding into the development of Northern Australia.
MINING
The reduced distance between WA & Qld due to the Outback Way will facilitate: Inter linkages between the nation’s two largest mining areas in Queensland and in Western Australia, accounting for over 73% of Australia’s output, saving companies $1million/ shift for emergency equipment replacement and $16,000/mining movement one way. Further infrastructure development is being worked on for West Musgrave mining interests and Metals Ex Wingellina project, as they look to start production - which will add value to the Adelaide to Darwin railway- increasing mining exports out of Darwin.

PROSPECTIVE NEW MINING DEVELOPMENTS
The Central and Western Desert areas of Australia have been under explored and under developed for mining in the past. A great deal of exploration has been taking place in recent years revealing very substantial mineral resources in the vicinity of the Western Arm and in the area along the Plenty Highway in the Northern Territory.
Mineral exploration along most sections of the Outback Way to be upgraded has been intense in recent years.

Western Australia
Nickel & Other Minerals
Exploration in recent years has seen the whole Musgrave Ranges area from Warburton across through Wingellina into South Australia emerge as a major prospect for mine development, especially of nickel. The major prospective mines in the area are as follows.
Nickel – Musgrave Ranges
West Musgrave (Nebo Babel deposit) (BHP) – 120 km east of Warburton near Jamieson community.
Wingellina/Claude Hills deposits (Metals X) – 240 km east of Warburton (Claude Hills across the border in South Australia). Derry Hills and Mt Woodroffe (Musgrave Minerals) – further east in South Australia.

Metals X Nickel & Cobolt project is situated on the NT, WA & SA borders, south of the Outback Way it has completed its Phase 1 Feasibility Study (+/– 25%) which defined a robust project with a minimum 40 year mine life at an average annual production rate of 40,000 tonnes of nickel and 3,000 tonnes of cobalt. The Feasibility Study assumed a nickel price of US$20,000 per tonne nickel, US$40,000 per tonne cobalt and an A$/US$ exchange rate of 0.85, resulting in an estimated NPV(8%) of $3.4 Billion at a production cost of US$3.34/lb after cobalt credits.
A landmark mining agreement for the Wingellina project was signed on 15 July 2010 with the Traditional Owners of the Yarnangu Ngaanyatjarra Lands through their representative bodies. The agreement provides the right to mine and develop infrastructure within the agreement area subject to regulatory approvals and for the grant of a mining lease
In September 2012 Metals X signed a memorandum of understanding with Samsung C&T Corporation which will see the parties collaborate to complete an updated Detailed Feasibility Study (DFS) and move the Wingellina Nickel-Cobalt project into production. Samsung C&T will provide its technical expertise in engineering, feasibility studies and construction to assist Metals X in completing the study.
Metals X is now looking at the road link to load onto the Adelaide Darwin railway and export out of Darwin. Traffic movements are anticipated at 15 triples per day carrying 400 000 mt sulphur prill to the mine and backloading 200 000 mt of nickel concentrate from the mine (in 1 mt bulka bags in containers). The supply of sulphur prill has been one of the high risk components of the project. However, one possibility would be to work with the owners of the Nebo Babel deposit which is nickel sulphide to extract sulphur to process Wingellina’s nickel laterites..
The ‘fly-in/fly-out’ workforce of 500 will fly to an airstrip at Wingellina. The construction phase of the mine would employ a workforce up to 1500 over 2 years.
Obviously, there would be substantial opportunities for employment at excellent wages among local Aboriginal community residents. Higher income among the existing community and additional workforce in the area would substantially increase the flow of vehicles along the Outback Way route including residents’ and workers’ vehicles but also of vehicles providing community support.
The project involves a large element of road haulage - approximately 600 km of road haulage (one way) and about 11.0 - 17.5 million road train kilometres a year. A saving of 0.30 cents per vehicle km from upgrading to all-weather gravel km and a speed difference of 70 – 90 km per hour would result in annual savings, at 25 – 40 road trains a day, of $6.6m - $10.5m pa. for vehicles carrying concentrates alone

Other – Warburton/Musgrave Ranges Area
Handpump (gold) (Beadell Resources) – 75 km east of Warburton.
Skirmish Hill (nickel, platinum, copper, gold).
Old Warburton Historic Copper Mining Area (Rubican Resources).
Tollu (copper, nickel) (Redstone Resources) – south of Wingellina.
The prospective development of this major prospective mineral field area has major potential ramifications for the development of the Western Arm of the Outback Highway.

West Musgrave Nickel Project
BHP’s (formerly WMC’s) West Musgrave Nickel project (Nebo Babel deposit) is located on Aboriginal lands 120 km east of Warburton in the vicinity of the Jamieson community (seeMap 13). The West Musgrave complex is widely regarded as a highly prospective “Greenfields” province for nickel sulphide and base metal mineralisation. Massive nickel/copper sulphides have been identified. The deposit is regarded as one of the largest nickel sulphide deposits in Australia. The deposits could form part of the future strategy of BHP Billiton’s Nickel West. Nickel West is the world’s third largest producer of nickel-in-concentrate with all operations including mining, smelting and refining based in Western Australia. Nickel West uses the port of Esperance to import reagents and export products.
Based on 2003 latest information available, if mining proceeds, it is likely to involve:-
§ A 25-year mine life.
§ Mining of 10 – 15 million tonnes of ore per annum.
§ On-site concentration.
§ Shipment of 450,000 to 700,000 tonnes of concentrate a year via the Outback Way east of Warburton to railhead at Malcolm, west of Laverton, and by rail to Kalgoorlie Nickel Smelter.
§ Final output 25 – 40,000 tonnes of nickel metal and 25 – 40,000 tonnes of copper metal with approximate current value (Dec 2009) of about AUD $537m (Nc) and $218m (Cu), Total AUD $755m.
Transport impact from mining operations is forecast to increase heavy traffic by :-
§ 25 - 40 road trains carrying concentrates a day.
§ Other heavy support vehicles a day.
§ Light vehicles.
Estimated movements are 90 heavy and 10 light vehicles a day.
Employment generated is estimated at 500 mine jobs and 2,000 additional jobs. The construction period would require more jobs.
Obviously, there would be substantial opportunities for employment at excellent wages among local Aboriginal community residents. Higher income among the existing community and additional workforce in the area would substantially increase the flow of vehicles along the Outback Way route including residents’ and workers’ vehicles but also of vehicles providing community support.
Clearly, movements on this scale would justify the upgrading of the Laverton - Warburton section of the road.
The project involves a large element of road haulage - approximately 600 km of road haulage (one way) and about 11.0 - 17.5 million road train kilometres a year. A saving of 0.30 cents per vehicle km from upgrading to all-weather gravel km and a speed difference of 70 – 90 km per hour would result in annual savings, at 25 – 40 road trains a day, of $6.6m - $10.5m pa. for vehicles carrying concentrates alone. Thus, road transport costs are likely to be a significant cost element in the project and decisions about whether the Outback Way is upgraded to all-weather gravel or not could have an impact on decisions about whether the project would go ahead.
Musgrave Minerals
Musgrave Minerals was formed through agreements between a number of companies to create the largest exploration land holding in the Musgrave Range area.
Musgrave Minerals have two potential nickel deposits east of Wingellina, all in South Australia on Aboriginal freehold (APY) lands at Derry Hills and Mt Woodroffe.
In addition, they have the Moorilyanna copper prospect off the highway between Kulgera and Maila in South Australia.
Current status of the projects has not been ascertained in full. However, proximity to the Adelaide – Darwin rail would almost certainly see outward transport of output and inward transport of inputs via roads, probably frorm Chandler or Kulgera Sidings.