A PERTH company wants to create a $2.5 billion iron ore mine on the Eyre Peninsula - a project that would last for up to three decades and create 600 jobs.
The open-cut mine would aim to produce at least 12.4 million tonnes of iron ore concentrate a year.
It would be the state's largest iron ore mine and rival the OneSteel operations at Whyalla.
The company, Iron Road, has completed a first-stage economic study, which shows that the project, near Wudinna, would be profitable.
Managing director Andrew Stocks said the mine would run for at least 12 years, employ 700 to 1000 people during construction and create about 600 permanent jobs. It's hoped to start construction in early 2015 and extend the mine life to 25 to 30 years.
Mr Stocks said Iron Road would undertake more detailed studies and mine planning and permitting.
"This is a real project that we intend to develop," he said. "This is a very significant result for Iron Road."
"It places our project alongside the top-tier magnetite (iron ore) development projects in Australia.
"This places the Central Eyre Iron Project in an excellent position to progress to the next phase of development, as we seek to introduce a large development partner.
The project would involve building a mine, a slurry pipeline and pumping stations to transport the ore to a proposed port at Sheep Hill north of Tumby Bay, a small desalination plant to supply water, a crushing and grinding plant and power lines from Port Augusta.
The mine would be open cut down to a depth of 550m. While the 12.4-million-tonne project would be viable, the company is looking at increasing the project size by 50 to 100 per cent in a second stage.
Iron Road has found 1.23 billion tonnes of iron ore resources at the project, but is continuing to drill, with the aim of discovering between 2.8 and 5.8 billion tonnes.
The plan has been welcomed by the local council and the State Government, with Mineral Resources Development Minister Tom Koutsantonis saying the announcement confirmed the potential of the state's iron ore sector.
Wudinna District Council chairman Timothy Scholz said the company had done a good job of working with the community to keep it abreast of the project's progress.
While there would always be issues to be worked through with a project of this size, they had so far had a good relationship, he said.
"Overall the community is positive," Mr Scholz said.
"But as it gets closer to the reality that this is a major, mine that will cause a few people to have second thoughts. We've taken the approach that if the resource is good enough, council opposing it won't stop it, neither will landholders, so the best way to do it is to work as closely as possible to make sure that we can maximise benefits across our whole community."
Mr Scholz said Wudinna was likely to serve as a base for the mine, which was just 22km away.
"Iron Road has said to us that while there will be fly-in, fly-out elements, their first choice is to employ local people," he said.
Mr Scholz said that after about 15 years of decline, the local population, which stood at about 1300, was on the rise again, and such a project would only benefit that. Mr Koutsantonis said the plan would benefit from SA's 2 per cent royalty rate for new mines.
"SA is being viewed by many companies both here and abroad as the centre of investment in new mines with a stable regulatory regime and a government that puts its money where its mouth is in finding the pre-competitive data and standing side by side with mining companies in the high-risk taking exploration stages," he said.
"Iron Road will now need to progress community and stakeholder consultation, and complete a comprehensive environmental assessment prior to lodgement of a mining proposal." The proposed mine is one of several projects in development on the peninsula, worth a combined $3.7 billion.
Projects at various stages of development include a $600 million bulk commodities port proposed for Port Bonython, just north of Whyalla, a $180 million port proposed for Sheep Hill, near Tumby Bay, IronClad Mining's $26 million Wilcherry Hill project near Kimba and several exploration programs on the eastern side of the peninsula.
The State Government will today release the guidelines for an environmental impact study for Arafura Resources' proposed $1 billion rare earths complex near Whyalla.
