I have read about the predicted oversupply in years to come, however with FMG, RIO and BHP all doing massive expansions over the next few years there must be some level of confidence that demand and price will stay at levels to support such huge projects.
We are talking about operations that will be extracting for the next 50 years not 5.
Clive is a bit of a showman and i too lack a bit of confidence in the current boards ability to land a deal however clive needs ARH to work and if there is one thing he is , thats a "wheeler and Dealer".
He hasn't built anything ? He has played a large hand in Citic's development of the largest Magnetite Plant in the world.
Here's an old article -
WA cattle station becoming one of the biggest holes on earth Amy Coopes From: AFP April 13, 2010 1:18PM 6 What are these? On a sprawling WA cattle station, the world's largest trucks and excavators are digging what will become one of the biggest holes on Earth.
Sino Iron, a joint venture between Hong Kong-based Citic Pacific and China's state-owned Metallurgical Group Corporation, will be Australia's largest magnetite iron ore mine, at Mardie Station, and its first major foray into processing the oxide.
China has been mining magnetite domestically for close to 100 years but Australia, blessed with other high-quality forms of ore deposits, saw little commercial benefit.
However, a five-fold increase over 10 years in iron ore's spot price, driven by voracious Asian demand for the basic ingredient of steel, meant magnetite was now not only viable, but vital.
``This is basically China's biggest single investment in a resources project in Australia,'' said Sino Iron mine manager Tim Ryan. ``This will be the first large-scale magnetite operation in the world.''
Start of sidebar. Skip to end of sidebar. Related Coverage Gindalbie makes first Karara shipment Perth Now, 20 hours ago Uranium, magnetite royalty break looming Perth Now, 1 day ago Gindalbie warns of project blowouts The Australian, 15 Mar 2011 Gindalbie to ship early after Sino deal Perth Now, 23 Feb 2011 Palmer to try again on Hong Kong listing The Australian, 1 Feb 2011End of sidebar. Return to start of sidebar.
The renewed interest will translate into an open-cast pit 5.5km long, three kilometres wide and hundreds of metres deep -- providing a glut of high-grade steel for China's increasingly affluent consumers.
Despite being a lower-grade mineral when it comes out of the ground, and more costly to produce, magnetite is more stable and of higher purity than hematite -- the main form of ore used in iron production -- once crushed and processed, Ryan said.
``We like to say you build your Porsches out of magnetite and your Toyota out of hematite,'' Ryan joked. ``Magnetite's a better grade.''
The top-end product, commonly used to build aircraft bodies and medical equipment, will find an enthusiastic market in the diversifying Chinese economy and its burgeoning middle class.
Mining giant BHP Billiton first explored the Sino Iron tenement in the early 1960s but wasn't interested in magnetite, which is only 25 per cent pure when it comes out of the ground, said Ryan.
``It just wasn't commercially viable to mine and process magnetite, which costs about 40 per cent more than hematite to produce,'' Ryan said. ``It was a question of economies of scale.''
So BHP and Rio Tinto staked their fortunes on the hematite-rich ranges of the Pilbara, where deposits such as Mount Tom Price and Mount Whaleback offered up ore of unrivalled purity.
``There was 65 (per cent pure) hematite literally cropping on the surface,'' one Rio worker told AFP. ``It was like God's gift to a prospector.''
But most high-grade deposits in the Pilbara have been discovered and claimed, while China's off-the-charts growth has left it struggling to find alternative sources of ore, said Ryan.
``We believe that this is really the start of a magnetite industry in Australia,'' said Barry Fitzgerald, the project's CEO.
``It demonstrates the capacity of Chinese industry, and I'm sure they see this as a major coup.'' Australia currently has just two small scale magnetite operations -- neither in mineral-rich Western Australia, and neither of which could rival Sino Iron, which Ryan claims will be one of the ``biggest holes in the world''.
Chinese equipment and expertise was central to the project, which will include a mine pit, processor, desalination facility and power plant.
Ryan said some ``raised their eyebrows'' at the 100 per cent Chinese ownership, but most in the industry saw growing investment from Beijing as inevitable.
``It's always been accepted that those guys buy the iron ore in the first place,'' he said. A growing magnetite industry might also find support from environmentalists because it requires less energy to process that hematite.
``That means that the carbon emissions from when you mine it (to when you) produce a tonne of steel is lower, the carbon footprint is reduced in a global context,'' said Fitzgerald.
``From that point of view the development of a magnetite industry is significant.'' Citic Pacific has acquired a 25-year lease to mine Mardie Station from owner Clive Palmer. At 632,000 hectares, it is one of Western Australia's largest cattle farms.
Self-made billionaire Palmer, one of Australia's richest men, in February signed what he described as the country's biggest-ever export contract -- a $US60 billion ($A64.74 billion) deal to export coal to China. Palmer's private company, Mineralogy, owns an estimated 160 billion tonnes of iron ore reserves in the Pilbara, and he stands to reap royalties from the Sino Iron project.
Management hopes for first production from the plant by the end of this year, with output of 28 million tonnes per annum once it reaches full capacity.
It's not much compared the 217 million tonnes of ore shipped last year by Rio Tinto, but Ryan says the mining industry is following Sino Iron with a great deal of interest.
``There's vast reserves of magnetite in the ground,'' he said. ``Everyone's watching this project very closely.''
ARH Price at posting:
38.0¢ Sentiment: None Disclosure: Held
