megan anwyl -magnet magnetite network - an update on the magnetite sector in the pilbara and the...

An Update on the Magnetite Industry

Mining the Pilbara

Current Members

WA Magnetite Projects

Projects - Economic Benefits

Magnetite Concentrate vs DSO Production Process

Magnetite Concentrate vs DSO

Magnetite Concentrate vs DSO Production

Process

Magnetite Concentrate vs DSO Production

Process

Value-adding in Australia

Magnetite Concentrate Production Process - Fe3O4

Mine → Crush → Grind → Separate → Concentrate → Stockpile → Ship

Australian DSO Quality Steadily Declining

56.0%

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

% F

e

Magnetite Conc.

Brazilian Fines

Pilbara Fines

FMG Fines

Magnetite Concentrate is a premium product consistently > 68% Fe

Market preference for Magnetite

• Main market is for Chinese steelmakers

• Significant demand forecast to increase as Chinese domestic production tapers off

• 70% of China mines produce less than 1mtpa

• Significant Chinese political pressure around clean air, water, liveability of major cities

• 900 million people to live in cities by 2030

Carbon Benefits

• Producing magnetite (Fe3O4) concentrate is emissions intensive in Australia

• When compared to use of DSO or hematite (Fe2O3) in steelmaking magnetite requires significantly less energy so produces less carbon emissions

• 108kg less emissions per tonne in steel life cycle - from mine to steel

Global Carbon Savings

Life-cycle analysis of magnetite shows that even though it is about seven times more

energy intensive in Australia than hematite production, it has an overall global emissions

reduction benefit when used in steelmaking.

0

500

1000

1500

2000

2500

3000

3500

Total CO2 saving in downstream processing by using magnetite ore in steelmaking Mine to ship (CO2 emission differences between Magnetite versus hematite in Australia)

kg C

O2

e/

ton

ne

of

mag

net

ite

pro

du

ct

CO2 saving in

steelmaking in

China

CO2 penalty due to

beneficiation in

Australia

Net

reduction

of 108kg

per tonne

CO2

emissions

from mine

to steel

Based on Sino Iron project emissions

Where to on Carbon?

• December 2011 – Former government announces moderately emissions intensive assistance – 66% free permits for magnetite

• Inequity created as no WA projects were yet in production so not factored in to allocative baseline used for free permit grants

• MagNet supports repeal of carbon laws and has lodged ERF submissions

• Favours a global ETS

Senate

Lower House ALP Coalition Others Greens

Old Parliament 73 71 (incl Slipper) 5 1

New Parliament 55 (-18) 90 (+18) 4

Katter Wilkie Palmer

McGowan

1

Bandt

PARTY Continuing New as at 1 July

2014 Total 76

Liberal/National Party 16 17 – WA:3 33

Australian Labor Party 13 12 – WA:1 25

Australian Greens 6 4 – WA:1 10

Palmer United Party 3 – WA:1 3

Democratic Labour Party 1 - 1

Australian Motoring Enthusiasts Party - 1 Vic 1

Family First - 1 SA 1

Liberal Democrats Party - 1 NSW 1

Nick Xenophon 1 SA 1

Where to on Carbon & MRRT?

• MRRT & Carbon Law Repeal will occur

• Direct Action doubtful – Review due in 2015

• Palmer/ ALP/ Greens ETS possible but seems unlikely

• Magnetite unlikely to have liability / penalty payments

• Special provisions for new projects

• Renewable Energy Target to stay with modifications

Karara Opening 9 April, 2013

15

Location

Asia Iron Australian Project Locations

8 Bt

0.9 Bt

50 Mt Proposed Oakajee

Port Development

(200,000 DWT)

26 Mt

2,760 Ha

Farming Property 2,760 Ha

Farming Property

7,600 Ha

Farming

Properties

Minga Well

Magnetite

Extension Hill Project Update

• Shareholder support confirmed

• Chinese regulatory bodies and the City of Chongqing

have affirmed their support of the Project and the goal to

develop the Project as soon as possible.

• Continuing completion of land access agreements; and

• Continuing with debt finance arrangements

Conditional Debt Funding received from Chinese

policy bank

Banker’s Due Diligence underway

Project Schedule

The Sino Iron project

18

CPM Ownership

CITIC Pacific Mining (CPM) is owned by CITIC Pacific

in Hong Kong:

•CITIC Pacific – listed on HKSE - business focus is

special steel, iron ore mining and real estate

•CITIC Pacific is 58% owned by CITIC Group

(Beijing)

• First shipment in late 2013

• The Sino Iron project is China’s biggest mining

investment in Australia.

Atlas Iron Ridley Magnetite Project

• Only 75km from Port Hedland, adjacent to Pardoo

• Reserve of 970Mt at 36%Fe, DTR grade of 68.3%Fe &

3.8% SiO2

• PFS complete. Mine life >20yrs, potential to 35yrs, 15Mtpa

• $2.7Bn CAPEX

• Project resource of 2 billion tonnes @ 36.5% Fe

• Close proximity to the declared Goldsworthy Railway

• Export alternatives include South West Creek, Anketell and

trans-shipping

Atlas Iron Ridley Magnetite Project

22

Australia - China Business Council

• Premier trade & investment group

• More than 200 WA members

• New National President Duncan Calder

(KPMG - Perth)

• WA President Adam Handley (Minter Ellison)

• WA Resources Committee Chair Megan

Anwyl

Questions