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Department for Manufacturing,
Innovation, Trade, Resources and Energy
Commodities Outlook for
South Australia
Paul Heithersay Deputy Chief Executive
Resources and Energy Group
26 November 2013
www.dmitre.sa.gov.au
Resources is a tough game
2
3
But look at China
4
And look at China again
Barry Dawe’s Thesis
5
6
South Australian Mineral Exploration Expenditure 1993-2012
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
0
50
100
150
200
250
300
350
400
South Australia Minerals Expenditure SA % share of Australia
$ M
illio
n
SASP Target 41 - $200m to 2015
PACE 2020
Olympic Dam drill-out
Hillside discovery
Carrapateena discovery
Jacinth-Ambrosia discovery
PACE Prominent Hill
discovery
Olympic Dam Expansion
Challenger discovery
Four Mile discovery
South Australian Mineral Exploration Licences 2013
January 2004
Applications Granted Renewed Transferred Surrendered Current Total
(Active) Area
Exploration Licences
11 6 5 Nil 2 972 421,923.00 sqkm
Mineral Claims
3 4 NA NA NA 109 16,874.58 Ha
Mineral Leases
Nil Nil Nil Nil Nil 896 99,627.61 Ha
Extractive MLs
Nil Nil Nil Nil 1 706 16,271.86 Ha
Misc. Purposes Licences
Nil Nil Nil Nil Nil 104 12,086.16 Ha
Retention Leases
Nil Nil Nil Nil Nil 40 47,896.70 Ha
September 2013
South Australian Mineral and Petroleum Production
by Commodity 2000/01 – 2012/13
8
0
1
2
3
4
5
6
7
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13$ B
illio
ns
Copper Hematite Magnetite Gold Uranium Coal Other Metallics Industrial
Construction Gemstones Caroline 1 CO2 (well) Condensate Crude Oil Ethane LPG Natural Gas
Source: Resource Production Statistics for year ended 30 June 2013 – complied by DMITRE
9
MCA Scorecard of Approvals 2012, publ. June 2013
South Australia leads Australian and New Zealand
mining jurisdictions securing the highest scores on 12/19
issues relating to the design and implementation of
policies and regulations linked to mining approvals,
maintaining its leadership position since the last
scorecard release in 2006.
‘The SA system works well and is driven by a positive
attitude toward mining which derives from the top
echelons of government. This is reflected in a positive
and assistive attitude by the Lead Assessment Agency
which has been empowered by government to
expeditiously seek whole of government solutions in
approving mining projects’
The result confirms South Australia leads all jurisdictions
in Australia and New Zealand for the majority of mining
approval, environmental assessments and land access.
10
RESOURCESTOCKS – South Australia, Australia’s NO.1 !!!
For the fourth consecutive year, South Australia is Australia’s best
low risk destination for resources investment according to the
RESOURCESTOCK World Risk Survey for 2013.
Though South Australia leads within Australia, South Australia ranked
10th, behind Canadian provinces (TAS 12th, WA 13th, VIC 15th, Qld
16th, NT 17th and NSW 18th)
Australia rated 6th out of forty countries up from 7th last year.
“South Australia has again won the „battle of the states‟, with its
reputable mines and petroleum department bending over backwards as
always to facilitate investment and its geology still highly regarded. Its
oil and gas industry is booming in the Cooper Basin with links to multi-
billion dollar LNG projects in Queensland and a guaranteed market in
NSW and Victoria. On the mining side, the Eyre Peninsula is growing
a reputation as “the Pilbara of graphite‟ – to say nothing of the state‟s
well established copper, uranium, gold and zinc mining industry among
others.”
The survey is based on members of the global mining and petroleum sectors, including
investors, supply companies who were asked to rank on perceived risk factors including
financial, sovereign, land access, green and red tape, social risk, infrastructure, civil unrest,
natural disasters and labour relations.
• South Australia is rich
in resources
• World Class Deposits
11
4 mines
in 2003
21
mines in
2013
Copper
Gold
Rare earths Minerals
Sands Silver
Coal Zinc
67% of Australia’s economically
demonstrated copper resources
Uranium
Iron Ore
30% of Australia’s economically
demonstrated gold resources
78% of Australia’s identified
resources
14 billion tonnes in identified
resources
Lead
World Class Deposits
Graphite Nickel Tin
THE SOUTH AUSTRALIAN RESOURCE SECTOR
3 operational copper mines
4 development projects
40 prospects
For more information on copper please contact Invest in South Australia
Many of the deposits in South Australia’s copper
provinces are covered by a sequence of
younger rocks that have effectively hidden
many large copper deposits from the early
explorers.
COPPER
67% of Australia’s economically
demonstrated copper resources
12
PROJECTS NEEDED TO MEET WORLD COPPER
DEMAND
2 2
WORLD COPPER SUPPLY
• The output from existing mines are expected to decline by 2.1% pa from 2013-2022
• Forecast supply from committed projects are not expected to meet demand
• New sources of production will be required with large discoveries occurring with less frequency
WORLD COPPER DEMAND
• The long term growth in demand for copper is to accelerate driven in large part by the urbanisation of
China and India.
• 1997-2011: Global refined copper demand increase of 2.8% p.a.
• 2011-2022 : Forecast global refined copper demand increase of 5.2% p.a.
Source: IBIS World forecast, US Geological Survey, Brazilian Symposium on Mineral Exploration- CRU presentation
Mt
Co
nta
ined
Cu
COPPER WILL BE
HIGHLY SOUGHT AFTER
IN THE FOLLOWING
DECADE
Olympic Dam
14
BHP Billiton owned
Copper, uranium,
gold, silver
Australia’s largest
u/ground mine,
~ 300 km tunnels
570 km north of
Adelaide
Roxby Downs
~ 4500 people
Olympic Dam Expansion Deferred
Deferral announced in August 2012
BHP Billiton considering less capital intensive
methods
SA Government have extended Indenture option to
2016
BHP Billiton will spend around $650 Million
researching new options
Includes $10 million towards Mining Skills Centre
of Excellence
15
16
3 operational mines and 1 approved mine
78% of Australia’s identified resources
25% of the world’s uranium resources
Olympic Dam – the world’s largest uranium
deposit
South Australia has an unusually high incidence
of ‘felsic magmatic rocks’, these provide an
excellent naturally elevated source for uranium.
For more information on uranium please contact Invest in South Australia
URANIUM
17
0
20
40
60
80
100
120
2013 2018 2023 2028 2032
Forecast Iron Ore Production (Mtpa)
North Gawler Craton South Gawler Craton Braemar Province
Source: Deloitte Regional Mining & Infrastructure Plan
3 operational iron ore mines
20 development projects
14 billion tonnes in identified resources
Forecast production of 105Mtpa by 2025
For more information on iron ore please contact Invest in South Australia 18
IRON ORE
Cooper Basin Exploration & development for 50+ years
Otway Basin Mature & immature conventional/unconventional plays
Arkaringa Basin Unconventional plays with significant shale oil potential
For more information on oil & gas please contact Invest in South Australia
OIL & GAS
19
Bight Basin BP & Statoil leading offshore exploration
An emerging unconventional oil & gas boom.
VISION: The unconventional gas revolution will
deliver decades of safe, secure, competitive gas
www.petroleum.dmitre.sa.gov.au
To reach the vision
• Potential risks to social, natural and economic environments
are reduced to as low as reasonably practical (ALARP); and
meet community expectations for net outcomes BEFORE IT
IS PERSONAL – before approval sought for land access;
• Affected people and enterprises get timely information
describing risks and rewards to enable informed opinions;
• Convene a Roundtable to deliver a Roadmap for
Unconventional Petroleum Projects to inform: the PUBLIC,
GOVERNMENTS, INVESTORS, AND REGULATORS and
in doing so – will enable welcomed unconventional
petroleum projects;
South Australia’s Roadmap published Dec. 2012
• Outcome:
Attain the vision
• Strategy:
Cooperate to compete
• Roundtable:
List what to do by
priority (125
recommendations)
• Working Groups:
Implement priority
recommendations.
Priorities to foster sustainable, profitable projects
roundtable and roadmap for unconventional gas
Top priorities to build trust:
• Legal frameworks provide certainty and simultaneously
meet community and investor expectations for outcomes
• Trustworthy, people implement and regulate projects
• Environmental sustainability
Priorities to foster sustainable, profitable projects
roundtable and roadmap for unconventional gas
• Manage supply-chain risks
(people and facilities)
• Bolster understanding of
risks, risk management and
rewards
GO TO AUSTRALIA
DRILL A WELL
BINGO
SORTED
GO TO AUSTRALIA
DRILL A WELL
BINGO
SORTED
Go to South Australia
16 www.petroleum.dmitre.sa.gov.au
DEEP GAS IN THE COOPER BASIN
Beach Energy: PEL 218: Encounter, Holdfast
and Moonta all flowed >2 MMscf/d. Beach
estimate potential 300 TCF gas in place in PEL
218 (Nappamerri Trough, SA) – almost 100 TCF
in shales and >200 TCF in sands. Chevron now
PEL 218 partner
Santos: High-side 200+ TCF recoverable raw
gas. Moomba 191 (vertical well): 2.6 MMscf/d
from shales at line pressure flowing to market.
Santos/Beach/Origin JV have domestic and
export markets. Will invest strongly hence
Senex Petroleum: Estimate 75-110 TCF gas in
place in tight sandstones, shales and coals. Extensive
unconventional gas program. Kingston Rule-1 (PEL
516) 1.2 MMscf/d. Hornet-1 (PEL 115) flowed > 2
MMscf/d
EIA: 85 TCF sales gas in Cooper Basin shales
Up to 1000m of
gas-filled shale,
siltstone, coal &
sandstone
REM shale REM shale
Shale Play
Ro = 0.95%
Patchawarra
coal thickness
Toolachee
coal thickness
Deep coal
target area
Ro = 0.95%
Deep coal
target area
Basin-Centred Play
below ~3000m
$10+ billion in announced infrastructure
Path to Market Projects 6 port projects, multiple slurry pipelines, rail upgrades
Mine Infrastructure Projects 3 desalination plants, magnetite beneficiation plants
Electricity transmission upgrades Eyre Peninsula, North Gawler Craton, Braemar
Province
For more information on resources infrastructure please contact Invest in South Australia
RESOURCES INFRASTRUCTURE
Source: Deloitte Regional Mining & Infrastructure Plan 26
PRINCIPAL SOUTH AUSTRALIAN RAIL OPERATIONS
• Connections to Sydney, Melbourne, Perth and Darwin.
• Network is strategically located to key mining regions
• Tarcoola to Darwin line servicing the North
Gawler Craton
• Broken Hill to Adelaide line servicing the
Braemar province.
Location Owner Gauge Primary Usage
Metropolitan Adelaide South Australian
Government
Standard
Broad
Urban passenger
Kalgoorlie – Melbourne
Adelaide – Broken Hill
Australian Rail & Track
Corp. (ARTC)
Standard
Standard
Intermodal, grain,
ores, steel
Tarcoola – Darwin Genesee & Wyoming Standard Intermodal, ores
Port Lincoln – Thevenard Genesee & Wyoming Narrow Grain, gypsum
Middleback Ranges Arrium Narrow1
Standard
Iron ore
EXISTING RAIL NETWORK
27
0
25
50
75
100
125
150
2013 2018 2023 2028 2033
Resources Sector - Forecast Freight Demand (Mtpa)2
North Gawler Craton South Gawler Craton Braemar Province
Source: ARTC, Genesee & Wyoming, Bureau of Infrastructure, Transport & Regional Economics, Deloitte 1 Narrow gauge rail from Iron Duke to Whyalla, standard gauge rail from Whyalla to Port Augusta 2 Adapted from the Deloitte Regional Mining & Infrastructure Plan
PRINCIPAL ROAD NETWORK
South Australia’s road network is in excess of 23,000km and covers all key mining regions
within the State. This includes sealed highways linking the North Gawler Craton, South
Gawler Craton and Braemar Province to export facilities.
The following projects currently use road as their main transport option:
Source: Department of Planning, Transport & Infrastructure, company websites
Mine Owner Mineral Annual Production
Beverley Heathgate Resources Uranium 60t U3O8
Beverley North Heathgate Resources Uranium 370t U308
Challenger Kingsgate Consolidated Gold, silver 66Koz Au
3Koz Ag
Honeymoon Uranium One Uranium 76t U308
Jacinth-Ambrosia Iluka Heavy mineral
sands
138Kt zircon
86Kt limenite (saleable)
3Kt limenite (upgradable)
26Kt rutile
Kanmantoo Hillgrove Resources Gold, copper,
silver
13Kt Cu
6Koz Ag
121Koz Au
Olympic Dam BHP Billiton Iron oxide,
copper, gold,
uranium
166Kt Cu
113Koz Au
880Koz Ag
4,102t U3O8
EXISTING ROAD NETWORK
28
Source: Company websites, DMITRE 1 Due to timing between the regions, the maximum forecast production across the State is 105Mtpa and not the sum of the individual regions
Operating Mines Operator Production 2012-13
Middleback Ranges (multiple mines) Arrium 6.5Mt
(Ramp up to 8Mtpa)
Peculiar Knob Arrium 1.5Mt
(Ramp up to 4Mtpa)
Cairn Hill IMX Resources 1.7Mt
Total 9.7Mt
Mines & Projects by Region Measured Resources Forecast Production
North Gawler Craton 1,376Mt 13Mtpa
South Gawler Craton 5,660Mt 56Mtpa
Braemar Province 7,263Mt 39Mtpa
Total 14,299Mt 105Mtpa1
IRON ORE IN SOUTH AUSTRALIA
South Australia is the birthplace of the Australian iron ore industry with existing operational
mines in the Middleback Ranges (six mines) and North Gawler Craton (two mines). There are
a further two mines approved and twenty development/prospect projects across the State
with identified resources of over 14 billion tonnes.
IRON ORE INFRASTRUCTURE
Arrium own and operate the port at Whyalla to export ore from their Middleback Ranges and
Peculiar Knob projects. The Middleback Ranges are linked to the port via narrow gauge rail
while Peculiar Knob is linked via the standard gauge rail network.
IMX Resources rail ore in containers from their Cairn Hill project to Port Adelaide where the
ore is loaded onto a vessel via a container rotating facility.
Of the development projects and prospects there are a range of infrastructure solutions being
considered including the development of new deep sea ports, rail lines and slurry pipelines.
These are detailed on pages 23 - 49.
IRON ORE
29
Source: Company websites, Deloitte 1 Adapted from the Deloitte Regional Mining & Infrastructure Plan
PROPOSED IRON ORE PRODUCTION
Infrastructure demand will be heavily driven by the development and production of South Australia’s
iron ore regions. These regions are best described as:
• North Gawler Craton
• South Gawler Craton
• Braemar Province
Based on existing and forecast production, estimated iron ore production will reach 105Mt by 2025.
INFRASTRUCTURE DEMAND
30
0
20
40
60
80
100
120
2013 2018 2023 2028 2033
Forecast Iron Ore Production (Mtpa)1
North Gawler Craton South Gawler Craton Braemar Province
NORTH GAWLER CRATON IRON ORE PRODUCTION
Situated more than 800km north west of Adelaide, the North Gawler Craton includes two
operating iron ore mines and a further seven development projects and prospects.
Of the operating mines, Arrium are currently producing from Peculiar Knob with ore sent via
standard gauge rail to their port at Whyalla (first shipments in 2012-13).
IMX Resources are currently producing approximately 1.7Mtpa from their Cairn Hill mine with ore
sent via rail to Port Adelaide.
Including the development projects and prospects there is forecast production of 13Mtpa by
2018.
EXISTING INFRASTRUCTURE
• Adelaide – Darwin open access
standard gauge rail
• Major road networks
• Ports (Whyalla, Port Adelaide, Port
Pirie)
PROPOSED INFRASTRUCTURE
• Rail upgrade
• Port Bonython deep sea port
• Port Pirie upgrade
• Electricity transmission
• Desalination plants
NORTH GAWLER CRATON
PROJECTS
• Cairn Hill (operating)
• Peculiar Knob (operating)
• Commonwealth Hill
• Coolybring
• Gawler Iron Project
• Giffen Well1
• Hawks Nest
• Hicks Hill
• Mt Woods
Source: Company websites, DMITRE 1 WPG Resources announced on 7 May 2013 that they would not exercise the option to acquire the Giffen Well project. WPG released on 8 March 2013 the PFS for this project highlighting a capex amount of $1.72B and
opex of $71/tonne and announcing the project was ‘feasible’
Cairn Hill
Peculiar Knob
INFRASTRUCTURE DEMAND – NORTH GAWLER
31
IRON ORE PRODUCTION
2012-13 Production 3Mtpa
Development/Prospects 10Mtpa
Total 13Mtpa
IRON ORE RESOURCES
JORC Resources 1,378Mt
SOUTH GAWLER CRATON IRON ORE PRODUCTION
The South Gawler Craton is situated on the Eyre Peninsula and is home to the
birthplace of the Australian iron ore industry, the Middleback Ranges.
Currently there are multiple mines in operation within the Middleback Ranges with
current production of 6Mtpa in 2011-12 (ramp up to 8Mtpa forecast).
There are a further 7 development projects and prospects with a total forecast
production of 56Mtpa by 2021.
IRON ORE PRODUCTION
2012-13 Production 6Mtpa
Development/Prospects 50Mtpa
Total 56Mtpa
IRON ORE RESOURCES
JORC Resources 5,604Mt
Source: Company websites, DMITRE
SOUTH GAWLER CRATON
PROJECTS
• Bungalow JV
• Central Eyre Iron Project
• Eyre Iron JV
• Gum Flat
• Middleback Ranges (operating)
• Wilcherry Hill & Hercules
• Wilgerup
EXISTING INFRASTRUCTURE
• Whyalla steelworks
• Standard gauge rail from Whyalla
to the national network
• Narrow gauge rail close to mine
sites
• Major road networks
• Close to deep water
PROPOSED INFRASTRUCTURE
• Port Bonython deep sea port
• Port Spencer deep sea port
• Luck Bay port development
• Cape Hardy deep sea port
• Standard gauge rail to Cape
Hardy
• Slurry pipelines
• Electricity transmission upgrade
• Desalination plants
• Road upgrade
Middleback
Ranges
INFRASTRUCTURE DEMAND – SOUTH GAWLER
32
New Application Status Menu Option
Minerals Exploration Licence Online Tracking Application
Click Tenement to view Application Status
Application Status
Tracking
South Australian Mining App
• a free smart phone app designed for investors
• highlights real-time investment opportunities within resources sector
• information on geospatial map interface, mines and projects, geology
34
South Australian Mining App
35
7 Reasons to Invest in South Australia’s Resources
Sector
36
Resource Rich 81% of Australia’s EDR of Uranium
69% of Australia’s EDR of Copper
28% of Australia’s EDR of gold
8% of Australia’s EDR of Iron ore
Cooper Basin 54% of Australia’s
onshore oil production
1st Unconventional Gas
production in Australia
Strong
Government Support PACE 2020
Mining Industry Participation Office
Mining and Petroleum Services
Centre of Excellence
RESA
RESIC
World Class
Geoscientific
Information 125+ yrs of geological information
available free
World-Class Drill Core Storage Facility
Award winning SARIG 2020 online
geoserver
Australian government’s
first Mining App
Proven Record of
Red Tape Reduction MCA 2012 Scorecard of Mining
Approvals
ResourceStocks World Risk Survey
No.1 in Australia 2009-13
Long
Mining History Australia’s first base metal mine
Australia’s Copper Booms of the
1850’s, 1870’s
Australia’s first iron ore mines and
steel works
Australia’s first uranium mine
Australia’s first ISR
uranium mine
World Class
Mines and Deposits Olympic Dam Mine - World largest
Uranium Deposit, World’s 4th largest
copper deposit, World’s 4th largest
gold deposit,
World class discoveries, Prominent
Hill, Jacinth/Ambrosia, 4 Mile,
Carrapateena,
Hillside
Research
Capability Ian Wark Research Institute
Australian School of Petroleum
Deep Exploration Technologies CRC
Institute for Mineral and Energy
Resources (IMER)
Mawson Institute
www.invest.sa.gov.au
Published October 2013
The information contained in this presentation has been compiled by the Department for Manufacturing, Innovation, Trade, Resources and Energy
(DMITRE) and originates from a variety of sources. Although all reasonable care has been taken in the preparation and compilation of the
information, it has been provided in good faith for general information only and does not purport to be professional advice. No warranty, express or
implied, is given as to the completeness, correctness, accuracy, reliability or currency of the materials.
DMITRE and the Crown in the right of the State of South Australia does not accept responsibility for and will not be held liable to any recipient of the
information for any loss or damage however caused (including negligence) which may be directly or indirectly suffered as a consequence of use of
these materials. DMITRE reserves the right to update, amend or supplement the information from time to time at its discretion.
Further Information
Please contact Invest in South Australia for detailed investor-ready information across copper, gold, uranium, iron ore and resources infrastructure.
Invest in South Australia
Level 9, The Conservatory
131-139 Grenfell Street
Adelaide, South Australia 5000
T: +61 8 8303 2400
F: +61 8 8303 2410
E: investinsa@sa.gov.au
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