Land of the brave?

By Siobhan Lismore-Scott
Published: Thursday, 27 October 2016

Australia hosts many industrial minerals and has a rich and varied mining history, However as Cameron Perks, IM Correspondent, discovers, the country is missing a chance to develop its agricultural sector alongside a wave of new mining claims.

Australia is known for its abundance of mineral resources, rich mining history, and now tops the world for investment attractiveness, according to the Fraser Institute. In a survey taken to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment, Western Australia came out top of the pack.

In fact, Australia now has three jurisdictions placed in the top 10 of a list that includes every mining district in the world. Western Australia has moved from fourth to first place in 2015, with honorable mentions going to the Northern Territory (7th) and South Australia (10th).

Australia has had a chequered history however, falling over when trying to coordinate resources opportunities between the states, in taking advantage of downstream processing opportunities and sometimes having the perception of being fickle or heavy handed when it comes to regulation.

In New South Wales (NSW), industrial minerals explorers and producers have become worried that they will be fined hefty sums if an annual report is late, something that has contributed to the state coming in at 38 on the investment attractiveness scale. 

Following through with new-found regulatory vigor, NSW government authorities suspended the mining lease of Young Mining earlier in the year, a company that has a magnesium minerals quarry in the state. The suspension came after several warnings were made over an unpaid environmental security deposit. The license was later reinstated however, after the company paid the Australian dollar (A)$540,000 ($410,450*) owed.

When contacted for a statement on the overall operating environment and investment attractiveness for each state in Australia, explorers and producers were unwilling to comment. Making a single statement on Australia’s investment attractiveness or operational environment is difficult, owing to the vast differences found between each State Government authority. 

While NSW might seem unapproachable to explorers and miners, the state’s Geological Survey and their online resources remain some of the best in the country. In addition, the State’s Department of Resources and Energy Deputy Sectary, Kylie Hargreaves, remains a staunch public defender of the importance of sustainable mining. The state provides a perfect example of how complex the mining and exploration environment can get across Australian jurisdictions.

Tasmania’s ratings in terms of investment attractiveness have improved notably, with its ranking increasing from 49th to 34th this year. Australian Bauxite Limited (ABx), a company originally destined to provide bauxite for the metallurgical environment is taking advantage of the conducive operating environment to begin exporting bauxite into fertiliser and cement grade markets from Tasmania.

ABx said in September that it was managing to sell bauxite into the "fertiliser and cement markets at prices higher than the currently over-supplied metallurgical bauxite market", taking sales of cement grade bauxite in 2016 up to 42,005 tonnes. The company has also sold some 3,585 tonnes of fertiliser grade bauxite, with further sales to come.

In Australia, industrial mineral production is split between those commodities priced too cheaply to export, and those that have a predominantly export-focused industry.

Those export driven markets are primarily to Asia, where many minerals are processed, consumed, or generally value-added. Australia’s proximity to those markets gives it the edge on other countries hoping to compete.

InfoGraphic  

Lithium

Spodumene, an industrial mineral with a long history of importance has recently hit the spotlight owing to the supply and demand fundamentals surrounding the green-energy supply chain. With around 450,000 tonnes of spodumene concentrate exports per year, Western Australia is leading the way.

The green-energy revolution has ignited activity across Australia, with over 60 ASX explorers looking for lithium, each having multiple projects, with at least 80% of these existing in Australia itself. 

Australia hopes to be at the forefront of the green-energy boom, with new lithium processing techniques taking center stage. The world’s largest lithium producer, Chinese company Tianqi Lithium has invested in and will operate a 24,000 tpa plant that will produce lithium in Western Australia. Colin Barnett, Premier of the state, stated the new plant is an example of Western Australia’s economy evolving naturally towards higher-level, value-adding downstream processing.

While graphite has faded into the background in the face of lithium’s supply chain concerns and subsequent popularity, it continues to be a developing market in Australia. Hexagon, Lincoln, and Archer Resources all continue to explore and define their resources in Western Australia, and South Australia.

Rare earths

Australia’s proximity to Asian markets also plays a key role in rare earths production, with Lynas’ Mt Weld deposit flying in the face of low commodity prices with continued success. Disposal of waste associated with their Malaysian plant, on the other hand, is one that needs to be addressed with concern and care, and shows that the operating relationships between companies and countries is one of increasing importance (see pp35). 

While China remains the dominant force in terms of rare earths, Lynas has an opportunity to supply the praseodymium and neodymium markets, areas that Professor Dudley Kingsnorth from Curtin-IMCOA, sees as having great risk of being undersupplied in spite of illegal sources in China. Providing it gets off the ground with a ~A$1bn start-up cost, Alkane’s Dubbo Zirconia Project in NSW hopes to be Australia’s second source of heavy rare earths before 2020.

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Mining limesand at Greenhead. 
Source: Western Australia Department of Agriculture and Food 


Mineral sands

In mineral sands, Australia’s main player Iluka Resources announced in October that year-to-date their zircon, rutile and synthetic rutile sales were up 8.8% on the same period in 2015. While total mineral sands revenue, which included ilmenite and by-products, decreased by 11.8%.

Australia is now the only country in which Iluka is actively mining. Australia is also Iluka’s base for research into innovative solutions to mineral sands mining and processing challenges. David Robb, former CEO, told IM in an interview earlier this year that Iluka expected to spend around $35m in that area in the first half of 2016 alone.

Agricultural sector left wanting

Australia is also a large producer of agricultural commodities and ideally situated to supply the expanding food markets in Asia, particularly those arising from the expanding middle classes of China, India and the ASEAN region. Despite a large land area, agricultural production can be limited by variable rainfall but mainly by the soil quality, in particular, acidic soils.

To get an idea of how big the problem is, it is estimated 14.25m hectares of Western Australia’s wheat belt soils are already acidic or at risk of becoming acidic. This erodes potential crop yields by about 9 to 12% at a cost of almost A$500m annually.

 The problem, one that causes widespread loss of crop yield, is one that can be fixed with proper education and appropriate liming.

Overall, Australia is playing a vital role in feeding, fueling and building the world, with substantial opportunity to grow – but is not without its problems.

IM sees the critical need for Australia to get the research sector, governments and industries to coordinate development of resources and processing projects from agri-minerals to battery-minerals. 

As always, finding the capital will be a challenge. Novel funding schemes may be necessary to compete with generous overseas tax incentives. However, if the country is to thrive, and seize the opportunities available to it, a high-profile, national debate is necessary on how it can continually attract projects like Kwinana’s lithium processing plant, and how it might bring those various entities together in tackling inter-disciplinary problems that could be assisted with the vast natural resources available.