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.
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.
|
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.