This document discusses magnetite iron ore projects in Australia and why some new projects have faced problems. It provides an overview of several major magnetite projects in Australia, including Savage River, Project Magnet, Sino Iron, and Karara. While established projects like Savage River have been successful, newer greenfield projects have struggled due to high capital and operating costs, difficulties developing infrastructure, and low iron ore prices squeezing margins. Overall, magnetite processing remains challenging in Australia compared to direct shipping ore deposits.

1. > M i n e r a l P r o c e s s i n g > E n g i n e e r i n g D e s i g n > T r a i n i n g > S p e c i a l i s t S e r v i c e s
A division of Midas Engineering Group
IRON ORE 2015
What is the Future for Magnetite Projects in Australia and Why Have Some
of the New Projects Been so Problematic?

2. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
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• ACKNOWLEDGEMENTS
This document is a dynamic record of the knowledge and experience of personnel at Mineral
Engineering Technical Services. As such it has been built upon over the years and is a collaborative
effort by all those involved. We are thankful for the material supplied by and referenced from various
equipment manufacturers, vendors, industry research and project partners.

3. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Key Attributes
• Working globally since 1988
• Dynamic and innovative niche consultancy
• Dedicated team providing customised service
• Specialist in Mineral Processing & Engineering Projects
• Unique solution finder
• A division of Midas Engineering Group

4. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Introduction
• Australia’s history is one of DSO of high grade hematite ores such as Mt
Tom price and Mt Newman
• Magnetite ore processing requires much higher OPEX and CAPEX
compared to Direct Shipping Ores (DSO)
• Magnetite projects presented are Savage River, Project Magnet, Sino
Iron and Karara
• Some new projects have been highly problematic-why is this?
• Overseas projects have been successfully processing magnetite ores
for long periods of time
• Does magnetite processing have a future in Australia?

5. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Iron Ore Price

6. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Savage River Project
• Started operation 1966 in
Tasmania
• 70 kms north west of Burnie
• Mine and beneficiation plant at
Savage River
• Slurry pipeline from the mine to
Port Latta
• Fully integrated pellet plant
• Currently coming under tight
cost pressures
• CAPEX depreciated long ago

7. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Open Pits

8. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Savage River

9. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Operations

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Product Prices

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Operations
Mining
• Open pits 100 to 150m deep
• Hydraulic excavators and conventional dump trucks
• Grade control from drill blast holes
Processing
• 54/74 Primary gyratory to 200 mm, 100 t stockpile
• 2 by Hardinge 9.75m by 3.66m autogenous grinding mills
• 2 Nordberg 8.84m by 3.96m ball mills
• Magnetic separation
Slurry Pipeline
• 83 kms through 229mm steel pipe
• 50% w/w, 14 hours transport time
Pellet Plant
• Green pellets formed on balling disks with bentonite
• 5 Midland Ross shaft pellet furnaces
• 4.5 hrs heat induction, diesel fired
• Fines screened out
• Pellets stockpiled for shipment

12. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Project Performance
• Well established operation with a track record
• Highly efficient operation, many improvements over time
• Fully integrated to sell high value good quality pellets
• Energy is a major cost in producing pellets
• Small producer- 2.5 Mtpa on a global scale
• Current cost $86.50/tonne and sale price $118.8/tonne (falling)
• Current low iron ore prices are putting enormous pressure on the project

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Project Magnet
• Long established hematite DSO
operation, pellet plant and steelworks
• Changed Whyalla steelworks from
hematite to magnetite $400M project
• Operational in 2007 with early
commissioning problems
• Mine, concentrator and slurry pipeline
• Integrated to produce pellets and steel

14. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Project Magnet

15. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Project Magnet Flowsheet

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Operations

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Project Performance
• Early processing problems overcome
• Exceeding design by 15%, CAPEX was modest
• Achieving < 4.5% silica in concentrate
• No reverse flotation or screening
• All of the concentrate going to pellet production and blast
furnaces, fully integrated project
• Successful project although low prices are squeezing margins
• Local shipment advantage - rail infrastructure

18. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Citic Pacific-Sino Iron-Magnetite
Project
• Located near Dampier in the Pilbara region of
Western Australia.
• Citic Pacific Magnetite project (Pilbara region of
WA) sources process water from a seawater
desalination plant
• Massive $A11BN project

19. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Citic Pacific Project
• Large open cut 80 Mtpa
magnetite ore - massive
projects
• 24 Mtpa magnetite
concentrate
• 40 GLpa desalination plant
• 600 MW combined cycle
power station
• Co-disposal tailings rapid
water recovery
Typical BIF magnetite core

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Sino Iron Project

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Large Scale – Sino Iron CITIC
Pacific Mining

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Process Flowsheet

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Process Flowsheet
• HPGR to 3mm
• Coarse cobbing
• Primary grind P80 55 µm
• Intermediate magnetic separation
• Final magnetic separation
• Reverse flotation reduce silica <5%
• Filtration concentrate to 9% moisture
• Tailings flocculated co-disposal

24. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Large Scale - Sino Iron CITIC
Pacific Mining
• Not just the largest but perhaps the
highest?!

25. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Predicted OPEX Magnetite

26. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Reverse Osmosis Supply & Water
Balance
• Sea water feed-little choice
• Energy recovery by recuperators
• Producing 40 GLpa
• (GL=1X109 and ML=1X106)
Area of Use
Annual
Activity
Water Usage Rate
Water
Consumption (GLpa)
Mining Dust Supression 160Mtpa total movement in
the mine
3% of material moved 4.8
Water in concentrate exiting the
filter plant
24Mtpa produced 9% 2.2
Water in screened and filtered
coarse tailings leaving the plant
56Mtpa 15% 8.4
Additional water for discharge of
fine tailing
56Mtpa 28% 15.7
Evaporation in the plant 10% of water used in plant 2.0
Pellet Plant 14Mtpa 8% of pellets produced 1.1
Port Stockyard 24Mtpa 3% of material handled 0.7
Power Station 450MW for 7800 hrs 1.28m3
/MWh, mostly
evaporated in cooling tower
4.5
Camp 4000 people 0.4m3
/day 0.6
Total 40.0

27. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Project Performance
• Citic as China’s largest conglomerate, its businesses include financial
services, resources and energy, manufacturing, real estate and
infrastructure, engineering contracting, and other businesses in China and
overseas.
• Eight years to develop the project
• Plagued with delays and cost over runs
• All infrastructure - power, water and port had to be established
• Cultural language issues, issues with contractors
• Painful learning process
• Long life project so important to Chinese steel mills

28. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Karara Magnetite Project
• 225 km east of Geraldton, WA
• JV Gindalbie Metals Ltd &
Ansteel Group - $1.8BN to
$2.5BN
• 20 Mtpa raw feed to produce 8
Mtpa concentrate 68% Fe
• Water supply from Tathra
bore-field 140 kms
• Dry stacked tailings
• 80 km rail spur for
concentrates to Geraldton

29. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Gindalbie Project – Project Review
Magnetite Project – Gindalbie Metals Ltd
• High quality magnetite concentrate produced – approximately 8 Mtpa
• Products:
― Mass Recovery: 41% with high Fe grade of 68.8%
• Proposes three-stage grinding followed by magnetic separation
• Proposes High Pressure Grinding Roll (HPGR) in the comminution
circuit and magnetic separation in the beneficiation steps
• Proposed Start of Operations: 2010

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Gindalbie Magnetite

31. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Gindalbie Magnetite (cont.)

32. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Gindalbie Metals Flowsheet

33. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Gindalbie Metals Flowsheet (cont.)

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Cost Differential

35. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Project Performance
• Plant bottlenecks based on ASX announcements
• Ore body not well understood
• CAPEX blowout
• OPEX higher than predicted
• Low iron ore prices have exacerbated the issues
• Ansteel has been a solid backer of the project
• ASX announcements highlight the difficult situation the company
finds itself in

36. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Conclusions
• Infrastructure cost for greenfield projects can be significant impediment for the
development of magnetite projects
• Savage River had power, water and was also depreciated years ago, coming
under cost pressure.
• Project Magnetite is an integrated project and has been a success although
margins are being squeezed
• Karara has struggled and survived because of Ansteel solid support
• Citic Pacific has struggled and has been a very difficult project from a delivery
and operation perspective
• Current low iron ore price is a problem. Falling energy and labour costs will
help
• Lower returns will be accepted in line with falling interest rates

37. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Conclusions
• With the exception of FMG’s Iron Bridge North Star magnetite
project all other magnetite projects are on hold
• High grade DSO ores are being depleted and the future resources
are magnetite ores
• The characteristics of magnetite ores varies widely in hardness,
liberation size and silica levels achievable
• NPV & IRR for magnetite projects are currently problematic

38. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
What did you get out of this presentation?
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Attendee Outcomes

39. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
Acknowledgement
• Thanks to AusIMM for the opportunity to present
• Thanks to various companies, colleagues, engineers
• METS staff and consultants

40. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
References
• Grange Resources, 2007. Southdown Magnetite Proposal. Albany Iron
Ore Project Public Environmental Review.
• Gindalbie Metals Ltd, Karara Mining Ltd, Anshan Iron and Steel
Corporation, 2008. Karara Iron Ore Project Public Environmental
Review. Gindalbie Metals Ltd. www.gindalbie.com.au
• Arrium Mining & Materials. www.arrium.com
• Citic Pacific Mining. www.citicpacificmining.com

41. ENVIRONMENTAL PROCESSING DESIGN & VERIFICATION PRODUCT INNOVATION PROJECT MANAGEMENT OPERATIONS TRAINING SKILLS HIRE
THANK YOU
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