Lengthening approvals processes and rapid cost escalation has forcedMineral Resources to shutter its iron ore operations, according to the company’s iron ore boss, rather than concerns about the outlook for the steelmaking commodity.
MinRes this week flagged plans to close its Yilgarn operations in WesternAustralia’s Goldfields and eastern wheatbelt, putting about 1000 jobs across its mining and rail operations at risk – although the company says it will be able to redeploy the overwhelming majority of those workers to its other lithium and iron ore mines.
The company says it expects to need at least 800 workers across its lithium operations and for the expansion of its new iron ore mines in the Pilbara, with the company recently exporting its first iron ore shipments from its new port facilities near Onslow.
MinRes iron ore CEO Chris Soccio said on Thursday the decision was forced by MinRes’s inability to bring new deposits to production quickly enough to replace the ageing operations – smaller deposits scattered across two processing hubs and more than 220km – in the area.
The company plans to export another 4 million tonnes of iron ore from the region this year, before winding down its mines by the end of the year.
Mr Soccio said the company hoped to be able to return to the WA wheatbelt region in the future and build new iron ore mines, but said lengthening approvals processes – for both exploration and mine development – meant MinRes had run out of time to bring on new deposits to feed its processing hubs.
However, he said the company believed it would need to find enough deposits to sustain about seven million tonnes of iron exports a year to“sustainably” begin work in the region again.
In 2021, managing director Chris Ellison flagged the potential development of magnetite deposits in the Yilgarn, confidently forecasting another seven to 10 years of mining in the area.
Mr Soccio said the rapid cost escalation in WA’s mining industry after the pandemic had forced a rethink of its plans.
“The inflationary pressures over the last two years have been quite significant,” he said.
“We’ve also had some targets not deliver quite the same resource that we had estimated and it’s just taken a bit longer to get through approval processes and get drilling campaigns across some of these other prospective targets.
“So it’s been a combination of factors, but inflationary pressure has definitely pushed the operation that little bit harder than what we may have seen two years ago,” Mr Soccio added.
Mr Ellison took the magnetite extension off the table last year, citing the difficulty linking enough water and power to run energy-intensive magnetic separation plants needed to process magnetite deposits.
But Mr Soccio said magnetite developments could return to MinRes’s regional plans in the future.
“We’ve been continuing to work on these solutions and I believe we’ve got a viable solution for power,” he said.
“Water is always a challenge, particularly freshwater in the Yilgarn. However, processing magnetite with hyper saline water isn’t impossible.It just means that you have to wash the concentrate at the end.
“There’s a great amount of magnetite potential throughout the Yilgarn, it’s just a matter of finding the right resource with the right strip ratio and the grind qualities that you need.”
MinRes began operating iron ore mines in the Yilgarn region in 2011, during the last mining boom, when the region was considered a potentially major new iron ore province for the state due to the size and number of magnetite deposits.
But that dream was cruelled by the rapid iron ore price slide from 2012, and massive blowouts at magnetite processing plants in the Pilbara andMid West regions of the state, and miners in area have instead been forced to rely on smaller deposits of hematite ore.
In 2017 the WA government rubbed out an extension of MinRes’s Carina operations, permanently banning the development of iron ore mines in the Helena Aurora Range, 100km north of the small town of SouthernCross, where MinRes’s J5 and Bungalbin deposits offered the potential of a15-year extension to the mine’s life.
A year later the company stepped in to buy the Koolyanobbing iron ore mine from US-headquartered Cliffs Natural Resources, keeping it open with a special royalty relief deal with the state government.
Mr Soccio said MinRes had not approached the state government for an extension of that deal, though, saying the issue for its Yilgarn operations was simply that they were running out of commercially viable ore.
“We haven’t approached the state for any royalty relief. And in actual fact, there was no reason to because it wouldn’t have impacted the decision,”he said.
“The diminishing economic resources across the five operating mines has been one of the main driving factors and also the high cost of what are complex operations over 200km.”
Mr Soccio said MinRes had not made any decisions about what it would do with the two processing plants it controlled in the area, nor the six locomotives and 400 ore wagons purchased by the company for its rail ‐operations.
“Both the Koolyanobbing and Carina hubs have inherent value and you’ve got the rail loop there as well,” he said. “So for anyone in the area that does find economic resources, these are obviously a natural fit for those.”