Noordin Mengal speaks about Balochistan in an interview with the Canadian magazine, International Resource Journal

112 ASIA Seeds of distrust

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JULY 2012 Volume 4 Issue 7 www.irjonline.com

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113JULY 2012 The International Resource Journal

Seeds of distrust

asia

112Noordin Mengal is an activist in pursuit of independence for Balochistan, a mineral rich province in southwestern Pakistan bordering Iran and Afghanistan.

the acRiMonious Relationship between leadership in Balochistan and

Pakistan’s ruling establishment in Punjab province and government centre,

Islamabad, goes back for generations. Mengal claims that members of his

family, many who occupied various senior roles in the Balochistan govern-

ment since the province was absorbed into Pakistan in 1948, have faced

harassment, imprisonment and duplicity.

Moreover, the human rights situation in Balochistan is becoming in-

creasingly violent as abuses intensify. Academics, politicians and other civil

society leaders have been found murdered with evidence of torture after

being detained by Pakistan’s military.

Amnesty International has urged the Pakistan government to investi-

gate these crimes against Baloch civilians, particularly as the human rights

violations take place against a backdrop of political unrest and Pakistan

army operations in the province.


The situation has also prompted a US Repub-

lican-led House Committee earlier this year to

DIÀUP%DORFKLVWDQ·VKLVWRULFULJKWWRVHOIGHWHUPL-

nation amid vehement opposition from Pakistan.

Why is everybody so interested in this underde-

veloped region, one of the poorest in South Asia?

Mengal explains it is because of the re-

gion’s natural resources and strategic geo-

political location.

IRJ talks to Mengal to gain greater insight

into the underlying mechanisms that feed dis-

trust between a region, its government and

neighbours, and how those mechanisms under-

pin opposition to natural resource development.

iRJ: Can you tell me a bit more about your role

in bringing attention to the challenges facing

Balochistan?

nooRdin MenGal: My role has been primarily

to create awareness about the worsening hu-

man rights situation in Balochistan, not just the

human rights violations being carried out by

Pakistan’s military but also the sinister role it is

playing in causing terrorism by promoting and

abetting radical elements in the region as the

military’s own strategic assets, to ultimately reap

the rewards of the unrest. Pakistan is currently

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Baloch since 1948. We have highlighted these is-

sues at the UN Human Rights Council, in Geneva,

the European Parliament, British Parliament, at

universities, whatever forum is available to us.

iRJ: The Pakistan government has said that the

US House Committee’s encouragement of an

independent Balochistan is meddling into affairs

that the US does not understand, how do you

respond to that?

MenGal: If anyone has meddled into anyone’s

affairs or violated any country’s sovereignty, it is

Pakistan itself. We were an independent state

that was forcibly occupied on March 27, 1948.

Before then, the proposal that Balochistan join

Pakistan on the basis of Islam was rejected in

both upper and lower houses and nine months

after we gained our independent status, we were

forcibly occupied by the Punjabis and incorporat-

ed into what is today known as Pakistan. Now we

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and independence. Pakistan, and Punjab in par-

ticular, have no right to deal with anybody with re-

gards to our natural resources or decide our fate.

Human rights are not an internal matter. Ironi-

cally, when the Shah of Iran, who also oppressed


the Baloch in Iranian-occupied Balochistan,

SURYLGHGÀQDQFLDODQGPLOLWDU\DVVLVWDQFHLQFOXG-

ing direct air support to Pakistan in the military

operation against the Balochs in 1970s, no

Pakistani saw it as foreign interference, but when

someone speaks out for the rights of the down-

trodden Baloch, Pakistan calls it interference in

its internal affairs.

iRJ: The most recent Constitutional amend-

ments in Pakistan have given the authority

over natural resource development to the pro-

vincial governments, does this not give Balo-

chistan enough control over which companies

it does business with?

MenGal: The Baloch remain disempowered and

dispossessed. If we look at the human rights

situation, there is an oppressive military opera-

tion ongoing and the powerless chief minister of

Balochistan says he does not have the mandate to

change this and says that the Frontier Corps has

established a parallel government. Recently when

a senior provincial minister, Sadiq Umrani, held the

FC responsible for disappearances and extrajudi-

cial killings, his younger brother was abducted to

silence him. If the provincial government cannot

safeguard itself, what do they have authority over?

All state institutions, including the parlia-

ment, judiciary and presidency, are subservient

to the military. The incumbent so-called demo-

cratically elected civilian government is an epito-

me of politically impotent administrations that is

at the mercy of the Pakistani army. The military

holds the levers of power and are the declared

rulers of Pakistan since the country’s unfortu-

nate creation.

Pakistan has occupied our land and has

been systematically carrying out the social, politi-

cal, cultural, physical and economic genocide

of the Baloch nation. Companies need to know

that any deal they make on Balochistan’s natural

resources with this government is not meant to

last. Every successive government reverses the

decisions of its predecessor, it’s a failed state

and many factors indicate that it clearly has no

future. The basic problem is that the future of the

Baloch people is not secure within Pakistan. No

matter how good a deal might sound, we simply

won’t buy it anymore. We have constantly been

deceived by the Pakistanis since the past 64

years. We just want them to leave us alone.

Companies that cut a deal with the central

government over Balochistan’s resources need

to realise that there are no guarantees to them

for as long as there is no peace and stability. Any


attempt to indulge will be seen with strong nega-

tivity by the population. They will also be seen as

exploiters adding to our miseries. Such compa-

nies may get the deal on the condition that they

remain silent on the oppressive policies of the

state against the Baloch, as have the Chinese.

Why do you think Pakistan is more pleased

with China’s political establishment? Why is it

happier to let MCC [China Metallurgical Group Cor-

poration] work on the projects? If you look at Reko

Diq, Pakistan wouldn’t be in favour of the western-

based Tethyan Copper [Antofagasta and Barrick

Gold joint venture], they would be more comfort-

able with the Chinese because they are content

with Pakistan carrying out atrocities against the

Baloch as they themselves are the immoral mas-

ters of plundering and have no problem with others

adopting the same illegal methods. There is an old

relationship there, Pakistan has been the concu-

bine of China, that is how I would put it.

iRJ: Companies that develop natural resources

often bring much-needed development such as

schools, hospitals and infrastructure, would Balo-

FKLVWDQQRWEHQHÀWIURPVXFKGHYHORSPHQW"

MenGal: We have heard the word “development”

most of our lives. There is a difference between

development and exploitation. When Pakistan

says it wants to bring development, what they

really mean is they want to exploit. A prime exam-

SOHLV6XLJDVÀHOGWKHELJJHVWLQ3DNLVWDQRSHU-

ated by a state-run company. Gas was discovered

in 1952 and today there are only a couple of dis-

PHOTO COURTESY OF BALOCHVOICE.COM


tricts in Balochistan that have access to gas. The

capital [of Balochistan], Quetta, received gas in

1986, 34 years after it was discovered, and that

too only after a military garrison was stationed

WKHUHZKHUHDV3XQMDEKDVEHHQWKHPDLQEHQHÀ-

ciary with all its major cities receiving household

and commercial gasiby 1964.

It is the Punjabi military that has been given

the most priority, Balochistan consumes 12 per

cent of its own production though it is the largest

province accounting for 47 percent of Pakistan’s

total land mass What did the Baloch people

gain from the gas? What have the people of the

district that pumps gas to the whole of Pakistan

gained? They still burn wood. All the dividends

from the sale of Baloch gas are usurped by Pun-

jab. There is no shining precedent of the Baloch

EHQHÀWWLQJIURPWKHLURZQUHVRXUFHV

The military has already been working directly

on the Chamalang coals mines, said to be one of

WKHODUJHVWFRDOÀHOGVLQ$VLDDQGKDYHEHHQWU\LQJWR

get a hold of Reko-Diq by backing D. Samar Mubara-

kmand. In 2009, when the provincial secretary for

mines and minerals opposed granting an exploration

lease for the Chamalang mines to military, he was

critically injured in an assassination attempt soon

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Instead of schools, hospitals and basic in-

frastructure, the state’s version of development

is constructing massive military garrisons, para-

military bases, naval bases, air bases, several

hundred checkposts, illegal detention and inter-

rogation facilities and nuclear testing sites in

Balochistan with US and European taxpayers’

money and revenue generated from our land.

Their other sham developments have been to

construct roads for billions to inaccessible areas

and penetrate into our system to facilitate the mo-

bilisation and stationing of troops in order to forcibly

tap oil and gas and establish garrisons to further

subjugate the Baloch and promote fundamental-

ists and the construction of madrassahs, to counter

the secular Baloch movement and build a breeding

ground and safe haven for radical mullahs.

Another crime they committed in the name of

development was the nuclear tests conducted on

our land on 28 May 1998, which has caused count-

less diseases among the inhabitants of Chaghai

due to the radiation. When my uncle’s government,

which wasn’t even consulted, protested against the

tests on Baloch soil, his government was systemati-

cally toppled on June 15 1998.

The time for reconciliation is over, now our

demands are for nothing short of independence.

We have absolutely no future in Pakistan.


iRJ: Some would point to a lack of skilled labour

among the Baloch population to work on these

projects as part of the problem, for example, the

deep sea port in Gwadar on the Arabian Sea, a

highly strategic asset and one that could boost

the economy of the region considerably. What

do you say to companies that require skills and

expertise to handle mega-projects like this?

MenGal: I would say hold your horses, the Baloch

require more than skills and technical expertise,

they need empowerment and the freedom to

decide their fate. Just like other projects, outsid-

ers have come, the staff and labour is from other

parts of Pakistan, locals are not allowed access to

schools and hospitals, which are reserved just for

employees, and no efforts have been made to set

up training facilities, polytechnic institutes or vo-

cational centres so that locals attain the required

skills. Gwadar port was a project pushed for many

years by the Baloch but the project was taken

over by the Pakistan establishment and then they

painted an absurd picture that Baloch nationalists

oppose development. It is the Pakistani establish-

ment that is not only a threat to the Baloch national

identity but also an impediment to peace, stability,

security and “genuine” development in the region.

If the French had better skills for deep sea

drilling, would that give them an unquestionable

right to explore North Sea oil or the Hibernia oil

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The Baloch fear that the port will cause a

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encouraged by the government to migrate to

Balochistan for employment and will be used to

create a demographic imbalance and convert

the Baloch into a minority in their own homeland,

given the Baloch’s small population – less than

10 million compared to Punjab’s 91 million.

China’s political establishment has collabo-

rated with Pakistan’s government in the con-

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too have contributed to our plight and alienation.

We would have welcomed the building of a port

but China did not take the Baloch national in-

terest into consideration, they did not take the

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announced and dealt with Punjab and its civil-

military establishment directly.

Before Gwadar port’s construction, those

people who had land [in the area] had their

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cheaply by force. However, most of the land was

allotted to military generals who subsequently

sold them in the open market, to fellow Punjabis

and Muhajirs and earned billions.


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people and we opposed it because we knew

WKDWWKRVHZKRZRXOGEHQHÀWZRXOGEHRXWVLG-

ers and they would be given the right to vote

and elect non-Balochs had we allowed Paki-

stan to operate freely in Gwadar.

iRJ: What message do you want to send compa-

nies that are thinking of setting up shop?

MenGal: It is not the time. They need to under-

stand our concern and insecurity. At this point,

they will be fuelling human rights violations

against the Baloch and would be similar to the

case of blood diamonds. They would strengthen

the hands of the oppressor and would also be

indirectly funding radical elements patronized by

the Pakistani ISI[Inter-services intelligence agen-

cy] who are a menace for regional and global

peace and security. They should not try to ben-

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must not collaborate with oppressive and corrupt

regimes in carrying out crimes against humanity.

Multinational companies should not see our pre-

dicament as an opportunity to make a buck. They

can wait and we expect them to act more respon-

sibly. We will be willing to talk to them when the

situation is conducive for business.

As long as it is occupied territory and as long as

we don’t have our rights and are facing the situa-

tion that we are, we would oppose not just multina-

tionals but also anyone else in Pakistan coming in

to extract our natural resources. Pakistan is steal-

ing revenue from our own soil that is then being

used to fund actions against us. Baloch national

assets, including Gwadar, Sui, Reko-diq and Cha-

malang coal, have all been to exploit and expropri-

ate the Baloch of their wealth and advance Paki-

stan’s sinister agendas against the Baloch nation.

The Baloch are struggling for the protection of their

national identity, for their survival. That is what is

at stake for us. For as long as Balochistan remains

occupied and Punjab’s hegemony continues, the

Baloch will be in the grip of the Stone Age.

The issue of natural resources is one the

Baloch are deeply sensitive about. It must be

noted that it was this bone of contention that

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WRÀVKLQWURXEOHGZDWHUVZLOORQO\H[DFHUEDWHWKH

situation. No one wants that.

Now, there is the Iran-Pakistan pipeline being

constructed without the Baloch nation’s consent.

The Baloch will not sit as silent spectators as

they are trampled upon and there will undoubt-

edly be strong political resistance to allow it

through our homeland.

120 SECTION Seeds of distrust

1666 Mir Ahmed Khan of Kambarani tribe

start Ahmedzai dynasty

1749-1794 Reign of Nasir Khan and region

named Balochistan

1839 British incursion

1854 Nasir Khan’s successors defeated

by British and treaty formed with

Khan of Kalat to defend territories

from Central Asian or Iranian

invasions

1860s -70s Growing British interest to pre-

empt potential advance of Russia. A

period known as the “Great Game”.

1905 Demarcation of boundary between

British India-Iran and British India-

Afghanistan effectively divides

Balochistan among three states –

British India, Iran and Afghanistan

1934 Armed struggle for liberation and

unification of Balochistan begins

under Magsi, head of Baloch

national movement

1947 Pakistan becomes heir to British

rule, Kalat state [Princely state

of Balochistan] proclaims

independence. Pakistan

recognises Kalat’s sovereignty and

congratulates Baloch.

1948 In opposition to decision of Balochi

legislature, Pakistan forces Kalat

to be ruled by an agent of the

Pakistani state. Troops enter the

capital and forcibly incorporate

Balochistan into Pakistan. Balochi

nationalist defence continues under

Abdul Karim Khan until 1950. He

spends 16 of his remaining 22 years

in Pakistani prisons on charges of

sedition

1952 Pakistan’s first oil field discovered

near Sui

Balochistan Union States

established

1955 Princely states in Balochistan

(Kalat, Kharan, Las Bela, Makran)

abolished

1958 Second uprising and retaliatory

military operation

1962 Third uprising and military

operation, which ended when

a BRieF histoRy


Pakistan’s army took an oath on the

Quran not to harm rebels and their

90-year old leader while promising

amnesty and to accept demands.

Imprisonments and executions

followed.

1970 Within Pakistan, Balochistan

province established

1971 East Pakistan breaks away,

Bangladesh created

1972 First elections won by Nationalist

Party led by Sardar Attaulah

Mengal, first chief minister of

Balochistan

1973 – 1977 Large scale Baloch rebellion led by

Marri and Mengal tribes suppressed

by Pakistani forces with the help of

the Shah of Iran

1978 General Zia ul Haq comes into

power through coup, withdraws

troops from Balochistan and

releases Baloch leaders of

Nationalist Party from prison.

Baloch leaders Marri and Mengal

go into self-imposed exile.

1993 - 1997 BHP negotiates Chaghai Hills

Exploration Joint Venture Agreement

(CHEJVA) with Balochistan province

and discovers significant copper-

gold deposits near Reko Diq

1995 National Mineral Policy

Saindak copper-gold project trial

production begins with operations

handed over to Pakistani state-

backed company Saindak Metals.

Bureaucratic squabbling delays the

project.

1998 Nuclear tests were carried out

despite protests of ruling nationalist

party in bal headed by Akhtar

Mengal leading to the dissolution

of the legislature in 18 days

1999 General Pervez Musharraf takes

power in bloodless coup

2000 Tethyan Copper Co. established after

project taken over from BHP and

China approached by Musharraf to

fund Gwadar deep water port

Septuagenarian Baloch leader Nawab

Marri imprisoned, but released a year

and a half later


2002 -Implementation of National Mineral

Policy and formulation of Balochistan

Mineral Rules

-China Metallurgical Group

Corporation (MCC) gets 10-year

lease. 50 per cent of proceeds

retained by MCC, 48 per cent by

Pakistan’s government and 2 per

cent by Balochistan’s government

2004 Car bomb kills three Chinese

engineers on their way to Gwadar.

2005 Gwadar port completed on

schedule

2006 -Antofagasta and Barrick Gold form

a joint venture acquiring 100 per

cent of Tethyan Copper Co.

-Chamalang coal mine agreement

signed by Pro-government/

establishment Baloch Senator Mir

Mohabbat Khan Marri, elders of

Luni Pakhtun tribe and Government

of Balochistan

-Thousands of Baloch flee villages

attacked by Pakistani fighter jets

and helicopter gun-ships. Large-

scale, government-organised

kidnappings and disappearances

followed.

-Pakistani army kills Baloch leader

Nawab Akbar Khan Bugti, Balochistan

National Party resigns from

parliament in protest BNP president

-Akhtar Mengal imprisoned in

Karachi, released in 2008 soon after

Pakistan Peoples Party comes into

power and drops charges

2007 PSA International of Singapore gets

40-year contract to run Gwadar port

2010 -18th amendment to the constitution

signed into law by President Asif

Ali Zardari grants greater provincial

rights of exploration and production

of natural resources, including oil,

gas, metals and minerals


-Baloch nationalist leader and

head of the Marri tribe Nawab

Khair Baksh Marri resists sharing

coal reserves in tribal domain with

rival Pakhtun tribe and provincial

government. Claims that Khan Marri

was not empowered to sign the

accord as a competent authority.

2011 -MCC gets lease extension for

Saindak for another five years

from 2012. The lease was granted

one year ahead of schedule and

renegotiated terms would see

MCC receive 45 per cent of mine

proceeds, bumping Balochistan’s

stake up 5 per cent.

-Tethyan files arbitration

proceedings with the International

Chamber of Commerce (ICC)

in London after the Balochistan

government rejected its mining-

lease application

2012 -US Congressman Dana

Rohrabacher, who chairs the

US House of Foreign Affairs

Subcommittee on Oversight and

Investigations, calls upon Pakistan

to recognise the Baloch right to self

determination

-Pakistani media reports that

Balochistan chief minister Aslam

Raisani stated the provincial

government itself would run the

Reko Diq copper-gold project in

Chaghai and had allocated Rs7

billion ($73.6 million) as well as

announced infrastructure reforms

for Gwadar port access

124 ASIA Pawn or potential queen?


aFGhanistan: Pawn or potential queen?

asia

124

It took decades for an agreement to get reached on the Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline but commitment to bring the project to life in the spirit of what is written on paper is going to be a tougher test yet. Regional actors such as China, Iran, Russian and Pakistan may not see TAPI !tting their strategy in the region and therefore may work to engineer its collapse against a backdrop of geostrategic competition, writes Javed Noorani.


the tapi Gas pipeline is an ambitious project

which is set to connect the religiously and ethni-

cally diverse geographies of South Asia with Cen-

tral Asia, propelling them into gas-fuelled econo-

mies. At one end of the pipeline is Turkmenistan,

a former Cold War era Soviet bloc still heavily

LQÁXHQFHGE\5XVVLDDQGDWWKHRWKHUHQGRIWKH

project is emerging regional power, India, an at-

tractive market for gas.

Pakistan is undergoing economic expansion

and to continue this trajectory, it requires suf-

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have been raised due to availability amid rising

global demand for energy.

Robert Looney in his essay for the Woodrow

Wilson International Centre for Scholars says that

Pakistan’s rather static oil, hydroelectric power

and gas reserves have raised serious concerns

as to the sustainability of the current economic

expansion, as well as future economic growth.

The gap between Pakistan’s energy use and the

country’s ability to produce energy has widened

in an alarming way in recent years.

Games and playersThe politick around the region’s gas reserves in

general and the TAPI pipeline in particular have

both local and global actors gate-crashing to shop

for the commodity and vie for associated projects.

6HFXULW\HQHUJ\VHHPVWRFRQVWDQWO\ÀQGD

prominent place within the NATO strategic dis-

course. As NATO continues its transition from a

Cold War military alliance, energy security is play-

ing an increasingly important role. NATO states,

being the most developed countries with strong

industrial bases, would continue to have the larg-

est demand for oil and gas to sustain their eco-

nomic engines. Saudi, a traditional oil supplier

to NATO countries, still has 20 trillion barrel of oil.

NATO states, which consume 43 per cent

of total oil and 42 per cent of gas production,

will undoubtedly continue to receive oil from the

Middle East but a sense of energy security also

dictates its shopping excursion into the huge

JAVED NOORANI


Caspian gas reserves to keep alternative energy

sources. However, the Caspian region is still seen

DVD5XVVLDQVSKHUHRILQÁXHQFH

The four Caucasus and Central Asian states,

namely Azerbaijan, Kazakhstan, Turkmenistan

and Uzbekistan, produced 4.7 trillion cubic feet

of gas, representing four per cent of the world’s

total production in 2010. The Russian federation

possesses 24 per cent of the gas reserves and

largely dominates the gas market in the Caspian

region to maintain its hegemony and thus use it

as a diplomatic tool.

Despite over-committing itself to various gas

exports - such as a deal to supply 30 billion cubic

feet of gas to China, some to Iran and export to

Kazakhstan though Russia - Turkmenistan has

committed itself to pipeline some gas to Euro-

pean Union too. Not surprisingly, the US and

European Union support Turkmenistan’s policy of

multiple export routes.

China, India, Pakistan and Iran are locked

into energy competition due to their industrial

needs. China and India have growing economies

which make energy an important element of their

strategic imaginations. Pakistan’s energy needs

are increasing by 10-12 per cent annually.

The country’s reserves appear to run

the gamut of mineral types. The north

has proven fields of coal, oil, gas, gold,

copper, precious and semi-precious gems;

the border with Pakistan in the east is

likewise dotted with troves of emerald,

ruby, aquamarine, kunzite, quartz, marble

and lithium. The central provinces

enjoy iron, chromites and lithium (the

latter a mineral with a significant new

potential market, due to its use in high-

end batteries); while the southwest has

potentially significant oil, gas, gold,

uranium and onyx deposits. The southern

part of the country, meanwhile, is said to

have copper and gold veins that run for

dozens of kilometres, estimated to be

worth some USD 200-400 billion at today’s

market prices. There are also gold- and

nickel-bearing areas sprinkled across the

hinterland.

Source: Integrity Watch Afghanistan

Integrity Watch Afghanistan (IWA) was

created in October 2005 and established

itself as an independent civil society

organisation in 2006 with the aim of

evolving into a reference actor committed

to understanding, analysing and

acting in the interests of transparency,

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Isolated Iran is the third largest importer

of gas despite and has the second largest gas

reserves. Now, cash-strapped, it urgently needs

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programme as the country’s political establish-

ment seeks regional power status. As a result,

the country’s leadership has desperately been

trying to showcase Iran, Pakistan and India (IPI

) gas pipeline as a more economical and viable

alternative to TAPI. Iran has already completed

over 80 per cent of the work on the IPI pipeline

running through its territory and has even offered

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,V,UDQLDQLQYHVWPHQWDQGFRQÀGHQFHLQ

the (IPI) pipeline underpinned by Russian and

Companies developing

Afghanistan’s resources:

China’s MCC at Aynak copper mine

Kilo Goldmines and Indian-led

steel company consortium at

Hajigak iron ore deposit

China National Petroleum at Amu

Darya oil and gas basin

Western-backed consortium led by

Kulczyk Investments and facilitated

by JP Morgan developing gold

project in Baghlan province

Chinese assurance to the country? It is hard to

imagine that it would otherwise invest so much

money in a pipeline that still does not have a con-

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if India, the other buyer Iran is trying to attract,

opts out of the project under heavy US pressure

underpinned by the Indo-US nuclear deal.

This leaves China, which has already made

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shadow of the US-led Western isolation of Iran.

Dr. Christian Lin, visiting scholar at SAIS Cen-

tre For Transatlantic Relations, The John Hopkins

University, writing about China’s silk road strate-

gy in Afghanistan-Pakistan, states that China has

invested over US$25 billion in the last decades

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projects such as onshore Azadagan and Yada-

varn and offshore South Pars, with the clear

intention of increasing its oil and gas supply with

OLTXHÀHGQDWXUDOJDV/1*LQLWLDOO\DQGHYHQWXDOO\

piped gas imports from Iran. So, if Pakistan agrees

to the Iran-Pakistan gas pipeline project, then it ef-

IHFWLYHO\ÀQGVDEX\HULQHQHUJ\KXQJU\&KLQD

Check and blockTAPI is promoted by the US to stop IPI and potentially

IPC [Iran Pakistan China pipeline] if China is looped

in as an end consumer for Iranian gas. This, along

with other economic sanctions, may synergise to


throttle the Iranian nuclear program and engineer

the collapse of the Iranian regime internally. And

WKHUHLVWKHDGGHGEHQHÀWRIGLPLQLVKLQJD5XVVLDQ

monopoly over Caspian gas while ensuring sustained

energy for US investment in India - considered a

strategic partner in a new world order.

7KHVHJHRSROLWLFDOUHDOLWLHVDUHUHÁHFWHGLQ

the polarisation of the international structure

itself. Recent US and Pakistani disputes over

NATO attacks on Pakistani army posts at the

border of Afghanistan often lead to suspension

of transit facilities to NATO trucks transporting

goods through Pakistan for international military

forces. There have been consistent voices in the

US Congress against partnership with Pakistan in

LWVÀJKWDJDLQVWWKH´:DURQ7HUURUµ3DNLVWDQKDV

desperately been trying to cling to China and is

ready to twist itself to keep its friendship intact to

survive and sustain.

It is possible that Pakistan’s heightened

needs for energy security and its isolation by the

US will push the country closer to IP gas pipeline

which may eventually become Iran-Pakistan-China

(IPC) pipeline. Iran joining Pakistan and China will

effectively lead China to navigate around India

and thus, not only complete the triangle but allow

Iran to emerge as an actor with greater strength to

threaten the world with a blockade in the Strait of

Hormuz. It is a powerful bargaining chip.

China’s energy needs are driven by its rapid

ReGional status

Pakistan has been eyeball to eyeball with

India over territorial disputes for six

decades, prompting an arms race which

takes important resources away from the

countries impoverished citizens even as it

stays armed to the teeth.

Meanwhile, Afghanistan is in the firm grip

of political instability and insecurity but

will be a key facilitator for the pipeline

through 730km of its territory.

The regional aspiration of India and its

energy needs magnify the importance

of sustained supply of gas for its large

industrial consumptions.

Turkmenistan has 21.2 trillion cubic feet of

recoverable gas and India offers the Turkmen

gas a sustainable market and an opportunity

to loosen Russia’s monopoly grip.


economic growth. “The principle concern over en-

ergy security in China is the perception that the

Chinese economy is highly dependent on a stable

supply of energy and cannot tolerate the slightest

interruption or shortfall,” writes Zha Daojiong, an

associate professor of international relations and

chair of the Department of International Political

Economy at Renmin University of China.

1RZDIWHUWKHJOREDOÀQDQFLDOFULVLVDQG

LQDQHQYLURQPHQWRIÀHUFHFRPSHWLWLRQIRUWKH

world’s natural resources, this situation is inten-

sifying. China has put its stamp in Sudan against

the wishes of Western countries and it has so far

turned a deaf ear to international concerns over

Iran’s nuclear programme.

86JRYHUQPHQWRIÀFLDOVKDYHYRLFHGFRQFHUQV

about China’s indifference and stated that China has

appeared even more reluctant than Russia to take

action against Iran on its shrouded nuclear program.

86RIÀFLDOVVDLGWKH\DUHSDUWLFXODUO\FRQFHUQHG

that China has blocked their efforts to target freight-

forwarding companies based in Hong Kong that

reship goods, including prohibited weaponry, to Iran,

according to media reports. As such, US efforts to

promote TAPI based on its geo-strategies will be met

with suspicion by global superpower China.

TAPI checkmate?The odds in the current scenario are against the

development of TAPI. Afghanistan is not secure

which could be used as an argument by some

of the countries participating in the project to

withdraw altogether. The Iranian political estab-

lishment may magnify insecurity in Afghanistan

to expedite this withdrawal of participating coun-

tries in TAPI and open itself to sell its own gas or

be a transit country.

There is suspicion of Iranian agents active

in the areas of Afghanistan demarcated for TAPI

natuRal Gas pRoVed ReseRVes (2009)

Quatar13%

Central Asia7%

Saudi Arabia 4%

US 4%

United Arab Emirates 3%

Venezuela 3%

Nigeria 3%


pipelines. Sources in Afghanistan’s south have

on numerous occasions reported that senior

members of Sepah Passdaran (The Iranian Revo-

lutionary Guards) have visited some provinces

along planned pipeline routes. There has been

evidence of Iranian weapons seized by interna-

tional militaries based in Afghanistan, though it

VKRXOGEHQRWHGWKDWZHDSRQVIURP1$72DIÀOLDW-

ed countries are ubiquitous.

China, in its aggressive campaign to reach

Africa, Asia and Latin America, may not like its main

FKDOOHQJHUWKH86WRLQÁXHQFHLWVQHLJKERXUVDF-

cording to US self-interest. China may play to stop

India its rival from accessing gas through TAPI. It

will be able to buy extra gas from Turkmenistan to

address its energy insecurity cost-effectively and

supply some of it to its xingjaing province, with

some rebellious Muslim population thus stabilising

the region through industrialisation and connect-

ing it to the Silk Road. To this end, Kashgar, part

of xingjaing, is one of those areas where a Special

Economic Zone is being established.

Pakistan, in the light of its long term interest

and fear of dependence on Afghanistan, may opt

for the Iranian pipeline to have access to reliable

gas supply and earn some money in transit.

Besides this, the Iran-Pakistan gas pipeline

will give the two countries cover to suppress the

people of Balochistan, who have roots in and

disputes with both countries. TAPI will collapse in

such a situation where all the major regional ac-

tors excluding India team up together against it.

Such an event will rob Afghanistan of the chance

for the project to contribute to the country’s sta-

bility through investment.

At stakeAfghan hydrocarbon experts from the 1980s

pointed out that Afghanistan’s northern geology

natuRal Gas pRoVed ReseRVes (2009)

Russian Federation24%

Iran16%

Nigeria 3% Source: BP Statistical Review of World Energy 2010


EHDUVVLPLODUFRQVWUXFWVDVWKHJDVULFKÀHOGVLQ

Turkmenistan. There is every likelihood that Af-

ghanistan’s gas reserves will compare and even

rival Turkmenistan’s resources.

The United States Geological Survey (USGS)

carried out two surveys to identify the mineral

resources of Afghanistan with the second

identifying 12 potential sites. The Afghan-

Tajik basin was subjected to intense seismic

surveys using latest technologies to peep into

underground formations. Reliable sources

following the survey, shared on condition of

anonymity, say that the early sign from the

seismic survey show presence of huge gas

deposits in Afghanistan. Another source said

that Afghanistan could have better reserves than

inteRnational eneRGy outlook 2011

China and India together will consume 31

per cent of the world’s energy in 2035, up

from 21 per cent in 2008.

By 2035, China’s projected energy

consumption is 68 per cent higher than US

energy consumption.

Global energy consumption grows 53 per

cent between 2008 and 2035, representing

an average annual growth rate of 1.6 per

cent

Sidebox:

A Soviet survey of gas in Afghanistan

compiled the following deposits of gas in

the country. However it needs to be borne

in mind that the figures show only the

minimum reserve potential.

The proven gas deposits in Afghanistan

S.No

1

2

3

4

5

6

Kind of Energy

Gas

Gas

Gas

Gas

Gas

Gas

Region

Aqcha

Umalik (Char Bolak )

Elikrabt (Aqcha)

Shakhi Bel and Shamala Andkhoy

Ashraf and Darwaz Qader

Shakhmala

Quality Billion Cubic Feet

300

500

500

500

1000

500

Engineer Sadiq Niazi)


300

500

500

500

1000

500

Turkmenistan. No doubt, the discovery of the

gas in Afghan-Tajik Basin will rekindle hopes of

stability and security once again. Some sources,

on condition of anonymity, said that the USGS

had estimated gas reserves in Afghanistan’s

north to be 25 trillion cubic feet. Moreover, the

country may be home to reserves in Katawaz

basin in the southeast.

With these kinds of deposits, Afghanistan

can turn into a regional gas-bazaar and qualify to

join the elite gas suppliers club. Chevron’s inter-

est in the Afghan-Tajik basin and China’s Nation-

al Petroleum Company’s eye-catching contractual

terms in favour of the Afghanistan government

for the Amu Darya oil deposits in the north of the

country are clear signals that there is more to

ÀQG7KHVHFRPSDQLHVDUHWRRELJWRFRPHDQG

invest in a mere 87 million barrels of oil. Some

sources say Tajikistan has already been using

diplomatic channels to bid for Afghan gas.

Failure of TAPI will amount to US failure in

Afghanistan. One of the reasons for the US to

put boots on the ground was to ensure the TAPI

pipeline was made possible; US-based Unocal

was competing with Bridas, a Brazil-based oil

FRPSDQ\WREXLOGWKHSLSHOLQH8QRFDOWHVWLÀHG

to Congress and said that such a pipeline was

not possible unless an internationally recognised

government was put in place in Kabul, as stated

by Canadian energy economist John Foster

writing in the Energy Security Journal.

Pawn’s promotion?Pinning so much hope in TAPI without under-

standing the regional giants which will at all costs

seek to secure their interest is a giant misstep

and a potential tragedy for Afghanistan. Though

7$3,LVEHQHÀFLDOIRUWKHIRXUSDUWLFLSDWLQJFRXQ-

tries at the moment, the shifting geopolitics may

take regional actors away from the project.

A more prudent path for Afghanistan would be

to explore its own gas to supply to its households

and industries and encourage indigenous invest-

ment. Gas can also be used for electricity genera-

tion and presents tremendous export potential.

7KHUHLVQRWKLQJPRUHVWUDWHJLFDOO\EHQHÀFLDOIRU

Afghanistan than building its own mines and under-

standing its neighbours’ strategies, which is critical

to avoid being trapped into their game plans.

-DYHG1RRUDQLLVDUHVHDUFKHUZLWK,QWHJULW\

:DWFK$IJKDQLVWDQ+LVFXUUHQWDUHDRIIRFXVLVRQ

WKHH[WUDFWLYH,QGXVWU\LQ$IJKDQLVWDQ1RRUDQLKDV

0$LQ&RQÁLFW$QDO\VLVDQG3HDFHEXLOGLQJIURP

1HOVRQ0DQGHOD&HQWUHIRU3HDFHDQG&RQÁLFW

5HVROXWLRQ-0,1HZ'HOKL+LVUHVHDUFKLQWHUHVW

DOVRH[WHQGVLQWRVRFLDODQGVHFXULW\LVVXHVDVZHOO

7KHYLHZVH[SUHVVHGDUHKLVRZQ

With construction activity gearing up for full swing, Metals Exploration’s next step is to announce project !nancing to get its Runruno gold mine in the north Philippines into production

Full steaM aheadMetals Exploration

134

With construction activity gearing up for full swing, Metals Exploration’s next step is to announce project !nancing to get its Runruno gold mine in the north Philippines into production

Full steaM aheadMetals Exploration

asia

136 ASIA Metals Exploration


Metals exploRation is going full steam ahead

into the construction phase of development,

KRZHYHUWKHRIÀFLDOJUHHQEXWWRQLVQ·WJHWWLQJ

pushed until a full funding package is in place,

which Ian Holzberger, chairman and project direc-

tor at Metals Exploration, expects to announce in

the coming weeks.

“As soon as the drawdown is available on

WKDWGHEWÀQDQFLQJZHZRXOGEHORRNLQJWRJHW

into full construction and the trigger on that is

really the construction of the processing plant,

which is ready to go and we have already started

construction for the plant pad,” Holzberger says.

Feasibility and optimisation studies show an

average annual production of 96,700 ounces

(oz) of gold over an initial mine life of 10.3 years

at an average operating cost of $477/oz while

the internal rate of return is expected to be 42

per cent at a $1,500/oz gold price.

The area is also home to some 25 million

pounds (Mlb) of molybdenum, which Holzberger

explains could be a future credit story though the

company’s key focus is getting gold into produc-

WLRQDQWLFLSDWHGIRUWKHÀUVWTXDUWHURI

“Because we are using biological leaching the

process becomes hydrometallurgical…lab work

suggests it will work for us to recover that moly, but

because it is a novel process, we don’t want to com-

promise the main game, which is gold,” he says.

Biox, the biological leaching process tech-

nology that Metals Exploration will be using

at its plant, is the intellectual property of a

subsidiary of South African miner Gold Fields

and is one of the many partners the company

is working with as it upgrades basic infrastruc-

tures in its operating region.

Improvement partners2QHRIWKHVSLQRIIEHQHÀWVWRRSHUDWLRQVLVLP-

provement in the local area, adds Holzberger.

“While there are roads and power already

available, it needs to be upgraded and part of our

development plan is leveraging off that to improve

it. This will cut our costs but also it will improve local

conditions so it is a double win for us,” he says.

Although Leighton is the primary contractor on

site tasked with building the processing plant, most

additional contractors are from the Philippines.

“"is project is on the cusp of being developed, there have been very few new programmes that have actually been !nanced so we are a stand out and we are going to kick that goal” – Ian Holzberger

138 ASIA Metals Exploration

www.gxdsupply.comGEOLOGICAL, EXPLORATION & DRILLING SUPPLIESAFP-RSBS Industrial Park, KM-12, East Service Road cor C-5, Taguig City, 1630 PhilippinesPh : 63 2 866 1033 | Fax : 63 2 866 1036

GXD was established in the Philippines to provide services to the Construction, Geological, Exploration and Mining industries. Since the conception of the company we have emphasized delivering quality and reliable services and materials to the industry. All the products and services that we provide have been the best available in the market and supplied directly to our clients from the manufacturer with the necessary backup the industry demands.

GEOLOGICAL, EXPLORATION AND DRILLING SUPPLIES

METALS ExPLORATION BAGGED THREE OF THE MOST COVETED AWARDS IN THE MINING INDUSTRY INCLUDING 2011 PRESIDENTIAL MINERAL INDUSTRY ENVIRONMENTAL AWARD


“This project is on the cusp of being devel-

oped, there have been very few new programmes

WKDWKDYHDFWXDOO\EHHQÀQDQFHGVRZHDUHD

stand out and we are going to kick that goal,”

Holzberger says.

Broker’s viewAt its most recent AGM, the company lost one

of its non-executive directors, Jonathan Beard-

sworth, who did not stand for re-election. Though

this was unexpected, observers note that it may

not be too surprising since Beardsworth had a

IXOOWLPHSRVLWLRQZLWK&XWÀHOG)UHHPDQ&RDV

their managing director in Asia.

John Meyer, analyst at Fairfax noted that

Beardsworth’s commitments left little time for

other roles.

“The current challenge for Metals Exploration

LVWRJHWRYHUWKHSURMHFWÀQDQFHKXUGOHµ0H\HU

VD\V´:HORRNIRUZDUGWRQHZVRQWKHÀQDOLVDWLRQ

RIWKH5XQUXQRJROGPLQHÀQDQFLQJLQWKHQHDU

future and expect the team to be in the UK in the

next few weeks to report on the mine develop-

ment and exploration progress.”

Meyer adds that further exploration in the

area shows additional bulk mining opportunities

with good grades and near surface tonnage.

www.MetalsexploRation.coM

“We like to work with indigenous contrac-

tors that have the capacity and skill, so the

benefits are captured into the local and ex-

tended area rather than using offshore con-

tractors,” Holzberger adds.

Over and above that, Metals Exploration uses

several consulting groups as well such as Austra-

lian-based GHD Consulting.

Though it is likely that there will be further

permitting which will be required, major permits

and licences have been approved, which has

become one of the main concerns for operations

that are only beginning in the Philippines as the

JRYHUQPHQWGHEDWHVDQHZÀVFDOUHJLPH

METALS ExPLORATION BAGGED THREE OF THE MOST COVETED AWARDS IN THE MINING INDUSTRY INCLUDING 2011 PRESIDENTIAL MINERAL INDUSTRY ENVIRONMENTAL AWARD

news in ReViewclontaRF in talks on peRu oil and Gas

opeRations

iRJ - June 13 - UK-based oil and gas explorer Clon-

tarf is in talks with a number of joint venture and

strategic partners over its 100 per cent owned

exploration blocks in Peru.

One of the blocks in question - Block 188 - lies

DURXQGNPIURPWKHJLDQW&DPLVHDJDVÀHOG

which has a resource of 16 trillion cubic feet and

880 million barrels of oil (mmbbl).

Block 188 includes the Panguana well which

was drilled to a depth of 2,750m striking oil with

37api by Phillips Petroleum in 1999. The company

believed that Panguana’s Green Sandstone struc-

ture held 31mmbbl of oil.

Once a partner is secured, Clontarf plans to

re-enter the structure with an appraisal well to

FRQÀUPWKHUHVHUYHVWHVWRWKHUWDUJHWVDQGPRYH

to early development.

“Block 188 now looks much nearer to de-

velopment than we previously thought. Investor

attention had been on Ghana, where [Clontarf] is

DZDLWLQJUDWLÀFDWLRQRQLWVOLFHQFHEXWWKHNH\IR-

cus is now on Peru. The securing of a JV or strate-

gic partner on either Block 188 or 183 could lead

141AUGUST 2011 The African Business Journal

iew Emerging and frontier jurisdictions

WRDVLJQLÀFDQWERXQFHLQWKHVKDUHSULFHIURPLWV

current depressed lows. The market cap remains

at just £7m, which seems too low for an oil and

gas company that could be close to advancing a

sizeable asset,” said Jason Robertson, analyst at

Optiva Securities.

pRiVate equity Bets on oil exploRation

technoloGy

iRJ – June 12 –3ULYDWHHTXLW\ÀUP$SD[3DUWQHUV

and technology investment company JMI Equity

have agreed to buy software group Paradigm for

around $1 billion.

Paradigm, whose analytical technology is tar-

geted at oil and gas explorers and producers, was

last bought by US investment group Fox Paine for

around $100 million in 2002.

´3DUDGLJP«LVZHOOSODFHGWREHQHÀWIURP

strong tailwinds in the coming years as energy

companies look to drill in more challenging loca-

tions,” said Apax senior partner Ian Jones.

Apax was advised by Bank of America Merrill

Lynch and Simmons & Co; Paradigm was advised

E\-HIIHULHVDQGGHEWÀQDQFLQJLVEHLQJSURYLGHG

by UBS and Royal Bank of Canada.

142 SECTION Title

news in ReView

By the middle of 2013, the miner aims to

triple its current Pilbara production capacity of 55

million tonnes.

Bp consideRs oFFeR FoR Russian JV stake

iRJ - June 1 - BP will be pursuing a potential sale of

its shareholding in TNK-BP after receiving unso-

licited indications of interest. The company added

that there is no guarantee a transaction will take

place.

The Financial Times said a sale could fetch up

to $30 billion and cited an unnamed source who

said the offer had come “from one of the Russian

state companies”, but would not specify whether it

was Rosneft or Gazprom.

The equal joint venture with Russian oli-

garch consortium Alfa Access Renova, led by

0LNKDLO)ULGPDQKDVDKLVWRU\RIFRQÁLFWSXQF-

tuated by Fridman’s recent resignation as chief

executive of TNK-BP.

TNK-BP was formed in 2003 as the result of

the merger of the oil and gas assets of the two

partners. It is vertically integrated with a diversi-

ÀHGXSVWUHDPDQGGRZQVWUHDPSRUWIROLRLQ5XV-


news in ReView Emerging and frontier jurisdictions

sia and Ukraine and international interests in

Brazil, Venezuela and Vietnam.

kuwait to inVest $500M in uk noRth sea oil Field

iRJ - May 30 - Enquest will farm out a 35 per

FHQWLQWHUHVWLQLWV$OPDDQG*DOLDRLOÀHOGGHYHO-

opments to Kuwait Foreign Petroleum Explora-

tion Company (KUFPEC) for a total investment of

$500 million in cash.

7KH$OPDÀHOGSUHYLRXVO\NQRZQDVWKH$UJ\OO

ÀHOGZDVWKHÀUVWRLOÀHOGWREHGHYHORSHGLQWKH

UK North Sea. Alma was previously abandoned

because of high water content of output. First

production is anticipated in the fourth quarter of

2013, with peak gross production of over 20,000

ERHSGDQGWKHÀHOGLVHVWLPDWHGWRFRQWDLQ

million barrels of oil.

According to the Financial Times, Amjad

Bseisu, chief executive of EnQuest, said the talks

began last year with partners over investing in the

$1bn project but were held up until tax breaks

FRXOGEHFRQÀUPHGIURPWKH8.JRYHUQPHQW

Commenting on the deal, chief secretary

to the Treasury, Danny Alexander, said: “This is

good news for North East Scotland and the whole

of the UK…Today’s deal between EnQuest and

KUFPEC, bringing up to £300m of foreign invest-

ment into the North Sea, proves that the UK

continental shelf remains an attractive prospect.

The Government will continue working with the

industry in the North Sea to get the most of what

is a huge national asset.”

anGloGold takes Full owneRship oF BRazilian

Mine FoR $220M

iRJ - May 29 - AngloGold Ashanti is set to acquire

the remaining 50 per cent stake in Mineracao

Serra Grande in Brazil from Kinross for $220 mil-

lion. The transaction will be funded from existing

cash reserves and debt facilities.

To date, the Serra Grande mine has pro-

duced 3.4 million ounces (Moz) of gold. Last

year, the mine produced 134,000 ounces of gold

at a cash cost of $767 per ounce. Over the past

four years, more than 1Moz of mineral resources

have been added.

´7KLVGHDOIXUWKHUVLPSOLÀHVRXUSRUWIROLRDQG

gives us greater exposure to Brazil, where we’ve

KDGVLJQLÀFDQWVXFFHVVLQJURZLQJRXUSURGXFWLRQ

as well as our reserve and resource base,” Mark

144 SECTION Title

news in ReViewCutifani, AngloGold Ashanti’s chief executive, said.

“We see long-term, lower risk, potential from Serra

Grande, which is a key component of our strategy

to grow the contribution from the Americas.”

The operation comprises three under-

ground mines and one open pit mine as well

as a processing plant.

codelco chieF ResiGnation May sMooth

anGlo dispute

iRJ - May 25 - The resignation of Diego Hernández,

chief executive of Codelco, could be positive for

negotiations over the ownership of the Anglo Sur

copper division in Chile. Hernández cited “person-

al reasons” for his departure and there were ru-

mours that he had not been aligned with the rest

of the company’s board. Finance director Thomas

Keller will take on the chief executive role.

The move comes as Codelco and Anglo Ameri-

can agreed to restart talks over the ownership of

assets in Chile, including Anglo’s Los Bronces mine.

“Codelco’s previous stance taken very publi-

cally by their CEO was not particularly helpful

given the scale of investment being made by An-

glo into Los Bronces. Codelco need to grow their

copper production but so do Anglo and there

should be some middle ground in discussions,”

said John Meyer, analyst at Fairfax.

Los Bronces capex is $2.8 billion with pro-

duction expected to be at 278,000 tonnes of

copper per year and full production anticipated

in the third quarter this year. Codelco had tried

to exercise an option to purchase 49 per cent

of the Anglo Sur division, which includes the

Los Bronces mine, but the move was blocked by

Anglo American in an increasingly bitter dispute

between the two mining giants.



oRe expoRt appRoVals MoVinG in indonesia

iRJ - May 23 -,QGRQHVLDKDVVHHQWKHÀUVWPLQHU-

al export approvals start with reports suggesting

WKDWRYHUFRPSDQLHVKDYHJDLQHGWKHÀUVW

of three approvals needed to export ore, reports

Standard Bank.

On May 6, Indonesia banned exports of 14 raw

minerals with an exception for miners that plan to

build local processing facilities. However, a tax rate

of 20 per cent will be applied to ore shipments.

“It will be interesting to see how long it takes

before exports resume properly. For the moment

however, some of the concerns regarding avail-

ability of raw materials from Indonesia appear to

have subsided for the moment,” said Leon West-

gate, analyst at Standard Bank in a note.

The announcement in May sent Japan and

China scrambling to secure alternative supplies of

raw materials, particularly bauxite and nickel ore.

Indonesia is also the world’s top exporter of tin.

GlencoRe take MaJoRity contRol oF dRc

coppeR Mine

iRJ – May 22 - Commodities trader Glencore said

today that it has taken majority control of its

Mutanda copper mine in Democratic Republic of

Congo by paying $340 million to acquire a fur-

ther 24.49 per cent in Samref Overseas, a hold-

ing company above Mutanda, and another 1 per

cent in Samref Congo, a second holding com-

pany, taking its whole equity interest in Mutanda

Mining to 60 per cent.

´7KHDFTXLVLWLRQUHSUHVHQWVDVLJQLÀFDQWÀUVW

step towards achieving Glencore’s previously an-

nounced intention to merge the Mutanda and Kan-

suki mining operations,” Glencore told Reuters.

Mutanda and Kansuki combined will produce

160,000 tonnes per year of copper cathodes and

146 SECTION Title

news in ReViewWRQQHVRIFREDOWLQK\GUR[LGHE\WKHÀUVW

half of 2013. Glencore’s plans have led it to also

acquire around $140 million of shareholder debts

as part of the deal.

The announcement comes in the midst of the

much anticipated $90 billion “GlenStrata merger

of equals”.

According to the Financial Times commodities

note, long only funds have been spotted buy-

LQJ*OHQFRUHZKLFKZLOOKDYHDIUHHÁRDWRI

per cent on May 24 when some 36 per cent of

shares come off lock-up. The implication is that

index linked tracker funds will be buying the Swiss

trader as it gains a greater weighting in the FTSE,

putting the company in a good position to see the

merger voted through.

idc Backs diaMondcoRp’s lace Mine with $33.6M

loan

iRJ - May 21 - DiamondCorp has signed a term

sheet with South African state-backed Industrial

Development Corporation (IDC) for a $33.6 mil-

lion loan to develop the Lace Mine in Free State

province.

7KHFRPSDQ\DQWLFLSDWHVWKDWWKHORDQÀQDQF-

ing agreement, which is for seven years at a bor-

rowing cost of 11 per cent, will be in place by the

end of July 2012.

“The mine plan shows a deeper level of min-

ing and longer development time – this is posi-

tively offset by block cave economics with longer

block cave life and higher grades providing for

EHWWHUSURMHFWFDVKÁRZVµVDLGEURNHU)DLUID[

adding that the technical mining and processing

plant have been subject to in-depth review by SRK

Consulting.

Maiden run of mine production is expected at

around 8 thousand carats (kcts) supplemented by

tailings reprocessing that is expected to produce

around 15kcts in 2012 and 30kcts in 2013. Lace

will reach full production by mid-2014 producing

300kcts from both tailing and run of mine produc-

tion, according to Northland Capital Partners.

DiamondCorp owns 74 per cent of the Lace

diamond mine with the remaining 26 per cent

held by the company’s Black Economic Empower-

ment (BEE) partners.

DiamondCorp CEO, Paul Loudon said: “The

key driver for management in seeking funding for

WKH/DFHPLQHGHYHORSPHQWKDVEHHQWRÀQGWKH



RSWLPXPÀQDQFLQJPHWKRGZKLFKLVWKHOHDVWGLOX-

tive for shareholders of the company. Therefore,

we are delighted that we and our [BEE] partners

KDYHEHHQDEOHWRDJUHHLQSULQFLSOHDGHEWÀQDQF-

ing proposal from the IDC to provide over 98 per

cent of the estimated capital required to establish

a block cave development on the 47 level at the

/DFHPLQH7KLVLVDVLJQLÀFDQWPLOHVWRQHLQ'LD-

mondCorp’s transition from developer to producer

and we welcome the support of the IDC in funding

this potentially long-life diamond mine in the Free

State Province.”

nsl BecoMes FiRst FoReiGn iRon oRe pRoduceR

in india

iRJ – May 18 – Perth-based commodity company

16/&RQVROLGDWHGKDVVROGLWVÀUVWLURQRUHLQWR

the Indian domestic market, marking its transi-

tion into a producer.

It is now the only foreign company to own and

operate iron ore mines in India.

NSL managing director Cedric Goode said

EHFRPLQJWKHÀUVWIRUHLJQLURQRUHSURGXFHULQ

,QGLDZDVD´VLJQLÀFDQWPLOHVWRQHµIRUZKLFKWKH

company has had to overcome many challenges.

“Our journey is only just commencing as we

progress through completing phases 1 and 2, to

utilising our experience and actual performance to

lift NSL to its desired 1.5 million tonne per annum

(Mt/y) target by the end of 2014,” he continued.

“This target being possible through bolt-on

wet and dry separation plants to increase output,

together with sourcing additional ore feed through

strategic acquisitions and supply agreements.”

The company is currently constructing and

commissioning the Phase 1 Kurnool iron ore dry

separation plant, which will be capable of pro-

ducing up to 58 per cent Fe grade ore.

148 SECTION Title

news in ReViewNSL expects to begin gradually ramping up

production and sales tonnages towards Phase

1’s target production capacity of 200,000 tonnes

per annum (t/y) in the third quarter.

The dry separation circuit is expected to un-

GHUJRÀQDOFRPPLVVLRQLQJEHIRUH-XQH

Phase 2 of the project will comprise the

FRQVWUXFWLRQRIDZHWEHQHÀFLDWLRQSODQWFDSDEOH

RISURGXFLQJÀQDOSURGXFWJUDGHVRIEHWZHHQ

and 62 per cent Fe.

This plant is intended to double capacity to

400,000t/y and is scheduled for completion in

WKHÀUVWKDOIRI

“With the increase in funds being allocated

to infrastructure projects, Indian domestic steel

production is expected to increase from 77Mt to

200Mt by 2020,” Goode added.

“The company looks forward to making its

contribution as part of this growth.”

FiFth consecutiVe tanzania Gas discoVeRy

iRJ – May 17 - %**URXSKDVDQQRXQFHGLWVÀIWK

consecutive Tanzania gas discovery with the

Mzia-1 exploration well located in Block 1, off-

VKRUHVRXWKHUQ7DQ]DQLD0]LDLV%*·VÀUVWGLV-

covery within the deeper cretaceous section and

opens an extensive new play fairway within the

Group’s offshore acreage in Blocks 1, 3 and 4, to

complement the now proven Tertiary fairway.

Preliminary evaluation of the results indi-

cates 55m of natural gas pay in good quality

sands. An extensive logging programme has

been completed, including the acquisition of

pressure data and gas samples.



6LJQLÀFDQWO\WKHZHOOKDVGHULVNHGDQXPEHU

of adjacent cretaceous prospects, which could

form part of a future Mzia hub. These prospects

are expected to be tested in a future appraisal

SURJUDPPHWREHGHÀQHGIROORZLQJLQFRUSRUDWLRQ

of data from this new well and 3D seismic.

The new resources proven by Mzia and the

potential of adjacent prospects are currently un-

der evaluation. Prior to drilling Mzia-1, BG had es-

timated mean total gross recoverable resources

approaching seven trillion cubic feet of gas from

the four previous discoveries drilled in Tanzania.

Mzia-1 is approximately 45km offshore south-

ern Tanzania in a water depth of 1,639m. It is some

23km from the Jodari-1 discovery and is part of the

2012 three-to-four well exploration programme.

Following the imminent completion of opera-

tions at Mzia, the Deepsea Metro-1 will relocate

to Block 3 for the drilling of the next exploration

prospect, Papa-1.

BG Group as operator has a 60 per cent

interest in Blocks 1, 3 and 4 offshore Tanzania,

with Ophir Energy holding 40 per cent.

150 LATIN AMERICA What went wrong with YPF

A risk management perspective of Argentina’s nationalisation of resources

Repsol’s forced divestment of its YPF subsidiary by the Argentine government is a perfect example of the kinds of factors which lead to forced nationalisation, writes Jorge Vrljicak, Buenos Aires-based analyst for Westside Consultants.

ypF’s FoRced nationalisation is a backlash against

its 1992 privatisation because the market reform

IDLOHGWRSURYLGHH[SHFWHGEHQHÀWVIRU$UJHQWLQD

In essence the end result is not very differ-

ent from BP’s Gulf oil spill case - the corporation

has only itself to blame for the outcome. Many

analysts tend to consider Argentina’s action as

arbitrary and a product of ‘resource nationalism’,

comparing it to Venezuela or Russia. However,

those same analysts forget Norway’s nationalisa-

tion of oil in 1972, among other cases.

That is not to say that a nationalistic compo-

nent is not a factor but Argentina’s history is well

known. YPF and the oil issue were at the centre

of 70 years of political storms in the country even

prior to the start of the 1990 privatisation pro-

FHVVLQFOXGLQJWKHFRXSG·pWDW

Meanwhile, there are still simmering tensions

over the image of “Spanish Conquistadors”, who

would grab and remit to Madrid anything they can lay

their hands on. This particular factor led to the un-

fortunate 2008 nationalisation of Argentina’s airline,

what went wRonG with ypF150


Aerolineas Argentinas, owned by Spanish Marsans

Group, which was also privatised in the ‘90s.

Government faultNo doubt it was the government which made the

ÀUVWPLVWDNHV)RURQHLWGLGQ·WHVWDEOLVKFOHDU

obligations and goals for bidders outside of pay-

ing royalties. In addition, the government allowed

leveraged buy-outs, which led to asset stripping

DQGLQVXIÀFLHQWLQYHVWPHQW$QG5HSVROZDVDF-

cepted as a bidder though it had no prior experi-

ence in upstream operations.

5HSVROZDVDUHÀQHUDQGPXFKVPDOOHUWKDQ

YPF throwing into question the legitimacy of the bid-

ding process itself, with some factions pointing out

WKDWLWZDVQRWVXIÀFLHQWO\WUDQVSDUHQW7KHUHZDVD

ODVWLQJLPSUHVVLRQWKDWLQÁXHQWLDOSHRSOHJRWXQGH-

servedly rich in a short period of time.

It is true that the government didn’t have, nor

does it now have, an energy master plan. How-

ever, for anyone concerned, the thorns in the paw

of the lion are obvious - namely energy self-suf-

ÀFLHQF\MREFUHDWLRQSRVLWLYHWUDGHEDODQFHDQG

JRYHUQPHQWÀQDQFHV,QRWKHUZRUGVFXVWRPHU

and government satisfaction.

All this was irresponsible for Repsol to ignore

and disregard. There was never a satisfactory

OHYHORIFDSLWDOLQYHVWPHQWQHLWKHUÀQDQFLDOQRU

political. It was all a game of leverage as Spain

HQMR\HGKLJKÀQDQFLDOOLTXLGLW\DQGORZLQWHUHVW

UDWHV7KDWLVXQWLOWKHÀQDQFLDOFULVLV

6RZKHQWKHÀJXUHVZHUHUHOHDVHGDQG

what went wRonG with ypF

latin aMeRica

152 LATIN AMERICA What went wrong with YPF

showed YPF’s production declining 60 per cent,

petroleum and gas reserves down to one third

of peak levels, imports up by 100 per cent from

WKHSUHYLRXV\HDUZKLOHSURÀWVZHUHSHUFHQW

down from their peak - nobody was very happy.

But the real damage came when it became

widely known that Repsol intended to repatriate

WKHGLYLGHQGVDQGZDVWU\LQJWRÀQGDEX\HUIRU

its stake. Until that moment, Repsol had time

and dialogue with the government.

In short, Repsol didn’t serve its customers

properly. Which is why when Argentine president

Cristina Fernandez declared the government’s

intention to renationalise, no one shed a tear for

the Spanish parent. If anything, there was some

concern that the cure was no better than the

illness and may negatively impact foreign direct

investment into the country. Though this seems

unlikely as oil majors compete to pick up YPF

operations and the Argentine government sends

clear signals that it is willing to talk.

Expectations managementWas it possible for Repsol to better manage and

hedge its risks? Yes.

The company had plenty of chances and no re-

strictions making its mistakes conspicuously worse.

There was little evidence that Repsol cared

about upstream discovery and development –

ZKHWKHUWKDWZDVEHFDXVHLWZDVXQDEOHRUXQÀW

But the real shame was that the one thing that

the company should have had expertise in, the

downstream sector, was left neglected.

Storage capacity, for example, was not prop-

erly attended to which left supply vulnerable to

WKHVKRFNVRIVHDVRQDOFRQVXPSWLRQÁXFWXD-

tions. Gas-oil during planting and harvest sea-

sons became scarce causing inconveniences

to farmers. Tourist seasons and long weekends

proved to be a challenge for car travellers in

search of petrol. The manufacturing industry

consistently complained about the petroleum

and gas industry due to its continued fuel short-

ages. Moreover, households have priority for fuel

delivery during shortages, making matters worse

for manufacturers.

Storage facilities should have included tank

IDUPVIRUFUXGHDQGUHÀQHGSURGXFWVDVZHOODV

tank capacity at service stations. Doubling ca-

pacity at those points to account for two weeks

of consumption would have mitigated the risks of

frequent strike action by truckers.

Marketing innovation was non-existent other

than for petrol itself. Repsol was reluctant to create

or participate in a possible futures market, a move

that would have been welcomed by consumers and


reduced YPF’s exposure to commodity price risk.

On top of that, human resources were not

valued nor were employees promoted properly.

Segregation of YPF staff from Repsol was pain-

fully obvious, even as the parent needed the best

of local ingenuity to run its operations. That local

LQJHQXLW\ZDVDIWHUDOODVLJQLÀFDQWIDFWRUZKLFK

helped Repsol’s endeavour in Alaska, among

RWKHUEHQHÀWV

The company’s interaction with local com-

munities, including provincial governments and

municipalities, was also defective. One wonders

what sort of rationale was behind expensive

company initiatives such as promoting football

clubs when investment was better spent in com-

munities to boost jobs and fund schools and

hospitals.

Ripple e!ect? Lack of allocated capital and sloppy manage-

ment for the biggest Argentine oil and gas com-

pany was bound to lead to problems. Risk man-

agement presupposes essentially two things:

that there should be enough capital to foot the

bill for a viable functional project and that an-

other tranche of equity should be available for

possible volatility.

,QWKLVFDVHWKHSURMHFWGLGQRWSDVVWKHÀUVW

condition. It was absolutely dysfunctional.

A parallel can be drawn to a similar case of

water distribution and sewage services run by

Aguas Argentinas - a consortium led by Suez,

Aguas de Barcelona, Vivendi and AWG Group

- which lost its contracts for mismanagement

under similar circumstances.

Still, it remains to be seen whether this

nationalisation leads to a decrease in foreign

LQYHVWPHQWVLQFHLWLVGLIÀFXOWWRLPDJLQHWKDW

SURÀWDEOHFRPSDQLHVOLNH7HOHIyQLFDGH(VSDxD

which provide satisfactory services, could ever be

put in such odious position.

westsideconsultants.coM

$IWHU\HDUVLQEDQNLQJ-RUJH9UOMLFDNVSHFLDOLVHGLQ

TXDQWLWDWLYHÀQDQFLDOUHVHDUFKWKHGHYHORSPHQWRI

DQDO\WLFDOVRIWZDUHOHDGLQJFRQVXOWLQJWHDPVDQG

UXQQLQJRQOLQHÀQDQFLDOLQIRUPDWLRQVHUYLFHVWKH

ODWWHUDW5HXWHUVIRU\HDUV+LVH[SHULHQFHRI

\HDUVLQFOXGHVFUHGLWFRPPRGLWLHVHTXLW\À[HG

LQFRPHPRQH\DQGIRUHLJQH[FKDQJHPDUNHWVLQ-

FOXGLQJFHQWUDOHFRQRPLHVDQGHPHUJLQJPDUNHWV

154 LATIN AMERICA Leni Gas and Oil

Leni Gas and Oil is setting o# from Spain for greener pastures in Trinidad

the tRinidad option

154


Leni Gas and Oil is setting o# from Spain for greener pastures in Trinidad

the tRinidad option

latin aMeRica

WORKOVER AT AYOLUENGO


GOUDRON WELL IN TRINIDAD


london-headquaRteRed leni Gas and Oil (LGO)

LGHQWLÀHVSRWHQWLDOLQH[LVWLQJUHVHUYHVDQGGH-

velops those reserves with new technologies and

investment. Its strategic assets are the Ayoluen-

JRRLOÀHOGLQ6SDLQWKHRQO\SURGXFLQJRLOÀHOGLQ

the country, and it has interests in the Caribbean

island nation of Trinidad.

But the company’s asset base is about to

change, explains Neil Ritson, chief executive at

LGO, as it divests the Spanish assets to further

FDSLWDOLVHDQGGHYHORSLWV7ULQLGDGLDQRLOÀHOGV

Switching playsFirst developed by Chevron in the 1960s, the

$\ROXHQJRRLOÀHOGZDVJLYHQDZRUNRYHUDIWHULW

was acquired by LGO, a move that doubled pro-

duction which peaking at over 300 barrels of oil

SHUGD\ERSGODVW\HDU7KHÀHOGLVHVWLPDWHGWR

have over 100 million barrels (mmbbls) original

oil in place. Unfortunately, the economics showed

that between 300 to 400 per cent increase was

necessary to create the necessary internal cash

ÁRZWRJURZZLWKRXWIXUWKHUH[WHUQDOLQYHVWPHQW

The operational cost structure, explains Rit-

son, is not particularly favourable.

“Equipment needs to be imported across

Europe, there is no indigenous service sector,

while labour, equipment and transportation costs

are on the high end compared to the US or other

international areas and on top of that, there is

no obvious follow-on business,” says Ritson.

6WLOOLWLVDSURÀWDEOHHQWHUSULVHHYLGHQFHG

by interest from multiple bidders when the asset

went on sale. Ritson downplays the impact of

the eurozone crisis in the company’s divestment

decision, saying that he has not seen interest

for European primary production assets wane;

though raising capital to develop them will likely

FRQWLQXHEHLQJGLIÀFXOW

Out of the submitted proposals, one bid-

der was given exclusivity until the end of May to

PDNHDÀUPEX\LQJDUUDQJHPHQW5LWVRQLVWLJKW

lipped about any further details as discussions

are ongoing, but he does add that should talks

stall, other bidders are waiting on the sidelines.

“We should conclude something in the third

quarter, but if the current market does not sup-

port the kind of price we want then we will keep

WKHDVVHWLWLVQRZSURÀWDEOHDQGPDNHVPRQH\

for us every month,” Ritson says.

Trinidad opportunitySo why sell now? In the continuing turbulence of

capital markets – particularly for small caps with

high capital expenditure projects – LGO wants to

take advantage of what the company’s manage-

ment believes is an early mover advantage for the

redevelopment of the onshore Trinidad oil play.


In November, the £10 million market cap

producer raised £1.5 million for working capi-

tal purposes, which adds to a £5 million line of

equity to draw down from as well as a revenue

base from an annual 65 thousand barrels of oil

(mbbls) across its operations. The company’s

aim at this point, explains Ritson, is to stay out

of the capital markets altogether and this will

mean using its asset base in order to pursue

growth opportunities.

In 2008, LGO acquired a 50 per cent in-

WHUHVWLQWKHSURGXFLQJ,FDFRVRLOÀHOGLQVRXWK

western Trinidad operated by local oil and gas

company, Primera. Current daily production for

ICACOS FIELD WELL


WKHÀHOGLVERSGIURPRQO\WKUHHRIZHOOV

This led to further acquisitions in undeveloped

areas of the Cedros Peninsula close to the

nearby East Venezuelan Basin.

But the big step for LGO in Trinidad has been

EX\LQJWKHULJKWVWRWKH*RXGURQÀHOGZKLFKZDV

developed by Texaco in the 1950s through until

1986 when the lease expired. Texaco left in part

because its focus moved away from Trinidad, but

also because of technical challenges from uncon-

solidated reservoirs and wells that tended to sand

XS+RZHYHUZKDWZDVWHFKQLFDOO\GLIÀFXOW\HDUV

ago is not quite so complicated today and there are

widely available products and techniques to deal

with such challenges, explains Ritson.

At Goudron, LGO has started moving rigs to

EHJLQDFWLYHZRUNRYHUVRIWKHÀHOGZKLFKLVSUR-

ducing at about 50 bopd, through Ritson points

out that there are perhaps 100 useable wells in

total and oil quality is high.

“You could put the product straight into your

GLHVHOWUXFN\RXZRXOGQRWQHHGWRUHÀQHLW\RX

FRXOGUXQWKHÀHOGRQFUXGHUDWKHUWKDQLPSRUWLQJ

diesel because of how remote the region is… the

oil is a low sulphur, high API crude, of very good

quality,” Ritson says.

Baropex is an independent advisory firm with a great track record in helping oil and gas companies, private investors and financial institutions making the right decision on investment in and evaluation of petroleum assets.

We work hard to ensure that our clients get the best out of their investment by using our worldwide experience, knowledge of several languages and cultures and an integrated approach in reservoir management and asset evaluation.

10 Fenchurch AvenueLondon EC3M 5BNUnited Kingdom

Tel: + 44 (0) 208 613 1051Email: [email protected]

Contact us:


Industrial baseMeanwhile, Trinidad is home to the largest oil

UHÀQHU\LQWKH&DULEEHDQDQGDUREXVWVHUYLFHVLQ-

dustry to support operations, both as a convenient

supplier, but also buyer of product.

´7ULQLGDG·VUHÀQHU\H[SRUWVSURFHVVHGUH-

ÀQHGSURGXFWVDQGLWLVGHÀFLHQWLQFUXGHVXS-

ply at the moment and that is something the

government is keen to address, it is looking to

attract inward investment from companies such

as ourselves to raise production levels. They

are currently importing crude in order to meet

GHPDQGIRUUHÀQHGSURGXFWVWKRXJKLWFRXOGEH

produced indigenously,” he says.

non-coRe opeRations

Area 4, Southern Offshore Malta (10 per cent

interest, a legacy asset)

High potential exploration play in highly

prospective oil and gas basin in proximity to

Tunisian and Libyan active petroleum basins.

Major seismic interpretation executed on

the 5700km2 production sharing contract

(PSC) area.

Identified four prospects and five leads with

gross mean 2P STOIIP of 5 billion barrels and

recoverable reserves of 1.5 billion barrels.

PSC signed with the Maltese Government

to drill well on Area 4 to depth of 2500m.

Currently targeting high chance of success

drilling locations with new seismic acquired

in 2011. Area 4 is the only block not

contested among Malta’s neighbours.

GulF oF Mexico

Multiple leases in the shallow Gulf of

Mexico (7.25 per cent interest)

Total 2010 production net to LGO’s interest

was 6,617 barrels of oil and 37.8 million

standard cubic feet of gas (12,913 barrels of

oil equivalent). Additional potential exists

at Eugene Island to recomplete existing

wells or to sidetrack wells to undepleted

zones. LGO and its partners are actively

studying these options.

AYOLUENGO WELL IN NATIONAL PARK


7KH*RXGURQÀHOGLVORFDWHGRQWKHHGJHRID

wildlife sanctuary, and it is these environmentally

sensitive concerns that LGO addresses with its

corporate social responsibility programmes. The

$\ROXHQJRRLOÀHOGLVORFDWHGLQD1DWLRQDO3DUNVR

this is nothing new for LGO.

“The country has been producing oil for 100

years, so we don’t have some of the other issues

VXFKDVODFNRIVNLOOHGODERXUWKDW\RXPLJKWÀQG

in other regions. Our issues are around good

housekeeping, not spilling oil, not contaminating

water supplies or allowing chemicals to leak, and

not unduly affecting the wildlife, concerns of that

type,” Ritson says.

In total, Ritson estimates that there are well

over 200 million barrels of oil in place across

its Trinidadian assets and reserves of over 20

million bbls.

“In a different market, developing our as-

sets would have happened much more quickly,

recession is really just a lack of forward move-

ment. It is not an easy time, but the opportunity

is there, we have oil in the ground and a major

sustained downturn in the oil price seems un-

likely,” he adds.

www.leniGasandoil.coM

“Trinidad’s re!nery exports processed re!ned products and it is de!cient in crude supply at the moment and that is something the government is keen to address, it is looking to attract inward investment from companies such as ourselves to raise production levels.”

162 LATIN AMERICA Cabral Resources

stRike when iRon is hotCabral Resources

162


stRike when iRon is hotCabral Resources

162 Hot on the heels of signing agreements with the Bahia state government, Cabral Resources has begun a maiden resource drilling programme at its Brazilian magnetite tenements.

latin aMeRica


caBRal ResouRces’ initial assessment at its

tenement portfolio in the central eastern coastal

Bahia state in Brazil indicate a potential target

of 331 to 644 million tonnes (Mt) of high grade,

coarse grained magnetite iron ore.

And the explorer’s maiden 3km diamond

drilling campaign at Morro do Gergelim initi-

DWHVDLPVWRSURYHXSWKRVHÀJXUHVDFURVVLWV

tenement portfolio with a debut JORC resource

DWWKLVÀUVWGULOOWDUJHWE\6HSWHPEHUWKLV\HDU

The initial campaign target is driven by Ca-

bral’s promises to shareholders that capital

raising initiatives, which added A$25 million to

the company’s coffers in February 2011, would

fund exploration activities on the company’s

initial 12 tenements.

Since that time, explains Michael Bogue,

managing director and chief executive of Cabral,

the company has grown the portfolio substantially

and it now includes high grade hematite direct

shipping ore (DSO) targets, which could generate

HDUO\FDVKÁRZV

“Bahia is really underexplored, it is one of

the poorer states in Brazil and the government

is very progressive in looking at ways to create

development and opportunities in the region for

economic prosperity and employment. That is

one of the reasons why this project has such a

good infrastructure story,” says Bogue.



On the groundCabral signed agreements with the state’s govern-

ment in March this year for up to 15 million tonnes

per year (Mt/y) on the FIOL rail line, due for com-

pletion in 2013 and at Porto Sul, due for comple-

tion in 2014. The rail and port infrastructure build

is set to boost not only the iron ore sector, but also

the agricultural sector.

Cabral’s closest neighbour is LSE-listed

Eurasian Natural Resources Corporation, which

has spent upwards of US$1 billion buying un-

derdeveloped iron ore projects in the region and

looking to access the same infrastructure.

The $25 million capital raising enabled Cabral

to acquire a “starter pack” of tenements in Bahia

state and acquire and consolidate more over time

as well as embark on the JORC drilling campaign

while getting the exploration team established on

the ground. With $13 million left in the bank to

see those activities through, Bogue expects that

the company will not need to go back to equity

markets until the middle of next year.

The Lagoa Real group of tenements contain

coarse-grained, crystallised magnetite ore. Bogue

H[SODLQVWKDWLWZLOOEHFRVWHIÀFLHQWWRH[WUDFWWKLVRUH

when compared with deposits in Western Australia.

“Iron ore liberation grind sizes [in Western

Australia] are down to 32 microns or below,

whereas we are estimating that ours [in Lagoa

Real group] will come in at 75+ microns. There

will be a big operating cost advantage for us in

that respect,” he notes.

The other two groups, Itaquarai and Canabra-

va, are the hematite DSO and itabiritic ores and

Cabral is systematically working its way through

that portfolio, prioritising each of the tenements in

anticipation of identifying promising drill targets.

Local and global partners7RKHOSZLWKÀHOGZRUNDQGDVSDUWRIDJUHHPHQWV

signed with Bahia State, Cabral employs local

people where it can. As the project progresses,

Bogue expects that engagement in the region will

increase as well.

“Bahia is really underexplored, it is one of the poorer states in Brazil and the government is very progressive in looking at ways to create development and opportunities in the region for economic prosperity and employment.”


“In our region, we have subsistence farming

and we are very conscious of having a good rela-

tionship with local landowners. We employ them in

WHUPVRIEDVLFÀHOGZRUNDQGSHULRGLFDOO\HQJDJH

with communities in terms of having open ses-

sions and keeping regular dialogue. Locals under-

stand the mining industry well, some operations in

the area have been running for 70 years…and as

we move to construction and operating phases we

will certainly look to training and technology for lo-

cal talent in order to achieve our objectives as well

as those of the state government,” he says.

In terms of overseas partners, Cabral has

formed a “unique and established Chinese contact

network” for offtake agreements, joint venture

partners, infrastructure solutions, rolling stock

and locomotives and project funding alternatives.

That contact network is fomented by James

Li, who is employed by Cabral. A metallurgist by

background, Li has strong relationships with steel

PLOOVHQJLQHHULQJDQGFRQVWUXFWLRQÀUPVSROLF\

banks and other state-owned enterprises that can

be tapped into towards developing the project.

China is not only a partner, but also a

target customer.

“We will be looking to our Chinese friends for

project partnerships and infrastructure solutions,

so it makes sense to look at offtake agreements

CONSULTORES & ASSOCIADOS

www.5aconsultoria.com.brphone: 55-71-3033-8680 | [email protected]/Bahia/Brazil

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Excelling in Environmental Consulting


austRalian-lataM inVestMent in the spotliGht

IRJ - May 22 - Australia’s trading relationship with a number of Latin American

partners is being showcased at the inaugural Paydirt 2012 LatinAmerica

DownUnder resources conference in Sydney.

Brisbane-based Xstrata Copper said an expansion of its copper projects in

Latin America will be fundamental to achieving 60 per cent growth in annual

copper output within three years and would underpin the current $7 billion

commitment to achieve such a target. The company is currently producing

900,000 tonnes per year (t/y) but are looking to boost that nearer to 1.5 million

t/y, according to Charlie Sartain, Xstrata Copper chief executive.

“This is an ambitious programme a strong growth pipeline but new projects

now under construction or development in Peru and Chile and to some extent,

Argentina, will help to progressively deliver this objective,” he said. Xstrata

saw operating profit of $3.9 billion in 2011 with its South American operations

contributing 68 per cent of that margin.

“The next major phase will take in the current $90 billion Xstrata-Glencore

merger,” he added.

Also on display was Peru’s stock exchange in Lima, which merged with

stock markets in Chile and Colombia in 2011. Australia’s equities markets

and resources players were encouraged to dual list as a way to tap additional

sources of funds for new mining ventures in Latin America.

Peruvian stock exchange boss, Francis Stenning, pointed out that Toronto-

listed players were dominant on the Lima Stock Exchange with Canadian

juniors dually listed raising some $273 million globally.

In one of the lesser known LatAm stories, Nicaragua made a play to attract

investment, which saw a 90 per cent surge to $968 million in 2011 when

compared to the year previous. Mining investment is the third largest sector in

capturing foreign direct investment.

Javier Chamorro, executive director of PRONicaragua, a lobby group that

promotes investment in the country, said: “Foreign direct investment is now 13

per cent of GDP, the highest rate in Latin America, so Australian mining entities

coming into our market have a secure investment, operational, geological and

socially positive environment in which to make fresh plays,” he said.

He also hinted that a bilateral agreement would benefit both countries just

as Nicaragua’s agreements with major trading partners the EU and US do.


as well. One of the great things about having a met-

allurgist on the team is that we can match the met-

allurgical characteristics of our ore with the right

mills, and that is a very important and distinguish-

LQJIDFWRULQÀQGLQJWKHFRUUHFWSDUWQHUVLQ&KLQD«

in total these partners will be very useful when it

comes to the big dollar requirements to get these

iron ore projects off the ground,” Bogue notes.

Model businessA pre-scoping study commissioned through ProM-

et Engineers in Australia shows a capex in the

US$2 billion range as a high-end estimate, based

on a 15Mt/y allocation of magnetite concentrate

ore as a product. However, that could get lowered

depending on the blend of products being used

considering the potential to produce less capital

LQWHQVLYHFDVKÁRZJHQHUDWLQJKHPDWLWHRUH

“In short, we are a well-placed emerging iron

ore producer with a portfolio of highly prospec-

tive iron ore tenements located close to third

party rail and port infrastructure where we have

a Protocol of Intentions agreement for allocations

signed. Not to mention a healthy cash balance to

continue our exploration efforts for the foresee-

able future. We believe Cabral’s business model

LVUREXVWDQGZLOOUHDSEHQHÀWVIRUVKDUHKROGHUV

in the period ahead” Bogue adds.

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“In short, we are a well-placed emerging iron ore producer with a portfolio of highly prospective iron ore tenements located close to third party rail and port infrastructure where we have a Protocol of Intentions agreement for allocations signed.”

170 SUSTAINABILITY NEWS IN REVIEW

Unprecedented levels of civil society representatives have $ooded into Brazil for Rio+20, the majority of which are from the developing world for the !rst time.

iRJ takes a look at global developments pushing

sustainability into the headlines.

Large miners lead way on sustainability

IRJ - June 8 - The world’s biggest mining companies

have made major improvements in environmental

policies though as a whole the industry continues

WRIDFHVLJQLÀFDQWFKDOOHQJHVVDLGUHVHDUFKHU$EEL

Buxton, author of a report from the International

Institute for Environment and Development.

7KHVHDUHDPRQJWKHÀQGLQJVRID\HDUUH-

view of the progress the mining sector has made

since companies joined NGOs in calling for the

Mining, Minerals and Sustainable Development

(MMSD) initiative.

“The 2002 MMSD report was a game-chang-

HUµVD\V%X[WRQ´)RUWKHÀUVWWLPHPLQLQJH[HF-

utives committed to act to maximise their sec-

tor’s contribution to sustainable development,

and they adopted the MMSD agenda as a robust

and credible way to do this. Ten years on, how-

ever, the results are mixed and new challenges

have emerged.”

6RPHRIWKHÀQGLQJVVKRZWKDWZKLOHJRYHUQ-

ments are reasserting control over their natural

resources, they lack the capacity to ensure that

Sustainability news in ReView170


mining contributes to sustainable development.

Buxton’s report also states that the Interna-

tional Council on Mining and Metals – an umbrella

organisation of leading companies such as Rio

Tinto and Anglo American - has succeeded in imple-

menting many of MMSD’s recommendations for

industry. But complementary measures proposed

for governments, the small scale mining sector and

communities have not matched this success.

Ecuadorian coalition hits Chevron with $18bn lawsuit in Canada

,5-0D\$Q(FXDGRULDQJURXSÀOHGD

lawsuit in Canada seeking to enforce Chevron’s

compliance with an $18 billion clean up fee for

dumping toxic water in the rainforest.

7KHFRDOLWLRQFRQVLVWVRILQKDELWDQWVRIÀYH

indigenous groups in Ecuador and approximately

70 farmer communities who want Chevron to pay

the judgment imposed by an Ecuador trial court

LQ)HEUXDU\ZKLFKZDVODWHUDIÀUPHGE\

Ecuador’s court of appeals in January. In total,

the long-standing case spans 19 years.

Canadian lawyer Alan Lenczner, who will be

representing the Amazon communities, said the

ODZVXLWÀOHGLQWKH6XSHULRU&RXUWRI-XVWLFHLQ

Ontario is targeting Chevron and various subsidiar-

LHVWKDWWRJHWKHUKROGVLJQLÀFDQWDVVHWVLQ&DQDGD

including the country’s largest offshore drilling

project and new investments in oil sands in Alberta.

Chevron has virtually no oil assets in Ecuador.

Sustainability news in ReView


“I am honoured to have been asked by the

indigenous people of Ecuador to correct a histor-

ic injustice visited upon them by Chevron,” said

Lenczner, who visited Ecuador and reviewed the

extensive trial and appellate records of the case,

which exceed 250,000 pages.

“Chevron fought for nine years to move the

trial from the United States to Ecuador, and then

had a full opportunity for eight years to defend

itself in Ecuador,” Lenczner added. “This is a le-

gitimate judgment and I believe Canadian courts

will recognise it and enforce it as such.”

In response to the media reports, Chevron

said that the Ecuador judgment is a product

of bribery, fraud, is illegitimate and that the

company will vigorously defend against any

enforcement action.

“Chevron is defending itself against false al-

legations that it is responsible for alleged environ-

mental and social harms in the Oriente region of

Ecuador. Chevron never conducted oil production

operations in Ecuador, and its subsidiary Texaco

Petroleum (TexPet) fully remediated its share of

environmental impacts arising from oil production

operations, before leaving Ecuador in 1992,

´$IWHUWKHUHPHGLDWLRQZDVFHUWLÀHGE\

all agencies of the Ecuadorian government

responsible for oversight, TexPet received a

complete release from Ecuador’s national,

provincial, and municipal governments that


extinguished all claims before Chevron ac-

TXLUHG7H[3HWLQ$OOOHJLWLPDWHVFLHQWLÀF

evidence exonerates Chevron and proves that

WKHUHPHGLDWHGVLWHVSRVHQRVLJQLÀFDQWULVNV

to human health or the environment,” the oil

major said in a released statement.

The Amazon Defense Coalition says that

Chevron is using the “fraud” charge as a ruse

to try to block enforcement of the judgment

and to distract attention from the overwhelming

evidence of its historic misconduct. The Ecua-

dorian state-backed NGO noted that Chevron’s

ELOOLRQFXOSDELOLW\LQ(FXDGRULVMXVWLÀDEOH

when compared to BP’s disaster in the Mexican

Gulf in 2010. BP estimated the accidental leak

of 4.9 million barrels of crude oil would cost the

oil major $37.3 billion. By comparison, Chevron

intentionally dumped 16 billion gallons of toxic

produced water in Ecuador containing far more

crude oil that was spilled in the Gulf, as well as

heavy metals and other drilling chemicals, and

faces less than half of BP’s costs to clean it up.

EBRD launches next "25bn phase of sustainable energy investment

IRJ - May 18 - The European Bank for Reconstruc-

tion and Development (EBRD) launched the next

phase of its Sustainable Energy Initiative (SEI) at

the bank’s annual meeting taking place in Lon-

don May 18 to 19 amid criticisms of its high level

of fossil fuel investment.

The announcement outlines new funding

for projects worth up to €25 billion over the next

three years that reduce energy waste and green-

house gas emissions. The bank is aiming to pro-

vide €4.5 to €6.5 billion out of its own coffers.

The EBRD was founded in response to the col-

lapse of the Berlin Wall and is owned by 63 coun-

tries as well as the European Union and the Euro-

pean Investment Bank. It supports projects in 29

countries from Central Europe to Central Asia.

And as government budgets get slashed

across Europe in the middle of ongoing currency

DQGPDUNHWVFULVHV-RVXp7DQDNDPDQDJLQJ

GLUHFWRUIRUHQHUJ\HIÀFLHQF\DQGFOLPDWHFKDQJH

VDLGGXULQJDSUHVVEULHÀQJWKDWWKHSULYDWHVHF-

tor has an important role to play.

“A lot of the very capital intensive measures

on climate mitigation are being postponed be-

cause of constraints from governments…[previ-

ously] it was all about governments and public

sector well, you know what is happening to bud-

gets...so the emphasis that is given to the private

sector is very important,” he said.

Since its inception, SEI has adopted a

business model that drives investment at

commercially viable projects at market rates.


,QWKHEDQNEHFDPHWKHÀUVWLQWHUQD-

WLRQDOÀQDQFLDOLQVWLWXWLRQWRDGRSWDFDUERQUHGXF-

tion target and in 2011 became carbon negative

(-6.1Mt). SEI business volume is at €8.8 billion with

an estimated 46.9Mt/y of carbon emission reduc-

tion across 464 projects since 2006.

,WKDGUHFHQWO\FRPHXQGHUÀUHIURPZDWFK-

dog CEE Bankwatch Network because over €3

billion, or 48 per cent, of the bank’s energy loans

and equity between 2006 and 2011 had gone to

fossil fuel sources and coal, which will continue

to remain an important part of EBRD members’

energy mix. Tanaka pointed out that SEI is a large

part of the bank’s work.

“What we have achieved in these six years is

roughly [the equivalent of] making Serbia carbon

neutral,” said Tanaka, adding that SEI is “not a

side activity with a little green door to show the

EBRD cares about climate…it is almost one-third

of what we do”.

Renewable energy investment in projects such

as wind farms will stay a priority going forward and

as the EBRD begins operations in the Middle East

and North Africa regions, a more compelling argu-

ment could get made for solar energy.

,QGXVWULDOHIÀFLHQF\LVDQRWKHUDUHD(%5'ZLOO

continue to look at. Case studies presented at

WKHSUHVVEULHÀQJLQFOXGHGWKHEDQN·V½PLO-

lion long-term loan to Russian steelmaker Novoli-

petsk Steel Works (NLMK). The loan was used to

construct a 150MW combined heat and power

plant which will utilise waste gases from blast


furnaces. It is expected to cut energy consump-

tion 15 per cent by 2015.

Carbon markets, on the other hand, have

dropped down the agenda.

“The market mechanism was supposed

to send a carbon price signal, at this stage it

is not…we obviously feel we need to try and

continue supporting this approach because it

is an approach that does have a benefit, but

at this point we may be at the low end of the

cycle on it,” he said.

Speaking at the opening session of the board

RIJRYHUQRUV*HRUJH2VERUQH8.·VÀQDQFHPLQ-

ister, congratulated the EBRD on its work.

“The EBRD can help expand new markets

and leverage private investment and with many

of the bank’s shareholders dealing with large

EXGJHWGHÀFLWVRIWKHLURZQLWZLOOQHHGWRGHP-

onstrate it is delivering maximum value,” he said.

,QWKHEDQNUHDOLVHGSURÀWVRI½

million and invested over €9 billion in 380 proj-

ects of which 29 per cent were sustainable

energy initiatives.

176 US, CANADA AND AUSTRALIA METALS AND MINING Riversdale Resources

RiVeRsdale ResouRcesAlaskan coal play176


RiVeRsdale ResouRcesAlaskan coal play

us, canada and austRalia Metals and MininG



After their success in Mozambique coal, the Riversdale team is intent on realising another triumph - this time in Alaska.

RiVeRsdale ResouRces’ philosophy is the same as

the last time IRJ caught up with the team, which saw

its original operation, Riversdale Mining, acquired by

Rio Tinto for A$4 billion.


Summing up that philosophy is Steve Mallyon,

managing director: “Go hard or go home”. The

ÀJXUHVFHUWDLQO\EDFNXSWKHFODLPRIJRLQJELJLQ

2004, $1,000 invested in Riversdale Mining grew to

$82,500 when it was acquired by Rio Tinto in 2011.

Still, Alaska and Mozambique seem like quite

different prospects.

“It is a different operating environment,” says

Mallyon. “But to some extent all of the systems,

people and protocols are identical to what we

had in the original Riversdale Mining. And once

again, it is a multi-seam, coking coal basin that

we are pursuing.”

He admits there is one big difference, an in-

tentional one. That is the availability of infrastruc-

ture in Alaska, something that was woefully miss-

ing in Mozambique and an aspect of the project

that the Riversdale team admit was the toughest,

and most expensive, in their African experience.

By contrast, the Chickaloon project in Alaska

has a long history of coal mining and had been

mined from 1913 to 1922, when the US Navy

focused on high quality coking coal for their Pa-

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service the mines. Operations ceased when pe-

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discoveries in California and later in Alaska.

“As a result of that work, as well as additional

work by a number of US-based companies in the

1960s and a small development project undertak-

en by a private group in the 1980s in the area, we

KDGWKHFRQÀGHQFHWRJRGRZQWKHSDWKRIGHYHO-

opment. The Riversdale model has not changed,

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known coal domains with good quality coal, but the

difference here is that we were sensitive about ac-

cess to related infrastructure,” Mallyon says.

Port, rail, roadThat includes the deep water Port MacKenzie,

which is well-placed as a delivery point to natural

markets for the product in Japan, South Korea

and Taiwan. There is all-year round shipping and

the port is located about 120km from Chickaloon

on Glenn highway.

The Glenn highway runs through the centre of

“We feel the company is in a strong position to advance the project for the next couple of years with existing funds and we are unlikely to be in a position where we are beholden to any market to try and get additional money.”

- Anthony Martin, chief !nancial o%cer


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the state and through Anchorage, the biggest city

in Alaska with a population of about 300,000 and

connects with Chickaloon. Riversdale believes the

Port Authority is targeting between 2 and 3 million

tonnes per year (Mt/y) of coal exports from existing

infrastructure and rail and dock upgrades are being

considered for the future.

The Chickaloon region’s coal is bounded by

two river systems, the Chickaloon and King rivers,

and the land is amenable to a number of open pit

and underground development. Riversdale has

acquired about 40.5km2 of land in the Matanuska

valley, leased from the Alaska Mental Health Trust

(AMHT), which was awarded the land as part of

legislation in order to generate funds to support

mental health programmes.

Riversdale has a 10-year lease with exten-

sion by production and exclusive rights to coal

in a US$3million deal. In addition, royalties are

payable to AMHT with no additional state royal-

ties payable, though this does not reduce Rivers-

dale’s requirements to comply with the Depart-

ment of Natural Resources or other regulations.

“The relationship with AMHT is a unique

arrangement and from our perspective a very

satisfying one. Every dollar that we spend in

acquiring the land lease and in paying royalties

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looks to us to be quite underfunded. We are not

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targeting between 20 and 25 year production life,

so the royalty base will grow as we develop it and

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Mallyon explains.

The area is also home to a small population

at Chickaloon village, with about 350 landhold-

ers and about half that for people living in the

area. In addition there is a native community liv-

ing nearby. At this stage, the company is involved

in a community engagement programme, giving

presentations at local councils as well as spon-

soring community events. The main concerns

coming from the community are around the envi-

ronment, as a number of people use the area for

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environmental work has commenced to address

issues such as potential impacts on surface and

JURXQGZDWHUTXDOLW\DQGÁRZQRLVHGXVWFXO-

tural resources, vegetation, soil, wetlands, recre-

ational activities, wildlife and social impacts.

Mallyon notes, however, that the lease has been

effectively dedicated for mining since the 1920s.

“It is an exciting exploration environment

because Alaska has really developed on the back

of the oil and gas industry. There are a number

of sedimentary basins across Alaska from the

south of Anchorage to the northwest slope where

the major oil producing centre is. Coal has been

widely overlooked by the oil majors, yet groups

such as BHB Billiton have developed a sizeable

resource on the northwest slope. Our plan over

the next year or two is to investigate a number of

coking coal opportunities throughout Alaska, as

well as accumulate a larger footprint in the valley

we are in,” says Mallyon.

Quality coalThe company’s president in Alaska is associated

with the original Riversdale team, Russell Dann.

He was a former Regional Director of the Depart-

ment of Employment, Economic Development


$ODVND(DUWK

6FLHQFHVComprehensive Geologic Services

Geologic Consulting Geologic Staffing Geological Engineering Reporting (including 43-101) Logistics/Operation Coordination Remote Site Management GIS Services Permitting Assistance Community Engagement Claims Staking Claims Administration Equipment Rental

Dedicated to responsible development of Alaska’s resources.

11401 Olive Lane, Anchorage, Alaska907-522-4664 www.alaskaearthsciences.com

and Innovation in the Queensland Government’s

Mining and Energy agency and, prior to that, was

the Latin America, Philippine and USA exploration

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ed – part of the former Hanson Plc group) .

“There are a series of igneous intrusions in the

area and that appears to be the primary reason

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we take some of the historical coking coal analyses

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for coking coal, we are very happy with those re-

sults. It certainly gives us the indication and encour-

agement that we have the potential for a very good

quality coking coal,” Dann says.

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including two coal zones of between 6 and 9

metres wide.

“A key element for coking coal is that it has

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resource could be a low volatile bituminous coal

and the indications we have for ash at the mo-

ment are relatively low but we may need to wash

that coal. We don’t have enough information

at this point in time within the Chickaloon coal

lease itself and that is the purpose of the forth-

coming drilling campaign…We would like to drill

holes into sections right through that full thick-

ness of the coal seams and understand exactly

how thick those seams are and how the quality

varies between them,” Dann says.

Global and local partnersAs the company moves towards development,

Dann explains that Riversdale is trying to com-

bine teams of local Alaskan knowledge and expe-

rience with the more global technical capability

of groups it has worked with in the past.

Riversdale is working with Anchorage-based

Alaska Earth Sciences to tap into the group’s coal

expertise and experience in community engage-

ment. Overseeing the environmental programme is

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has also contracted SRK Consulting for the water


quality work and SLR International Corp for the me-

teorological and air quality work.

Geological services group McElroy Bryan is

WDVNHGZLWKUHVRXUFHGHOLQHDWLRQDQGGHÀQLWLRQDQG

the geophysical company, Fugro will be starting an

airborne geophysical programme later this month.

Exploration mapping is expected to be completed

by the end of this year and coal quality results are

expected by the end of 2014. A scoping study is

planned for completion by the end of 2014, while a

feasibility study and development decision is antici-

pated by the end of 2016.

Raising capitalHaving just completed an A$20 million capital rais-

ing effort with institutional and high net worth inves-

tors out of Europe, Asia and Australia, Riversdale

believes it is in a strong position to proceed with

work on the ground in Alaska, but also to potentially

look at additional opportunities for the company in

Australia and North America, says Anthony Martin,

FKLHIÀQDQFLDORIÀFHUDW5LYHUVGDOH

“The current intention is to look at an IPO

during 2013 as the next capital raising effort,

but that is dependent on markets at the time.

We feel the company is in a strong position to

advance the project for the next couple of years

with existing funds and we are unlikely to be in a

position where we are beholden to any market to

try and get additional money,” Martin notes.

Though he says that it is still early days to

talk about capital expenditure of the project,

Martin adds that compared to other potential

coal developments globally, due to the proximity

of rail and port infrastructure and potentially a

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based on historical coal quality and yield results,

capex may “comparatively sit quite well in the

coal development world”.

“It is a di!erent operating environment. But to some extent all of the systems, people and protocols are identical to what we had in the original Riversdale Mining. And once again, it is a multi-seam, coking coal basin that we are pursuing.”

- Steve Mallyon, managing director

186 US, CANADA AND AUSTRALIA METALS AND MINING New Millennium Iron

New Millennium Iron186


iRon willNew Millennium Iron"ough it is still a “small” junior miner, New Millennium Iron has heavyweight backing, huge resources and big production goals. 186



FRoM its BeGinninGs as a capital pool company

in 2003, New Millennium Iron has grown into an

emerging producer controlling one of the largest iron

ore resources in the world – the Millennium range,

a 210km long taconite belt in eastern Canada.

The company’s direct shipping ore (DSO)

project in partnership with Indian steelmaking

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cause of its smaller scale and relatively lower

capital costs. When the DSO project goes into

production by the end of the year, New Millen-

nium will become an operating company with

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In 2013, the company is targeting 2 million

tonnes (Mt) in production, ramping up to full

capacity of 4.2 million tonnes per year (Mt/y)

in 2014. Tata Steel Europe, which has plants

in the UK and Netherlands, has committed to

Big Span Steel on site. Image c/o www.nmliron.com


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100 per cent of the offtake at market prices

from the joint venture company, Tata Steel

Minerals Canada (Tata Steel 80 per cent: New

Millennium 20 per cent).

,W·VDEURZQÀHOGGHYHORSPHQWORFDWHGLQWKH

historic iron ore producing region of Northern

Quebec and Labrador and had been previously op-

erational until the market lost its appetite for lower

quality ore being produced by the operation.

“We have this resource which will last for upwards of a century and the world’s iron ore resources are being depleted at a considerable rate”


Dean Journeaux, chief executive of New Mil-

lennium, gets his share of questions on this point

– what makes him think he can do better today?

“The operator closed down the mine in

1982 because for one, the market was bad,

but also, the product was not treated, not up-

graded, running around 58 or 59 per cent iron.

We are upgrading the run of mine ore grade

to a 64.5 per cent iron, in other words, we are

meeting today’s market requirements for quali-

ty, and of course, the price of iron ore has gone

up quite a bit since 1982,” Journeaux says.

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C$300 million of the capital costs, with New Mil-

lennium responsible for 20 per cent of the excess.

Human ResourcesThe DSO project is just the beginning for the


Indian steelmaker in Canada, and it will be using

the experience as a tester before considering

WKHIDUPRUHVLJQLÀFDQW7DFRQLWHSURMHFWZKLFK

comes with estimated capital costs of between

$4.4 and $5 billion dollars for each of the two

deposits targeted for development.

A $50 million feasibility study, expected to be

completed by the end of the year, is underway for

WKHWZRGHSRVLWV.p0DJLQ4XHEHFDQG/DE-

Mag in Western Labrador. Tata has an option to

develop either one or both properties, with New

Millennium free to decide what to do should Tata

not go ahead.

LabMag is located about 30km northwest

of the town of Schefferville, Quebec. About

1,800 First Nations people live in the surround-

ing area, a sizeable population that Journeaux

says can go far in meeting the projects’ human

resources needs in the future – the plant op-

erators, truck drivers, mechanics, electricians

LabMag iron ore deposit. Image c/o www.nmliron.com


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and other supervisory, management and ad-

ministrative personnel who will be required to

maintain operations.

On the DSO project, the JV, Tata Steel Miner-

DOV&DQDGDKDVDQLPSDFWEHQHÀWVDJUHHPHQW

with First Nations groups. Apart from employ-

ment, the company is providing training and has

donated $50,000 to run a bursary programme

at the region’s secondary schools.

“I get asked if I am worried about the future

labour supply considering the global skills shortage

and I guess we are, but on the other hand, we have

this tremendous asset in the surrounding communi-

ties and if we can encourage people through educa-

tion and through other means, we hope it will bring

them into the employment pool,” says Journeaux.

For now, the company estimates that at least

1,000 people will be needed to operate each of

DSO Project - Existing pits and dumps Image c/o www.nmliron.com


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the deposits while facilities at Schefferville are

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$VDUHVXOWWKHRSHUDWLRQLVH[SHFWHGWREHÁ\

LQÁ\RXW

Taconite technologyLabMag is owned 80 per cent by New Millennium

and 20 per cent by Naskapi Nation of Kawawa-

chikamach through an initial investment, one of

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JURXSDQG.p0DJLVSHUFHQWRZQHGE\WKH

company. Production is expected by the end of

2016, ramping up in 2017 for full production

at 22Mt/y, of which 17Mt/y will be pellets and

5Mt/y will be pellet feed. The company expects

to have grades of 69 per cent in the concentrate

and slightly lower for the pellets.

Journeaux explains that the operation will

EHDEOHWRPDNHDFLGDQGÁX[HGSHOOHWVDWYDUL-

ous silica levels for blast furnace use as well as

“I get asked if I am worried about the future labour supply considering the global skills shortage and I guess we are, but on the other hand, we have this tremendous asset in the surrounding communities”


a low gangue direct reduction grade pellet. That,

he explains, means the company can tailor the

product to the demands of the steel industry.

The Taconite project will be an open pit

mining operation with a crushing plant, grinding

and magnetic separation facilities with concen-

trate transported either by rail or in slurry form

via 600km ferroduct to Port of Sept-Iles.

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Lavalin as the study manager for the feasibility

study and has also contracted specialist German

ÀUP6WXGLHQ*HVHOOVFKDIWIU(LVHQHU]$XIEHUHL-

tung as its primary metallurgical process consul-

tant while Midland Research Centre, in Minnesota,

provides crushing, blending and characterisation

work of samples.

Journeaux explains that the process to

mine and process Taconite was developed in

Minnesota because the US state is home to

the massive Mesabi iron range. Aside from

laBMaG contains: 3,545Mt proven and probable reserves

at a grade of 29.6 per cent Fe

1,045Mt of measured and indicated

resources at an average grade of 29.5

per cent Fe

1,151Mt of inferred resources at an

average grade of 29.3 per cent Fe

kéMaG contains: 2,141Mt of proven and probable

reserves at an average grade of 31.3

per cent Fe

307Mt of measured and indicated

resources at an average grade of 31.3

per cent Fe



lac Ritchie contains:3,330Mt of indicated resources at an




dso pRoJect contains: 64.1Mt of proven and probable mineral

reserves at an average grade of 58.8

per cent Fe

21.0Mt of measured and indicated

mineral resources at an average grade

of 59.2 per cent Fe

10.3Mt of inferred resources at an


Between 25 and 30 million tonnes

of historical resources that are not

currently in compliance with NI 43-101

“I get asked if I am worried about the future labour supply considering the global skills shortage and I guess we are, but on the other hand, we have this tremendous asset in the surrounding communities”


Midland Research Centre, other Minnesota-

based specialists have been brought on board.

Barr Engineering will be doing work on the

concentrator and the company uses the Univer-

sity of Minnesota Coleraine Minerals Research

laboratory facility.

As with the DSO project, Tata Steel Europe

is expected to be a major offtake customer

for the Taconite project as well, taking at least

half of the product. The rest will be left for the

open market.

For that product to reach Asian markets, how-

ever, the Port of Sept Iles will need an upgrade

for a deep water dock capable of handling ships

with 360,000 to 400,000 tonnes of capacity.

This last February, those development plans

received a boost when the Government of

&DQDGDDQQRXQFHGÀQDQFLDOVXSSRUWRI

million, or 25 per cent of the project costs,

towards construction.

“[The deep water dock] is under detailed

planning right now…we need those larger ves-

sels to lower freight costs so this is an impor-

tant factor in our development plan,” he says.

Strategic boardIn furthering that development plan towards

production, New Millennium’s board represents

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EFFICIENCY & EXPERTISEA subsidiary within the Municipal Group of Companies, Greyrock is a full service civil/mining contractor based in Labrador. Our history is firmly embedded in the mining industry of Eastern Canada, and, as an organization, we have been operating in the region for well over 50 years. Thanks to our experience and knowledge, we provide a vast range of service capabilities, including:

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To learn more about our team, please visit www.municipalgroup.caor call 709-944-2995.

INNU MUNICIPAL a broad range of backgrounds with experience

in mining, accounting, business and marketing,

geology, strategy and most recently, commanding

the Canadian Armed Forces.

General (Ret.) Rick Hillier, former Chief of the

Defence Staff, the highest rank of the Canadian

Forces, joined New Millennium’s board in 2011.

If that seems surprising, consider this, what iron

ore project couldn’t use a leader with a steady

resolve who doesn’t waver under pressure?

“He’s managed large groups of people and

facilities, the logistics side, but a good part of

the decision was that he is a Newfoundlander.

:HZHUHWU\LQJWRÀQGVRPHERG\ZLWKJRRGEXVL-

ness sense, experience and who understands

“We were trying to !nd somebody with good business sense, experience and who understands the area in which we operate, looking down the list [Rick Hillier’s] name certainly popped”


the area in which we operate, looking down

the list [Rick Hillier’s] name certainly popped,”

Journeaux says.

+HDGGVWKDWWKHKLJKSURÀOHDSSRLQWPHQW

is a welcome boost in furthering the company’s

vision to develop the Millennium Iron range into

a world class mining operation.

“New Millennium is a small junior mining

company on the TSx Exchange but we have

these very large deposits and we see it

becoming another Mesabi iron range, which

had eight or so mining operations at one time

in different pits. We have this resource which

will last for upwards of a century and the

world’s iron ore resources are being depleted

at a considerable rate, and also other factors,

declining grades, quality. We have a brand

new operation where we will be able to put

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“New Millennium is a small junior mining company on the TSX Exchange but we have these very large deposits and we see it becoming another Mesabi iron range, which had eight or so mining operations at one time in di#erent pits”


out the highest quality products and all of this

purports for a strong future for New Millennium

and we hope that one day we will rank in the

larger mining companies in the world, certainly

in iron ore,” Journeaux says.

www.nMliRon.coM

“New Millennium is a small junior mining company on the TSX Exchange but we have these very large deposits and we see it becoming another Mesabi iron range, which had eight or so mining operations at one time in di#erent pits”

Forge Resources

204FoRGinG ahead

Forge ResourcesWith much of the pre-development legwork already completed at its recently acquired $agship Balla Balla project in Western Australia, Forge Resources has begun marketing a magnetite iron ore product as the company seeks to secure project !nancing.204


FoRGinG ahead

206 US, CANADA AND AUSTRALIA METALS AND MINING Forge Resources

Balla Balla is a large-scale, JORC compliant

titanium-vanadium-magnetite resource close to the

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granted mining tenements. Major approvals such as

environment, native title, water access and condi-

WLRQDOJDVDJUHHPHQWVDUHLQSODFHDQGDGHÀQLWLYH

feasibility study (DFS) was completed in early 2010.

´7KH')6VKRZVWKHSURMHFWLVYHU\ÀQDQFLDOO\

robust as a magnetite only project. However what

is attractive about Balla Balla is the additional

vanadium and titanium contained within the

resource, which we view as an embedded option

for the company,” says Matthew James, manag-

ing director of Forge.

Initially, the vanadium which is contained

within the magnetite concentrate that will be sold

to steel mills, most likely in China, will act as a

free credit for those mills that have the technol-

ogy to separate the vanadium, he explains.

“This vanadium credit allows steel mills to lower

their net cost of production. In addition we will be

getting a titanium revenue stream from an ilmenite

by-product produced alongside the magnetite. In

the longer term we aim to extract the full value of

both the titanium and the vanadium,” says James.

Missing linkHowever there is one missing link, which is the

original studies were built on access to 10 million

tonnes per year (Mt/y) of shipping capacity at

Port Hedland.

James explains that Forge bought the Balla

Balla project from Atlas Iron for A$39.5 million,

which was over $100 million less than Atlas Iron

paid approximately 18 month prior to acquire

Aurox Resources, which then owned the project.

Atlas kept the 10Mt/y Port Hedland capacity for

its own DSO hematite iron ore operations.

“Without the Port Hedland capacity we knew

an alternative transport route would be required

to get to export. We were already looking at

trans-shipping as an option, which we think is

feasible particularly as a trans-shipment opera-

tor is already in northern Western Australia. In

places like South America and Indonesia there

is quite a bit of this being done, where the mate-

rial is barged from the coast to a ship anchored

offshore” says James.

A back up plan includes negotiating capacity

at Anketell Port since the Balla Balla project is

situated just 100km east of the area and Forge

has been short-listed for consideration, but the

company’s main focus is on trans-shipment.

“Our primary plan is the trans-shipment op-

WLRQ:HKDYHLGHQWLÀHGWKUHHORFDWLRQVQHDUWKH

mine that we are evaluating for trans-shipment.

:HKDYHÀQLVKHGVFRSLQJVWXGLHVRQWKHVHD

side of the operation and on the land side we


pRoJect in the pipeline

Eucla Mineral Sands project in Western Australia

Three contiguous granted exploration licences, 218.8km2

Maiden resource of 470Mt at 4.6 per cent heavy minerals

= 21.5Mt of contained heavy mineral

Farm-in agreement signed with a commitment to spend

A$2 million to earn 50.1 per cent and ability to go to 100

per cent with continued farm-in or JV with vendors

“We have two years to spend about $1 million with what

remains of the farm-in agreement to attain 50.1 per cent. It

is important to note that the McClaren deposit, which is the

resource we have defined, is a fairly small area within the

tenements. It is ilmenite-rich but the zirconium levels are

fairly low at around one per cent. We are ideally looking for

an area to contain a higher level of zirconium, ideally four or

five per cent. Based on the geology, we are quite confident

it is there, it is just a matter of finding it,” –Matthew James,

managing director, Forge Resources.


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are doing detailed studies on environment as

well as engineering in terms of infrastructure

requirements.” he adds.

Calculating costsWorking with GR Engineering Services as well

as other supporting engineers and specialists

in the mining industry, Forge is anticipating the

release of a revised DFS report in August which

details the company’s views on revised capex

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Currently, capex is at $1.3 billion, but James

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and Forge is aiming to see that number come

down closer to $1 billion. Some of that reduc-

tion will come from removing the costs of a slurry

pipeline intended to carry product to Port Hedland

and associated port infrastructure requirements

which accounted for $310 million of the original

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expenditures on a transhipment option, he notes,

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capital and operating costs, currently approxi-

mately $40 per tonne of 58 percent Fe magnetite

concentrate, can be reduced all around.

In a recent capital raising effort, Forge raised

$50 million in a combined debt and equity pack-

age to purchase 100 per cent ownership of Balla

Balla. Todd Capital came in as a strong unincor-

porated joint venture partner, contributing $10

million towards the purchase for a subsequent

25 per cent ownership of the project as well

as contributing towards the equity component,

raised at $0.5/share, to become a 19.9 percent

shareholder in the company.

“As Forge is the project manager we will be

developing a close relationship with Todd Capi-

tal in the development of the Balla Balla proj-

ect. After the purchase of this asset, Forge is

left with $10 million for working capital, which

we are using for the work to get us through to

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“The DFS shows the project is very financially robust as a magnetite only project. However what is attractive about Balla Balla is the additional vanadium and titanium contained within the resource, which we view as an embedded option for the company”


new south wales pRospects

Wymah, 100 per cent owned, Tungsten, tin and

molybdenum

Mayfield, 46.55 per cent owned, Mineral resources

containing 94,800 ounces gold, 1.3 million ounces silver,

17,250 tonnes copper and 29,900 tonnes zince

Michelago, 100 per cent owned, Volcanogenetic massive

sulphides – base metals

Captains Flat, 49 per cent reducing to 25 per cent

owned, Volcanogenetic massive sulphides – base metals

Mayfield North, 100 per cent owned, Granite hosted

copper/gold with potential for Cadia-Ridgeway or

Intrusive Related Gold (IRG) deposits


Towards this end, Forge has received a letter

of interest from National Australia Bank in rela-

tion to project funding and the company aims to

complete this step by the end of 2012.

“One of the key aspects why Forge is a good

investment opportunity is the track record of

the management team, for example, our chair-

man has a strong track record of identifying and

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On board and o!takeApart from an extensive history in the resource

banking and development sector, chairman Nick

Curtis has seen two companies through from

tens of millions to billions in market cap on the

ASx – Sino Gold and later, Lynas Corporation.

James himself is an alumnus of Lynas as is

Forge’s non-executive director, Harold Wang, an

experienced resources expert who has worked

across China’s ferrous and non-ferrous sector as

well as in Australia. Prior to Lynas, James worked

at McKinsey & Company and Deutsche Bank,

both in London.

$IWHUVHFXULQJSURMHFWÀQDQFLQJ)RUJHH[SHFWV

WKDWIURPVWDUWRIHQJLQHHULQJWRÀUVWSURGXFWZLOO

be a three-year schedule starting with 6Mt/y pro-

duction and ramping up to 10Mt/y a year later.

Mineral reserve estimates shows proven and

probable reserves of 229 million tonnes (Mt) with

45 per cent Fe content, 0.62 per cent vanadium

oxide and 13.8 per cent titanium oxide.

There are historical offtake agreements

equating to 10Mt/y with two Chinese steel mills

with which Forge has started initial discussions

in a bid to revive the contracts.

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ect, a company-making asset and in a relative-

ly short time-frame can be put into production

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pany,” he adds.

FoRGeResouRces.coM.au

Artwork @ 100% of actual sizeScale

95 121mm width x mm heightTrim0 0mm width x mm heightBleed

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212 US, CANADA AND AUSTRALIA METALS AND MINING Navarre Minerals

212GoinG BiG FoR GoldNavarre Minerals


212Australian-based explorer Navarre Minerals has achieved early exploration success at its Tandarra Gold Prospect situated just 40km from the historic Bendigo Gold!eld in Victoria. GoinG BiG FoR Gold




naVaRRe MineRals has FRPSOHWHGWKHÀUVWSKDVH

of a major drilling programme and though results

are still coming in, early indications show cause for

optimism - RC and diamond drilling have proven

over 850m of strike with continuous gold minerali-

sation and 10 assays have greater than 20 grams

per tonne (g/t) of gold contained intersected over

the full 2,500m of strike. A maiden mineral resource

LVDQWLFLSDWHGLQWKHÀUVWTXDUWHURI

This goes a long way to help the company

prove up the economic potential of a mining

operation targeting high-grade pods of gold

contained within broad zones of gold bearing

quartz. It helps that the area’s geology and

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which produced over 22 million ounces (Moz) of

gold over its lifetime.

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of reef and are RC drilling testing three of those

at this stage so there is plenty of work to do. One

of those lines, the Tomorrow Anticline, contains

a level of gold between one and three grams per

tonne with patches of high grade. The results so

far are in line with all of our models and we are

SUHWW\H[FLWHGDWGHÀQLQJRYHUPRIFRQWLQX-

ous gold mineralisation with our RC drilling from

ZLWKLQDP]RQHFRQÀUPHGE\DLUFRUHGULOO-

ing,” says Geoff McDermott, managing director

and chief executive at Navarre.

Taking coverMcDermott explains that the terrain on which

the company is exploring is concealed under a

shallow cover of sands and clays. In fact, most

of the 75Moz’s of gold mined historically in Vic-

toria has been found in areas where basement

rocks were exposed to the surface and these

veins were followed underground.

7KHUHFHQWEURDGLQWHUFHSWVFRQÀUPRSHQSLW

mining potential and the company is well-funded

to carry out the A$4.2 million programme of geo-

physics, air-core, RC and diamond drilling after

raising $3.7 million last year.


Currently, Navarre is planning a bulk sam-

ple with some 15 to 20 tonnes of material left

after drilling.

The company’s board owns 25 per cent of

the stock with another nine per cent of the com-

pany owned by Crocodile Gold as part of a legacy

asset when it acquired the Australian assets of

Canadian miner Northgate Minerals.

“We are strong believers in Victoria and hope

that one day it will return to its golden heyday.

Hopefully Tandarra is the start of a new rush,”

explains McDermott.

A recent farm-in arrangement has been nego-

WLDWHGZLWK&DVWOHPDLQH*ROGÀHOGV²EHLQJWDNHQ

over by Singaporean LionGold - for an area imme-

diately south of the Tandarra prospect since min-

eralisation continues north and south of Navarre’s

existing tenements. For $900,000, Navarre can

earn-in 75 per cent of the Raydarra Project.

Moreover, Crocodile Gold is the company’s

neighbour at another of its projects, Kingston,

where it had a good drill intersection around an

old mining prospect.

Great neighbourhoodMcDermott adds that Navarre’s projects are

located in one of the best addresses in the world.

Victoria is a small state with excellent infrastruc-

ture. Tandarra is ideally located near the city of

kinGstonAt-surface, oxide gold mineralisation

with shallow high-grade gold intercepts

to follow up

100% owned with dominant position

along prospective Landsborough Fault

Historic mining over 1,000 metres of

strike to 75 metres deep – high-grade

gold, silver and lead mined

Active mining jurisdiction – Stawell Gold

Mines operation 30 kilometres away

Navarre Minerals recently conducted

a small diamond drilling program ( 3

holes) the first hole had the following

results ; 16.9m at 5.5g Au/t from 65.7m

down-hole in DDK001, including 3.1m

@ 29.5g Au/t on hangingwall of quartz

lode structure. There was visible gold

in quartz observed in drill hole DDK001

between 65.7m and 65.9m down-hole.

Quartz lode structure was intersected in

next two diamond holes with geological

logging and assaying to come.

BallaRat southGravity ridge may control gold

mineralisation

Possible conceptual “Stawell basalt

dome” gold target

Gravity lines planned to model depth



Bendigo, which has a history of mining among

its population of about 100,000 people.

“There is access to water, people, power

which passes through the western side of our

tenement, there is a highway that goes straight

past and a daily train service out of Melbourne…

we are well situated. And we don’t have a town or

city sitting over top of our project so open pit min-

ing is an option,” McDermott says.

Aside from Tandarra and Kingston, Navarre

is also exploring for base metals at its Black

Range property, which is a copper-zinc-gold 100

per cent owned prospect with similar geology to

Tasmania’s Mount Read Volcanics – host to large


deposits such as Mount Lyell and Rosebery. The

region has been under-explored due to poor out-

crop and shallow cover.

“The techniques we used to explore under shal-

low cover in Tandarra can be applied to the Black

Range prospect. The Victorian government is keen to

promote exploration in this area,” McDermott says.

As an experienced geologist and senior com-

pany executive with over 20 years of experience

and specialised expertise in Victoria, McDermott

adds that he is intimately familiar with both suc-

cessful and unsuccessful exploration techniques

for the region.

“I have served a long apprenticeship work-

ing for other companies in Victoria and now I am

using my accumulated knowledge to give Navarre

every chance of attaining exploration success.

We have made a virgin gold discovery at Tan-

darra and are working hard using science and

technology to look under cover targeting a multi-

million ounce resource,” he says.

www.naVaRRe.coM.au

“We are strong believers in Victoria and hope that one day it will return to its golden heyday. Hopefully Tandarra is the start of a new rush.”

220 The Resource Channel

"e Resource Channel’s review of Australian mining projects in 2012220


"e Resource Channel’s review of Australian mining projects in 2012

special suppleMent


In contrast to the oil and gas sector, the mining sector in Australia is showing con$icting signs, writes Jody Elliott, director at "e Resource Channel

at least ten major LNG/CSG projects are now

under construction in Australia and generating

VLJQLÀFDQWMREQXPEHUVEXWWKHVLWXDWLRQIRUWKH

mining industry is slightly different.

Weaker commodity prices, the high Aus-

tralian dollar and higher input prices, including

labour costs, appear to be having a negative

impact in parts of the industry and a level of cau-

tion is evident throughout.

National economic indicators outside the re-

sources sector remain sluggish and there is still

a great deal of uncertainty on the international

front especially in Europe. This is having some

ÁRZRQHIIHFWZKHUHZHDUHQRZVHHLQJUHFUXLW-

ment freezes, project delays and even redundan-

cies - particularly in the base metals sector both

in Western Australia and Queensland and in the

steel industry in New South Wales.

Data coming from the exploration sector also

paints a mixed picture. Whilst Australian Bureau

RI6WDWLVWLFV$%6ÀJXUHVUHSRUWHGUHFRUGH[-

ploration expenditure for 2011, closer analysis

shows that expenditure in the iron ore sector

rose 32.9 per cent while exploration for Nickel

and Cobalt fell 33 per cent.

In the Bureau of Resources and Energy Econom-

ics’ latest release dated March 2012 they predict;

Australia’s resources and energy com-

modity export earnings are forecast to

grow over the medium term to reach a

record A$225 billion dollars in 2016-17

Despite projections of lower commodity pric-

es over the medium term this is to be offset

by substantially greater export volumes


Between now and 2016-17 export vol-

umes are forecast to increase for iron ore

(62 per cent), metallurgical coal (47 per

cent), thermal coal (65 per cent), copper

ores and concentrate (77 per cent) and

alumina (29 per cent).

According to the Bureau’s Professor Grafton,

the increase in Australia’s export volumes for

PRVWFRPPRGLWLHVUHÁHFWVFRPPLWPHQWVE\WKH

industry to increase production and expand infra-

structure over the medium term.

That said, and despite signs of a more tem-

pered outlook and reduced commodity prices,

the iron ore, coal and gold sectors continue to ex-

pand at lightning speed. It is particularly in these

commodity sectors where we see the volume of

projects generating literally thousands of employ-

ment opportunities.

Our 2012 mining project summary focuses

on major projects mainly in Western Australia

and Queensland that are either underway or

showing strong progress towards this goal. This

list is not in any way exhaustive, particularly

when you consider there are 456 projects in the

Australian resource sector in the construction

pipeline with 272 of those already committed

and/or under construction. These range from

major expansions like BHP Billiton’s Iron Ore to

VLJQLÀFDQWSURMHFWVOLNH+DQFRFN3URVSHFWLQJ·V

5R\+LOOWRVPDOOHUSURMHFWVOLNHDUHÀQHU\PRGLÀ-

cation to increase capacity.

Even with caution evident in some com-

modities, the employment demand is expected

to peak at 150,000 new entrants by the end of

2013 for construction alone.

The following is an overview of a select few of

the major and more interesting mining projects

either underway, or due to commence shortly in

both Western Australia and Queensland.


Rio tinto expansion

operators: Rio Tinto

cost: A$15+ billion

location: Pilbara

timeframe: 2012 - 2017

employment: Requires over 6,000 employees in

the next 5 years

status: In the Pilbara, initially three of Rio Tinto’s

mines are expanding:

Brockman 4 is expected to almost double

its current capacity of 22 to 40 Mt per

year (Mt/y) by 2013.

Western Turner Syncline will expand from

the 6 Mt/y road haulage operation it is to-

day to a 15 Mt/y overland conveyor opera-

tion by 2013.

Nammuldi is earmarked for future expan-

VLRQZLWKDÀQDOGHFLVLRQRQLQYHVWPHQW

expected in the second half of 2011.

In addition, they will achieve growth through

sustaining existing mines and bringing on new

mines such as:

Marandoo, which will extend its mine life

by 16 years to 2030 at the current mining

rate of 15 Mt/y.

Hope Downs 4; a new open cut mine

with an annual capacity of 15 million

WRQQHV0WDQGÀUVWSURGXFWLRQDQWLFL-

pated in 2013.

Capacity at Cape Lambert port will also

expand from 80 to 183 Mt/y by 2015.

Works include the construction of a

new 1.8 km jetty and four berth wharf.

Importantly, these are all on the west-

ern side of the rail line and so will have

minimal impact on existing operations

on the eastern side. The building of the

new jetty and wharf requires a dredging

SURJUDPPHDVZHOODVVLJQLÀFDQWPDULQH

and on-shore works.

westeRn austRalia


Rio tinto expansion suppoRt:

NRW; awarded earthworks at the Cape

Lambert Port B expansion project,

civil works for the Primary Crusher at

the Western Turner Syncline project

and the construction of the Boolgeeda

airstrip at the Western Turner

Brockman project.

Brierty; has been awarded a $55m

construction contract for the

development of infrastructure at

Wickham in the Pilbara. It’s the

first major contract awarded for the

company’s new joint venture with

Ngarluma Yindjibarndi Foundational

(NYFL), Brierty NYFL, established

in December. The Wickham Town

Expansion Phase 2 project will create

a new Wickham South subdivision and

includes 212 new dwellings, 25 residential

lots, the installation of 198 new high quality

fly in/fly out (FIFO) accommodation units,

the construction of a new 1,600m square

town administration and training centre for

both the company and community, as well

as the new public recreational parks.

FoRtescue Raises $490M FoR pilBaRa iRon oRe expan-sion plans

IRJ - June 8 - Fortescue has secured

$490 million in corporate senior debt

facilities to top up funding for its iron

ore expansion plans in the Pilbara

region of Australia.

The credit facilities, backed by

European Export Credit Agencies, will

be drawn over the next 12 to 18 months.

Fortescue’s CFO Stephen Pearce said

that the long-term corporate financing

strategy will extend the company’s

debt maturity profile at attractive rates

and that “the success of Fortescue’s

capital raising initiatives continues to

demonstrate the company’s ability to

diversify funding sources from a range

of local and international capital

markets”.


Roy hill iRon oRe pRoJect

operators: Hancock Prospecting

Location: Chichester Ranges

Timeframe: Construction between mid-2011 –

'HFHPEHUZLWKH[SHFWHGÀUVWRUHRQVKLS

planned for 2014

Cost: Reported to be approx. A$7 billion

Employment: During construction, the workforce

will peak at 3,500 people (with a total of 10,000 ex-

pected over the life of construction) and it will have

an operational manning of over 1,600 personnel.

Status: The Roy Hill project will be a world-class

iron ore mine. The deposit is the last of the large

low phosphorous ore bodies in Australia outside

the control of the majors and is located 105km

north-east of Newman in the Pilbara region of

Western Australia.

The project will consist of:

Mining operation for 55Mt/y hematite

iron ore;

Crushing, screening and processing lump

DQGÀQHVSURGXFWV

Stockpiling and train loading;

A 370km standard gauge, single line,

dedicated heavy-haul railway from the

mine site to Port Hedland;

westeRn austRalia


Roy hill suppoRt:

Brookfield Multiplex Engineering

& Infrastructure; is appointed the

preferred contractor for the design,

procurement and construction of the

$1.2 billion Process Plant and Mine

Material Handling Facilities at the mine

site.

Clough Forge; awarded an Early

Contractor Involvement (ECI) contract

for the Port Materials Handling

Facilities.

ISS Facility Services Australia; provision

of camp management services,

including catering, accommodation and

transportation services.

Ausco Modular; will build the

accommodation.

BGC Contracting; won construction

contracts to build the aerodrome,

airport roads, and village roads and is

expected to generate 4,000 jobs during

the construction phase.

Macmahon & John Holland Group;

building a 340 kilometre rail line

from the Roy Hill mine through to Port

Hedland.

Port facility located at Port Hedland for

receiving, stockpiling, screening;

Exporting 55Mt/y (wet) of direct

shipped hematite iron ore as lump and

ÀQHVSURGXFWV


sino iRon pRoJect

operators:&LWLF3DFLÀF0LQLQJ

Location: 85km south of Karratha

Timeframe: First production expected in late

2012 with a 25-year mine life

Cost: US$30 billion

Employment: More than 4,000 construction jobs

and 600 operational jobs. With commissioning

QRZXQGHUZD\&LWLF3DFLÀFKDVUDPSHGXSLWVRS-

erational recruitment efforts.

Status: In the mine-pit, individual load tests have

EHHQFRPSOHWHGIRUWKHÀUVWFUXVKHUDQGWKHOLQH

1 conveyor belt has been installed. The power

distribution system is ready to be energised. The

major components of the second crusher have

also been installed.

Stockpile construction is complete in the con-

centrator area with ongoing punch list clearance.

The third group of mills has been delivered to site

and positioned. Mechanical and piping installa-

tion of the Line 1 AG mill is nearly complete. The

EDOOPLOODQGÀUVWPDJQHWLFVHSDUDWLRQPHFKDQLFDO

installation for Line 1 is complete excluding the

westeRn austRalia

liner and cranes. Second magnetic separation pip-

ing and electrical installation is complete. The main

e-house is ready to be energised; water cooling and

air compressor systems have been installed and

pump station installation is underway.

At the power station, gas turbines 3 and 4 have

EHHQÀUHGZLWKV\QFKURQLVDWLRQDQGORDGWHVWLQJ

XQGHU0:DOVRFRPSOHWHG/XEHRLOÁXVKLQJ

and stationary commissioning is progressing on

JDVWXUELQHVDQG/XEHRLOÁXVKLQJKDV

been completed for steam turbines 1 and 2.

Hydro tests have been carried out on the desali-

nation, return water and concentrate slurry pipe-

lines, which are now ready for integrated com-


missioning. Main substation electrical testing has

been completed and is ready to be energised.

Major port assets including four barges, two tugs

DQGWKHÀUVWRIWZRWUDQVVKLSSHUVWKHÀUVWRI

their kind in WA waters) have arrived.

In the port area, piping and electrical installation

has been completed for building 1 of the dewa-

tering plant and individual equipment testing is

underway. Conveyor structure and mechanical

installation has been completed at the stockyard

and belt installation is progressing. Hydro tests

have been carried out on the concentrate thick-

eners and power distribution systems have been

installed throughout the area.

At the desalination plant, pressure testing and

bubble tests have been completed on the east

train and endurance testing has been completed

on all three intake pumps. Loop checking is

ongoing. Mechanical, electrical and instrumenta-

tion installation in the west train is progressing

and mechanical installation for the west train

pre-treatment is nearing completion.

Civil work has been completed for all workshops

in the mining infrastructure area and steel struc-

ture erection is underway.


southeRn seawateR desalination plant staGe 2

operators: Southern Seawater Alliance (SSWA)

Location: Binningup, south of Perth

Timeframe: 18 month construction, expected to

be commissioned by 2014

Cost: A$955 million

Employment: 600 jobs during construction, local

workforce only (no camp facilities)

Status: A Spanish-led consortium, Southern Sea-

water Alliance (SSWA) will build a second desali-

nation plant with 100 gigalitre per year (GL/year)

maximum capacity plant for the Water Corpora-

WLRQ7KHÀUVW*/DQQXPSODQWFDSDFLW\ZLOO

become fully operational ahead of schedule in

ODWHDQGLVLQWKHÀQDOVWDJHVRIFRPPLV-

sioning. The SSWA is led by Spanish companies,

Tecnicas Reunidas and Valoriza Agua. Its part-

ners are construction company, AJ Lucas and

engineering consultancy Worley Parsons. Tecni-

cas Reunidas and Valoriza Agua have extensive

major desalination experience and are interna-

tional multidiscipline construction companies.

These two companies will operate and maintain

the full plant, which will be owned by the Water

Corporation, for 25 years.

SSWA plant support:

westeRn austRalia


GVk plays down austRalian en-ViRonMent MinisteR’s stopped clock

IRJ - June 6 - GVK Power and Infrastructure,

the Indian group developing the Alpha

Queensland coal project, has said “it is

committed to norms and confident of a

positive outcome” in response to Australian

environment minister Tony Burke’s publicly

stated concerns over granting of mine and

rail permits.

Burke said to media that he “stopping the

clock on the process which has been given

to us by the Queensland government”

because of remaining ecological concerns

over the $10 billion Alpha coal and rail

project, which GVK co-owns in the Galilee

basin with Gina Rinehart, the billionaire and

mining heiress.

GVK said that, “Minister Burke advising that

he is “stopping the clock” by no means is

to be interpreted that the project will not

proceed, nor is it an indication of the Federal

Government’s decision.”

The Indian coal producer added that requests

from federal departments to clarify existing

information “is not at all unusual in the

process” of acquiring permits.

Analysts quoted in the media have

implied that the move by the Australian

government is political in nature though

the delay is also widely viewed as a blow

to the Alpha project against a backdrop of

competition from other energy companies

and coal shortages in India.

AusGroup subsidiary, AGC Industries

has received a Letter of Award valued at

approximately $30 million by Southern

Seawater Alliance for the construction to

expand the second seawater desalination

plant to its 100 GL/y capacity, scheduled

to be completed by the end of 2012.

The scope of work for AGC will cover struc-

tural, mechanical and piping installation

work of the main facility as well as fabri-

cation of the secondary steelwork.

ABB – Australia, Automation and Power

Technologies.

Siemens


westeRn austRalia

Bhp Billiton, iRon oRe expan-sion pRoJects

operators: BHP Billiton

Location: Pilbara

Timeframe: Construction has commenced,

VWDUWXSGXHLQWKHÀUVWKDOIRI

Cost: Reported to be approx. A$7 billion

Employment: Exact numbers unknown, but is in

the thousands for construction and operational.

Status: BHP produces most of its iron ore

through seven mines at three big mining hubs in

the central and east Pilbara known as MAC, New-

man and Yandi. To expand to 220 Mt it will build

another, Jimblebar, and to move to 350 Mt it will

open up four more mines: Jinidi, Marillana 1 and

2 and Southern Flank. Since our last update,

BHP Billiton has also bought out the equipment

and operators of its contractor, HWE and moved

to an owner-operator model.

BHP Billiton announced in February 2012, the

approval of US$917 million (BHP Billiton share

$779 million) in pre-commitment funding for the

construction of a 100 Mt/y outer harbour facility

associated with its expansion projects. The

project, which is expected to be reviewed for full

approval in the fourth quarter of calendar year

2012, has an embedded option to expand by a

further 100 Mt per year. The funds approved

will enable the company to progress feasibility

studies and the procurement of long lead time

items. It will also allow for dredging to begin,

subject to the necessary regulatory approvals. In

parallel with this work, engineering studies are

underway to match mine and rail expansions to

the expanded port capacity.

7KHÀUVWSKDVHRIWKH2XWHU+DUERXU'HYHORS-

ment would include the proposed construction

of a 4km jetty, a four-berth wharf, 32 kilometres

of dredged departure channel and

landside infrastructure, including stockyards and

a rail spur.


Bhp Billiton iRon oRe expan-sion suppoRt:

Monadelphous; has secured a

significant number of contracts for

major works, including structural,

mechanical and piping works for the

expansion project.

Joint venture partners, RCR Tomlinson

and Laing O’Rourke; will design and

construct primary and secondary

crushing facilities, including overland

conveyors.

FAST; a joint venture between Fluor

Australia and SKM will develop and

deliver iron ore projects to meet the

global market demand forecast for BHP

Billiton’s Iron Ore business.

John Holland Group.

Macmahon Holdings; awarded in

August 2011 the contract for pre-

development work adjacent to current

operations at BHP Billiton Iron Ore’s

Wheelarra Mine to construct haul roads

and run of mine.

United Group Resources; awarded

an $A165 million contract for the

fabrication and on-site installation

of structural steel and mechanical

equipment associated with transfer

stations, conveyors and shuttles.

AGC; awarded an A$100m contract for

the structural, mechanical, piping and

heavy haulage at the company’s Yandi

operation. The scope of work includes

construction of an Ore Handling Plant,

stockpile and conveyor systems;

fabrication of 2,000t of conveyor

components; and transportation of 43

structural modules - ranging from 100

to 300t - from Port Hedland to the Yandi

mine site, located 140km northwest of

Newman in Western Australia’s Pilbara

region.

RCR Tomlinson; has been awarded a

contract to provide power generation

works for BHP Billiton Iron Ore’s

Yarnima Combined Cycle Power Station

in Newman, Western Australia. The

scope of works includes the design,

manufacture and supply of three Heat

Recovery Steam Generators (HRSGs)

and associated equipment. Due for

completion in the second quarter

of 2013, the contract is valued at

approximately $30 million.


oakaJee poRt and Rail

operators: OPR was established in September

2007 to pursue a joint venture between Murchi-

son Metals and Mitsubishi Development, each of

which has a 50 per cent stake in OPR.Murchison

Metals. The project is now owned 100 per cent

by Mitsubishi.

Location: Mid west region of Western Australia

Timeframe: The project timetable from construc-

WLRQWR5DLODQG3RUWFRPPLVVLRQLQJWRÀUVWRUHRQ

ship, takes the project out to 2014.

Cost: A$3 billion +

Employment: OPR expects to employ about 250

personnel, who will live in the region.

During construction, OPR expects the number of

port and rail construction workers to reach a peak

of around 2600, comprising approximately 900

port area workers and just over 1,700 rail work-

ers, 19 - 24 months into the construction period of

three years.

All construction workers will be employed by the

successful construction contractors. They will be

accommodated in single rooms with private ensuite

facilities in up to seven construction villages.

One village will be located at the port site and the

others along the rail line. The portside construction

village will comprise 1,100 rooms. The rail villages

will vary in size from 150 to 760 rooms. All villages

will be managed by the successful contractors in

accordance with strategies determined by OPR.

The total number of accommodation rooms will be

determined bearing in mind project management

manning, workforce rosters and visitor contingen-

cies.

Once the port and rail are operational, the villages

will be decommissioned.

Status: Oakajee Port and Rail (OPR) will deliver a

rail and port network business to transport iron

ore from Western Australia’s mid-west region to

customers across the globe.

Back in 2009, OPR and the Western Australian

State Government signed an exclusive State

Development Agreement for the development of

the multi-billion dollar deepwater port at Oaka-

jee, 25 km north of Geraldton and integrated rail

network to service iron ore miners and other port

users in the mid-west region.

westeRn austRalia


The port will cater for the world’s largest ore

carriers and the railway network will service the

growing number of mining projects in the region.

In 2010, Oakajee Port and Rail (OPR) delivered

a draft Bankable Feasibility Study (BFS) to the

Government of Western Australia, which demon-

strates strong technical feasibility for the devel-

opment of the Oakajee port and rail project.

Draft Implementation Agreements for the port

and rail have also been delivered to the State.

Both parties have substantially progressed the

terms of these agreements and will continue to

work together to progress outstanding matters.

On 20 February 2012, Mitsubishi Development

(MDP), wholly owned by Mitsubishi Corp – Ja-

SDQ·VODUJHVWJHQHUDOWUDGLQJFRPSDQ\ÀQDOLVHG

the purchase of Murchison Metals Ltd’s 50 per

cent stake in OPR, increasing its interest in the

project to 100 per cent.

Project planning, evaluation, engineering and

regulatory approvals are well advanced. Indepen-

dent peer reviews, including value engineering

DVVHVVPHQWVKDYHLGHQWLÀHG235·VSRUWDQGUDLO

design as the optimal solution to meet the gov-

ernment’s scoping requirements.


westeRn austRalia

kaRaRa iRon oRe pRoJect

operators: Gindalbie Metals and AnSteel (one of

China’s leading steel and iron ore companies)

Location: The operations, located 225km inland

from Geraldton in the mid-west region is the re-

sult of an A$2.57 billion project which has been

in development since early 2009 and is currently

LQWKHÀQDOSKDVHRIFRQVWUXFWLRQ

Timeframe: Approaching commissioning, due

September 2012

Employment: Karara Mining will require a perma-

nent workforce of approximately 600 on a long-

term basis once in full production.

Status: Karara Mining is fast approaching com-

missioning in September this year for our 8Mt/y

magnetite operations and already underway with

feasibility for 16Mt/y expansion.

World-class magnetite deposit and multiple

hematite deposits with 30Mt/y potential for a

mine life in excess of 30 years.

First major magnetite operation “opening the

mid-west”

2,400Mt ore body covers an area 800m wide

by 3km long and has been so far been drilled

to a depth of 300m. Karara’s open pit will be

similar in size to the Kalgoorlie super pit once

complete with a processing plant for opera-

tions and maintainability.

Dry stacked tailings - only one in Australia

to use this world leading technology. The

SURGXFWLRQRIGU\WDLOLQJVUHSUHVHQWVDVLJQLÀ-

cant investment in water recycling capacity

at Karara, allowing the project to reduce its

water consumption by about one-third.

Commitment to training and education including

our University Scholarship Programme which is

open to students in site local communities who

KDYHDÀUPFRPPLWPHQWWRZRUNDWDSURIHVVLRQ-

al level in a mining company.


kaRaRa iRon oRe pRoJect suppoRt:

Brierty; awarded $150-million, three-

and-a-half year contract to provide

hematite mining and associated

services, plus authorisation to

procure key plant and facilities.

Downer EDI; awarded the mining

operation contract in February

2012, generating 120 jobs. Valued

at approximately $570 million over

six years, the contract is on the

largest single operation contracts

for the project and will include the

provision of drill and blast, and load

and haul services.

skills shoRtaGe could stall austRalia’s MininG constRuction sectoR

IRJ – May 17 – Demand for mining-

related construction in Australia is

poised to surge over the next two years

but could be held back by a lack of

skilled workers, according to a survey.

It forecasts a 14.7 per cent rise in

the total value of engineering and

commercial construction this year,

driven by oil and gas processing and

heavy industrial projects.

Released today by the Australian

Industry Group and Australian

Constructors Association (ACA), the

construction outlook survey also predicts a

further rise of 13.8 per cent in 2013.

Engineering construction turnover is

set to rise by 17.1 per cent this year and

15.4 in the next, while the total value of

commercial construction is expected to

rise by 6.1 per cent and then 7.2.

However, this growth could be offset

by an expected continuance of skill

shortages.

Around 70 per cent of businesses

predict they’ll find it difficult to hire

skilled staff over the next six months.

Australian Industry Group chief

executive Innes Willox said that

engineering construction in the mining

sector is “bursting at the seams, with

skill shortages widely anticipated and

rising expectations of shortages of raw

materials and equipment.”


FMG expansion pRoJect

operators: Fortescue Metals

Location: Pilbara

Cost: $360 million

Timeframe: 18 months, operational by mid-013

Employment: Unknown, but expected to be in

excess of 600

Status: The existing integrated mine, rail and

port supply chain was constructed in less than

two years and Fortescue’s board has recently

approved an US$8.4 billion expansion to their

Pilbara operations. Expansions plans are on

schedule for completion in mid-2013.

operations:&ORXGEUHDNWKHÁDJVKLSPLQHLV

located approximately 260km from Port Hedland.

Christmas Creek is 50km to the east of Cloud-

break

Cloudbreak is a 40Mt/y mining operation, Christ-

mas Creek is currently operating at approximate-

ly 18Mt/y.

The 40t axle load railway is the heaviest haul in

the world with up to seven trains a day transport

iron ore from the mines to Herb Elliott Port in

Port Hedland

The port was designed with expansion in mind, to

allow construction to take place without interfer-

ing with daily operations

Development highlights:

Fortescue is undergoing a transformative

expansion from a 55Mt/y operation to a

155Mt/y powerhouse by June 2013.

The 155Mt/y expansion involves additional

infrastructure at Herb Elliott Port, 120km of

mainline rail duplication, a new 130km rail

spur from Solomon to the mainline, a 60Mt/y

mine at Solomon and Chichester Hub de-

velopment to take its combined production

capacity to 90Mt/y (plus 5Mt/y from a 50/50

BC Iron Joint Venture).

The Solomon Project is 120km to the west

of the Chichester Hub, more than 3,000Mt

have been discovered here and early ore is

expected later this year, with full production

on target for July 2013.

Solomon is the largest iron ore start-up in

Australia, showcasing innovation to execute in

record time and at a lower capital cost/tonne

westeRn austRalia


FoRtescue FMG expansion suppoRt:

Decmil; will construct a 200 person rail

camp, including accommodation rooms

and associated facilities, at the site south

of Port Hedland as part of Fortescue

Metals Group’s T155 Rail Expansion

Programme. Construction has a forecast

completion date of second quarter of

calendar year 2012.

Worley Parsons

RCR Tomlinson

AGC

Construction Industries Australia

Brierty

Leighton Contractors; received formal

notification as preferred contractor

for Fortescue Metals mining and

operations at the Solomon iron ore

project. Leighton Contractors and

Fortescue have reached agreement

within a limited notice to proceed

(LNP) to facilitate the continuation of

negotiations regarding the five-year

mining and operations contract. The

LNP also provides for pre-mobilisation

activities and early services for the

project, including works for operational

readiness and full mine management. A

decision by Fortescue on contract award

is expected sometime in June 2012.

ration than any of its competitors

The company is evaluating early production of

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pect a full scale project to be its next develop-

ment step.

A maiden resource of 625 Mt has been de-

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pected to grow and both Nyidinghu and Western

Hub will rival the Chichester Hub in production

capacity.

Fortescue is investigating a ‘two port, three

hub’ strategy that would take production to

355Mt/y which could potentially include a

new Pilbara port.


alpha coal & keVin’s coRneR pRoJects

operators: Hancock Prospecting

Location: Galilee Basin

Timeframe: The Test Pit for Alpha Coal has been

completed and construction is due to commence

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Cost: A$7.5 billion

Employment: 2,500 construction jobs and 1,600

permanent jobs

Status: Hancock Coal (HCPL), a wholly owned

subsidiary of Hancock Prospecting, has as its

centrepiece, the development of an extensive

thermal coal deposit in Queensland’s Galilee

Basin, about 400km inland from the coast. The

project will include the construction of approxi-

mately 495km of rail, port facilities, mine infra-

structure, process plant and workforce village.

Adjacent to Alpha Coal, the Kevin’s Corner Proj-

ect is a recognised thermal coal deposit within

the Galilee Basin. This deposit contains very

large resources of thermal coal in a premium

location of the Basin. Hancock Galilee (HGPL),

a subsidiary of Hancock Prospecting, has a

long-standing interest in the development of the

Galilee Basin, with the parent company having

held coal exploration permits and investigated

the Alpha region since the 1970s.

Kevin’s Corner Coal Project is adjacent to Han-

cock’s Alpha Coal Project and both Projects will

utilise the proposed multi-user rail and port facili-

ties. This is designed so that at a future point, it

will have the potential to transport, load and ship

capacity greater than the combined production

level of both the Kevin’s Corner and Alpha Coal

Projects.

Similarly to the Alpha Coal Project, the Kevin’s

Corner deposit also lies within the late Permian

Colinlea and Bandanna Formations consisting

of four main thermal coal seams suitable for the

global export market. The coal seams dip gently

from east to west varying in thickness from 5 to

8m, enabling high production open-cut mining

and underground longwall mining.

Exploration to date has concentrated on the coal

reserves with the best export marketability, with

the resources to be further upgraded following

additional drilling to the west. With the comple-

queensland


alpha coal and keVin’s coRneR pRoJect suppoRt:

WorleyParsons and Ausenco; awarded

contract to manage the delivery of

Hancock Coal’s $7.5 billion Alpha Coal

Project in Queensland. WorleyParsons

and Ausenco will provide programme

management services to the project in a

50 per cent joint venture throughout the

next four years.

tion of the 2009 drilling programmeme, the

Kevin’s Corner Project was upgraded to approxi-

PDWHO\0WRI-25&FRPSOLDQWDVLJQLÀFDQW

increase to indicated and measured resources

(that now includes approximately 500 drill holes).

The Alpha Coal and Kevin’s Corner combined

resource is currently 7,900Mt of JORC compliant

coal with ongoing drilling expected to increase

this further. The Kevin’s Corner Coal Project

will have a capacity of 30 Mt/y via open-cut and

underground longwall operations. The operation

has a scheduled mine life of approximately 30

plus years.

The Project is expected to commence construc-

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2014 dependent on gaining relevant approvals.

The Kevin’s Corner Coal Project is anticipated

to employ thousands of people throughout its

productive (30 year plus) life. The construction

workforce is anticipated to peak at approximately

2,500 people.


the china FiRst pRoJect

operators: Warratah Coal

Location: 38km north-west of Alpha (160km to

the west of Emerald)

Cost: A$8 billion

Timeframe: Construction to commence late

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Employment: The Galilee Coal Project will require

approximately 3,500 workers during the construc-

tion period (excluding construction of port facilities),

and an estimated 1,860 during operations (exclud-

ing contractors). Approximately 360 staff will work

and reside in or near Bowen during operations.

The remaining 1,500 workers will be located at the

mine site. At least 28 senior managers will reside

permanently in Alpha. Waratah Coal is currently

discussing the desired population of Alpha with the

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who will reside in Alpha.

Status: The existing integrated mine, rail and

port supply chain was constructed in less than

two years and Fortescue’s board has recently

approved an US$8.4 billion expansion to their

Pilbara operations. Expansions plans are on

schedule for completion in mid-2013.

operations: The Galilee Coal Project includes

mine, rail and port components. Waratah Coal

plans to build a railway from the mine site to the

Port at Abbot Point and utilise proposed new port

facilities and infrastructure within the Abbot Point

State Development Area (APSDA) for the loading

and export of coal.

The railway line comprises some 468km and will

traverse the Barcaldine, Isaac and Whitsunday

Regional Council areas. Construction is sched-

uled to occur over a three-year period commenc-

ing late 2012.

The Galilee Coal Project includes open cut and

undergrounding mining. Maximum production is

expected to include 56 Mt of run-of-mine coal to

produce 40 Mt of product coal annually. Maxi-

mum production is envisaged within a 5 to 10

year period. Production is expected to continue

for at least 25 years.

Although additional work may be required on the

EIS, Waratah Coal aims to have the required gov-

queensland


china FiRst pRoJect suppoRt:

The Metallurgical Corporation of China

(MCC); has been engaged to undertake

the engineering, procurement, construction

and management of the project.

ernment approvals for the project in mid-2012,

ahead of the planned commencement of con-

struction activities in late 2012.

austRalian pM opens a$34 Billion lnG pRoJect

IRJ - May 21 – Prime minister Julia Gillard

has officially opened an A$34 billion

liquefied natural gas (LNG) project in

northern Australian port city Darwin.

The Ichthys project, belonging to

Japanese oil and gas company Inpex,

is set to bring thousands of jobs

and many valuable contracts to the

Northern Territory.

Gillard said the project was a

fantastic opportunity for the area

and a “remarkable time” in Australia

comprising large economic growth, low

unemployment and low inflation.

“We can be confident about the

Australian economy because there are

so many investments like this one in the

pipeline,” she said, citing the total value

of investments to exceed $450 billion.

She expressed optimistic sentiment

that, despite the crisis in Europe

causing the Australian share market to

plummet two per cent today, Australia

continues to grow and has a bright

economic future ahead.

Inpex chairman Naoki Kuroda said

the Itcthys LNG project would benefit

the people of both Australia and

Japan, bringing social and economic

development to the Northern Territory and

a long-term supply of cleaner energy to

millions of Japanese homes and businesses.

“The Ichthys LNG project will

strengthen the ties between Australia

and Japan, while securing Darwin’s

place as an emerging hub of oil and gas

activity in the region,” he said.


Bhp Billiton caVal RidGe pRoJect, queensland

operators: The Project is a 50-50 joint venture

between BHP Billiton and Mitsubishi Develop-

ment Pty Ltd, managed by BMA.

Location: Bowen Basin, 16km south of Moran-

bah and 160km south west of Mackay

Timeframe: First production expected in 2014

Employment: 1,200 construction and 500 opera-

tional jobs

Status: The Caval Ridge project includes the

GHYHORSPHQWRIDJUHHQÀHOGFRDOPLQHLQWKH

northern section of the Bowen Basin which will

produce high quality hard coking coal. The proj-

ect was approved for construction by BHP Billiton

in late 2011. Limited work packages are open

for tender. BHP Billiton BMA has commenced

recruitment for the operational workforce. The

operation will have a life of 30 years and will be

an open cut dragline and truck shovel operation.

queensland


Bhp Billiton caVal RidGe suppoRt:

Bechtel; appointed project manager

and is responsible for developing

the operation. Work includes

development of a new coal mine and

coal handling and preparation plant.

Bhp RestaRts teMco ManGa-nese opeRations in tasMania

IRJ - May 22 - BHP Billiton has restarted

operations at its manganese alloy facility

in Tasmania, Australia. Ran by TEMCO,

part of the manganese joint venture

between BHP and Anglo American, the

plant was suspended for 90 days due to

operating losses.

BHP conducted a successful review of its

economic viability and is now planning

for the facility’s safe and full restart.

Bryan Quinn, BHP Billiton Manganese

Australia Asset president, said:

“Extensive stakeholder consultation

and assessment of all options for

TEMCO has been undertaken over the

last three months.

“Thanks to the extensive investigation

by TEMCO employees of these options,

and the flexibility provided by several

stakeholders, significant cost reduction

opportunities have been identified,

primarily in the areas of workforce

efficiency, power supply flexibility, ore

blending and freight optimisation.

“These changes should allow TEMCO

to return to a globally competitive

position.”

BHP Billiton Manganese president

Tom Schutte said a key change will be

separating the operations of the TEMCO

alloying facility and the GEMCO mine in

the Northern Territory.

“This separation introduces the ability

to blend in other ore sources, which will

improve operating performance while

also allowing us to consider the strategic

fit of the TEMCO operation inside BHP

Billiton’s portfolio,” he said.

BHP will implement a reduced

organisational structure for the restart

that will be achieved through natural

attrition – an employment freeze and

redeployment within the company.


Bhp Billiton daunia pRoJect

operators: BHP Billiton Mitsubishi Alliance

(BMA)

Location: 150km south-west of Mackay

Timeframe: Following regulatory and owner ap-

provals in March 2011, construction activities at

the Daunia Mine commenced in mid-2011. Con-

struction of the mine is expected to take approxi-

mately two years. First coal is expected in 2013

and full production of up to 4.5 Mt/y is expected

to start in 2014.

Employment: 450 construction and 300 opera-

tional jobs

Status: The Daunia Mine is an open-cut coal

mine to be operated via an excavator and truck

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to support BMA’s growth options. The mine is

located in the northern section of the Bowen

Basin approximately 18 kilometres southwest of

Coppabella. It will produce up to 4.5Mt/y of semi-

hard coking coal and pulverised coal injection

(PCI) coal for the export market.

The Daunia Mine involves:

One new open-cut coal mine

A new Coal Handling and Preparation Plant

(CHPP)

Infrastructure associated with the new opera-

tions and facilities including a conveyor, haul

roads and an overpass across the Norwich

Park rail line, linking mining areas to the

treatment plant

Purchase and construction of new mining

equipment.

Bhp Billiton daunia pRoJect suppoRt:

Bechtel has been appointed to

provide engineering, procurement,

construction and management

services.

queensland



wandoan coal pRoJect

operators: The project is being delivered by

xstrata Coal Queensland and funded through a

joint venture between xstrata Coal Queensland

(75 per cent ownership), ICRA (Itochu) (12.5

per cent ownership) and Sumisho Coal Australia

(12.5 per cent ownership).

Location: Wandoan (immediately west of the

township)

Timeframe: Two to three year construction pe-

riod

Employment: 1,300 jobs required to build the

mine infrastructure which will generate up to 210

further jobs in the local region each year. Once the

mine is operational, 754 permanent jobs and 90

contractor maintenance jobs will also be created on

WKHPLQHVLWH,QDGGLWLRQWKHUHZLOOEHDÁRZRQHI-

fect that will generate 150 to 200 permanent jobs

in the local region. A number of entry level jobs

for school-leavers, including apprenticeships and

traineeships will be created among the long term

jobs on the mine site once the mine is operational.

The xstrata QMEA Education Partnership between

xstrata Coal, Queensland Department of Education

and the Queensland Minerals and Energy Academy

will provide A$720,000 over three years for fund-

ing, equipment, curricula enrichment and school

industry liaison to Wandoan State School, and

Taroom State School and Miles High School.

Status: Awaiting state and federal government

approvals. The Wandoan Coal Project has been

established to investigate the possibility of open-

ing an open-cut thermal coal mine immediately

west of the Wandoan township. The mine would

include an open-cut coal mine, a coal handling

and preparation plant and support facilities.

With an expected life of more than 30 years, the

mine would produce thermal coal which would be

crushed, sized and washed before being trans-

ported by rail to port facilities on the Queensland

coast and exported around the world, or used

here in Australia. It is anticipated that about 30

million run-of-mine tonnes (t) of coal would be

mined at Wandoan each year. As at May 2012,

;VWUDWD&RDOLVDZDLWLQJUHFHLSWRIÀQDODSSURYDOV

from the Queensland Government to allow them

to proceed with the development of the proposed

mine. After the Mining Lease and Environ-

mental Authority are granted by the Queensland

queensland


Bhp pRessuRed to expand olyMpic daM

IRJ – May 28 – Australia’s resources

minister Martin Ferguson is putting

pressure on mining major BHP Billiton

to expand the Olympic Dam project,

according to Fairfax analyst John Meyer.

There is speculation that rising costs in

the country and a less certain environment

for uranium and copper demand could

cause BHP to defer the A$20 billion dollar

investment it is considering for the next

Olympic Dam expansion.

Meyer added that the mine has already

suffered two catastrophic fires in its

processing plant on commissioning and

requires substantial investment to meet its

required economies of scale.

“No wonder BHP might want to push this

particular white elephant further out,” he

said.

Expansion of Olympic Dam would involve

creating a large open mine to tap an ore

body that begins around 400 metres deep,

as well as a 270km electricity transmission

line, 400km pipeline, large desalination

plant, 105km railway link from Pimba to the

mine.

It would increase the amount of ore mined

at Olympic Dam from 12 million tonnes per

year (Mt/y) to 72Mt/y; copper concentrate

production from 600,000tpy to 2.4Mt/y;

uranium oxide from 4,500tpy to 19,000tpy;

gold bullion from 100,000oz to 800,000; and

silver from 800,000oz to 2.9 million.


pRoJect BooMeRanG

operators: East West Line Parks

Location: Comprises a new 3,370km trans Austra-

lian railway from Port Hedland, Western Australia

WR0RUDQEDKLQWKHFHQWUDO4XHHQVODQGFRDOÀHOGV

as well as 6 or more steel smelters on both coasts

(12 or more in total), associated port facilities and

infrastructure to support the project.

Cost: US$45 billion

Timeframe: 3.5 year construction period. Proj-

ect design and feasibility study commences in

2010/11. Three-year construction schedule to

EHJLQLQ&RPPHQFHSURGXFWLRQDQGÀUVW

trains run in 2015/16.

Employment: Expected to generate up to 35,000

jobs in the Northern Territory and South Australia

during construction.

Status: East West Line Parks is building one

of Australia’s largest infrastructure projects

- a transcontinental multi-user rail infrastruc-

ture corridor and steel manufacturing complex

which they claim will revolutionise global steel

manufacturing. Poised to be one of the biggest

queensland


aBout the authoR

Jody Elliott is the founder and

director of The Resource Channel,

the leading, award-winning

employment news and job board

website for the Australian resource

sector covering mining, oil and gas,

and construction. She has 15 years

in management roles with major

resource sector employers and is a

regular speaker at conferences and

in the media.

Please forward your feedback or

enquiries to

[email protected]

construction challenges in the nation’s history,

Project Iron Boomerang will link the Pilbara iron

ore mines in Western Australia with the Bowen

Basin coal mines in north Queensland via a

3,300km rail line. The infrastructure, services

and resource linkages will support and fuel two

Steel Precincts, one on each coast, which will

manufacture slab steel for export.

The purpose built transcontinental railway line

will link Australia’s two great ore bodies for steel-

making, iron ore from the west coast and met-

allurgical coal from the east coast. The trans-

continental railway will be dedicated to carrying

UHVRXUFHVHIÀFLHQWO\IURPRQHVLGHRIWKHFRXQWU\

WRWKHRWKHUEHWZHHQWKHÀUVWVWDJHLURQDQG

Steel Precincts.

The project’s primary objective is to service and

facilitate the production of slab steel in Austra-

OLDIRUH[SRUWWKHUHE\VLJQLÀFDQWO\UHGXFLQJWKH

quantities of seaborne iron ore and coal con-

sumed in the world’s steel production cycle.

The Leading Logistics Network

SDV South Africa Pty Ltd. 24 Covora Street, Jet ParkProject Business Development - Caroline Brownson, Tel: +27 11 398 5000ŵĂŝůƐĚǀ ƐŽƵƚŚͲĂĨƌŝĐĂΛƐĚǀ ĐŽǌĂǁǁǁďŽůůŽƌĞͲĂĨƌŝĐĂͲůŽŐŝƐƟĐƐĐŽŵ

1st: We are the 1st intergrated logistics network in Africa

24: The number of port & rail concessions

43: The number of African countries where we are present

250: The number of subsidiaries in Africa

250: Million Euros investments per year

2 010: Million Euros turnover per year

6 000: Transport vehicles used in Africa

22 000: The number of people employed in Africa

3 500 000: Containers handled per year

6 500 000: Tons of freight handled per year

8 000 000: Square metres of warehousing space and yards

A Partner with a strong and integrated network

Documents

Noordin Mengal speaks about Balochistan in an interview with the Canadian magazine, International Resource Journal