There are several key competitive advantages the Mawson Iron Province has over other magnetite (and DSO) projects;
Access to existing infrastructure
Our operations are within easy driving distance of major urban areas (e.g. 280km by car to Adelaide, the state capital of South Australia). We will not have the expense of either company towns, or fly in - fly out. We should also be able to get materials and supplies delivered at a significantly lower cost than in remote areas. The driving distance from Adelaide to Wallaroo, the base for our off shore floating port, is only 156 km. The driving distance from Perth, the capital of Western Australia, to Port Hedland, the largest iron ore port in the Pilbara is 1,648 km.
Our access to electricity is also a competitor advantage. Electric power on the Yorke Peninsula and Mid North of South Australia costs about one sixth the cost of power in the Pilbara. The Mawson Iron Province is not far (~100Km) from the Eastern Australian power network. Major high voltage supply lines cross the proposed infrastructure corridor near Burra.
Studies1,2 have shown that the geometry and simplicity of our orebodies are such that we can use very low cost bulk mining methods (i.e. Fully Mobile In Pit Crushers and Conveyors), rather than higher polluting and expensive diesel trucks. With or without drivers, trucks are still polluting and expensive.
Metallurgical and geotechnical studies at Razorback Deposit 1,2, have shown the rock is soft and relatively non-abrasive when compared to other magnetite projects, which contributes to very cheap mining and very low comminution (crushing and grinding) costs.
Transport of Material
From previous iron ore projects in Australia, Brazil and India, it is known that slurry transportation is an order of magnitude cheaper than railroad transportation. Conceptual studies1 have determined that the slurry pipeline is lower in capital cost than a railroad even before adding on the cost of the train sets necessary to carry the ore or concentrates.
From the time the ore is excavated at the mine face, the product does not stop moving and is never stockpiled until it reaches the floating port facility, where it can be directly loaded in ships from the filter plant or stored in bunkers in the floating port. Whereas in conventional rail and port, every time an ore or concentrate is put into a storage bin or placed on the ground in a stockpile it costs from 2 to 5 AUD per tonne. Our plan is to eliminate this issue. The fewer handling steps, surge bins and stockpiles in the flow sheet from orebody to ship, the lower the cost - both capital and operating.
Steel makers with whom we are in discussion, have grasped the essential importance of this concept. It is much more cost effective and sustainable, to design-in such low capital cost and low operating cost concepts at the earliest stage of project development, than to attempt half hearted retro-fits later, which has been the issue of many marginal producers.
We will be able to load the largest bulk carriers afloat and will therefore have the cheapest delivered freight cost per tonne of any operation delivering to China. We will take advantage of Chinamax and Valemax vessels which can carry about 400,000 dry metric tonnes. This is because the planned position of the Filter and Loading Vessel will be in water depths of >23 metres at Mean low, low water. There are no ports able to load such vessels anywhere else in Australia. Additionally, there are no disruptive cyclones in Spencer Gulf. The Gulf constitutes a huge natural harbour ideally suited to an offshore floating iron ore port.
Metallurgical studies2 show our product will potentially be 67 to 69% Fe, versus the 58% Fe of much of the production from the Pilbara. This gives us a natural cost advantage in cost per contained iron unit delivered to the customers’ steel mills. It also significantly reduces the cost of steel making, and reduces the pollution liabilities. Although that benefit accrues to the steel maker and not us, it makes our concentrates very attractive.
1 Based on Lodestone Equity Group Conceptual Feasibility Studies
2 ASX announcement 27th November 2013