While historically Africa was a land of risks and endeavour, it was set to become a force of the future in global traded iron ore.
This is according to John Welborn, MD, Equatorial Resources Limited, speaking on the second day the three day 2013 Paydirt Africa Down Under conference in Perth Australia.
He believes that the cost curve forecast for Africa’s emerging iron ore sector has the potential to displace future production from higher cost operations elsewhere around the globe.
“There is a reality that Africa’s time is coming in terms of iron ore. It is now a case of ‘when’ not ‘if’ for Africa’s iron ore exports. Africa is the last great region in the world of undeveloped, large-scale, high grade iron ore deposits. African iron ore projects in the pipeline have the potential to operate in the first quartile of the cash cost curve with costs well under $50 a tonne. By 2020 Africa could host three out of the top seven lowest cost mines,” he said.
“The forecasts also demonstrate that these leading projects have the potential to displace future production from higher cost operators. “The factors tipping the scale in Africa’s supply favour are not only that Africa is the host to major iron deposits and has the ability to fit below or within the cost curve and be highly competitive, there is a strong political driver in the increasing willingness of African governments to support development and drive infrastructure development and the social and financial dividends of mining success.
He then spoke about what he termed the “China reality”. “The China Iron & Steel Association has stated that within two years, China wants to import 50% of its iron ore consumption from Chinese owned mines elsewhere in the world.”
The well cashed up Equatorial (A$52m in cash) is developing two 100%-owned iron ore projects in the Republic of Congo – Badondo in the country’s northwest and which has the potential Mr Welborn says to rival the Pilbara – and the planned 2 mtpa low capital cost Mayoko-Moussondji project in the far southwest corner.
“Our own aspirations aside, the Congo has favourable fiscal terms for miners as the mining sector is central to the Government’s Economic Diversification Programme – including uncluttering the approvals process and providing incentives for foreign mining companies.”
Mayoko-Moussondji has a JORC resource defined in February of 767 million tonnes at 32% Fe including a hematite resource of 102 million tonnes at 41% Fe. This initial hematite resource is expected, with low cost processing, to produce a clean premium grade fines product grading 64% iron.
The company has set a US$114 million capital cost to get into initial production building to a total expenditure of US$230 million by the third year for a 2mtpa operation. “We believe we can be in production within 15 months of final investment decision,” Welborn said. “Our operating costs will be low – around US$41/t – and there is significant potential to expand the resource.”
An upgraded resource estimate is expected before the end of this year.
Paydirt 2013 Africa Down Under Conference is Australia’s largest mining conference, and kicked off on Wednesday, in Perth, Australia. A showcase for the $40 billion investment to date by Australian mining companies, explorers and suppliers, in co-developing Africa’s vast mineral wealth and its mining industry – and largest gathering in the world of Federal and African resources ministers and business heads outside of the African continent – the three day conference runs over two hotel venues in the Perth CBD.