Sino Iron mine – a personal perspective

Citic Pacific Mining’s massive Sino Iron ore mine in the Pilbara has been beset by issues such as low-grade ore, remoteness, labour, language and conflict with Clive Palmer and others, but RON HORNER reckons it’s a testament to the Chinese qualities of innovation and determination

It’s dark, cold and wet and the Chinese racial taunts and anti-sentiment in the gold mining camps at Lambing Flat in NSW are running high. The Chinese gold miners brace themselves for a brutal attack from the 2,000 disgruntled European miners, when all hell breaks loose.

The 1861 attack leaves many hundreds of Chinese goldminers severely battered, bashed and injured … and, adding insult to injury, the anti-Chinese movement forces the NSW Government to pass an Act of Parliament restricting Chinese immigration into the colony.

At this time there are almost 40,000 Chinese working the Australian mines from Ballarat to Bathurst and Cobar to Cooktown; in fact, 3.3 percent of the Australian population is of Chinese descent.

Chinese labourers are prepared to work in adverse conditions and locations where the European workers will not. Projects like mining the north of Australia after gold was discovered at Pine Creek, building the Overland Telegraph Line from Darwin to Adelaide, and constructing the Pine Creek to Darwin railway line.

Despite the initial opposition to their presence, the Chinese have made an enormous contribution to Australia and its mining industry since the gold rush of the 1850s.

Fast forward some 150 years to the Pilbara region of northwest Australia and there is more than just a little bit of history repeating itself — though, thankfully, without the riots.

The Chinese — in the form of Citic Pacific Mining, a wholly-owned subsidiary of Hong Kong-listed Citic Limited — have secured the mining lease on a vast iron ore deposit from Clive Palmer’s mining company Mineralology. The quantity of iron ore in the ground is massive, but the quality is regarded as below average in this area, which is home to some of the world’s richest iron ore deposits.

The very rich ore deposits of the BHP and Rio Tinto super-mines in a similar region of Western Australia can be virtually ‘dug up’ and transported out to the Chinese steel mills. However, the Sino Iron ore needs to be ‘benefacted’, or treated, to remove the impurities from the ore before loading and shipping to the company’s own steel mills in China.

To make this project successful the Chinese have had to pull a rabbit out of the hat.

 

$10 billion investment

The now-operational Sino Iron project, located at Cape Preston some 100km southwest of Karratha, stands among the most modern and technically advanced mines of our era. It is the first fully owned and operated Chinese iron ore mine in Australia, and was built for a massive $10 billion, exceeding initial budget by almost $6 billion.

In typical Chinese fashion, Citic Pacific Mining and its main contractor Metallurgical Corporation of China (MCC) Mining, have overcome enormous difficulties and problems in building this state-of-the-art ‘mega-mine’ in the middle of nowhere, creating one of the biggest mining operations in our history.

Essential infrastructure included the construction of a magnetite mine, a process plant, a 450- megawatt power station, 51-gigalitre desalination plant, hundreds of kilometres of large-diameter pipelines and a large-scale port facility.

In typical Chinese fashion Citic has implemented world-leading technology at so many levels. For instance, the largest dump trucks of their type and the largest SAG mills (crushing mills) in the world are something to behold.

The mine had to overcome so many issues other than the low-grade ore and remote location. For example, Citic had to overcome the language barrier, a major issue in Australia where very few speak or understand Chinese and vice versa.

And the company had a massive labour cost blow out when it was advised that it could not build the mine totally on Chinese labour. This action guaranteed Australian workers the opportunities to be involved with this massive project.

 

 

Mining process

The Sino Iron mine has a life expectancy of about 25 years and the pit, when fully excavated, will be approximately 5.5km long, 2km wide and 600m deep. The mining operation is a drill, blast, load and haul operation, in which the ore is transported to the crushers and then conveyed to the mill for benefacting.

The haul trucks, weighing a massive 360 tonnes and capable of carrying a payload of 400 tonnes, are loaded by two 400-tonne face shovels capable of loading 5,500 tonnes of rock per hour.

The trucks haul the material to one of the four seven-storey-high crushers which reduce the ore to the size of a house brick. The crushers have the capacity to crush 4,250 tonnes per hour per unit (equating to 17,000 tonnes per hour).

The crushed material is then fed by conveyors into a series of SAG mill crushers, where the ore is mixed with water to create a slurry. A magnetic separator removes the impurities, which are sent off to the tailings dam, and the concentrate ore is pumped 30km through an in-ground pipeline to the port.

 

Supporting infrastructure

Port facility

At the Cape Preston port — the first to be built in the Pilbara for over 40 years — the water is removed from the concentrate iron ore, creating a paste-like material. The concentrate is stockpiled in an area about 1km long and 250m wide, creating a store of 1.4 million tonnes of product ready for shipping. The water is recycled back to the plant in a 30km-long underground steel pipeline.

The port has a breakwater extending 2.6km offshore. Massive barges with a 15,000-tonne holding capacity are loaded with the magnetite and towed by tugs to vessels at anchor offshore.

The concentrate is then off-loaded into specially designed iron ore bulk carriers capable of carrying 115,000 tonnes. The Sino Iron ore journey from Australia to China has begun.

Desalination plant

The desal plant is one of the most innovative of its kind anywhere in the world. Using reverse osmosis technology the plant pumps filtered seawater under high pressure through a semi-permeable membrane.

It can produce 140 megalitres of water daily. The water reservoir constructed to store the water on site has a 15-megalitre capacity.

Power station

The combined-cycle power station, which will primarily power the concentrator circuit, is capable of generating electricity equivalent to the entire capacity currently installed in the Pilbara.

Citic’s power station is the first combined-cycle, gas-fired power station in the Pilbara, with seven turbines developing 47 megawatts, three steam turbines developing 59 megawatts and six heat recovery generators developing 20 megawatts.

In total, and at full capacity, the power station will produce 450 megawatts of energy to run this state-of-the-art project, while producing 40 percent fewer emissions than a conventional power plant.

 

 

A personal view

Having had personal experience with the Chinese companies and several Australian contractors involved with this project, I have seen first-hand the problems facing the early and mid-term construction phases.

The past five years have not been an easy run for Citic, with massive construction cost overruns, significant write-downs and conflict with Clive Palmer, MCC and several construction contractors.

As this story is being written, termination notices issued by Palmer’s Mineralogy to stop Citic exporting iron ore from the Cape Preston Port over a royalties dispute have been dismissed by the Federal Court as “farcical”, without substance and designed “as a lever for future commercial negotiations”. Palmer has said he will appeal.

I have often wondered whether, should the many issues surrounding this project become insurmountable, the Chinese would pull the plug on their $10 billion investment in the Australian mining industry.

BUT that was before I visited China and witnessed the Chinese passion for ‘doing it right’.

Citic engaged and housed over 4,000 contractors during the peak construction phase, with nationalities from all over the world sharing ideas, knowledge and dreams as one. No racial taunts, no bashings and no anti-Chinese sentiment on this construction site … Lambing Flat is no more.

To Citic Pacific and MCC Mining’s credit they persevered and are continuing along a steep and long learning curve to get the project up the full capacity.

China has a 50-year plan; it is not afraid to step up to the plate, nor afraid to walk the ‘untrodden path’.

Innovation and determination, with a mix of ingenuity, integrity, wisdom and restraint, has seen the Chinese come to Australia for over 150 years, work the hard yards in harsher conditions than we could ever imagine, feel the wrath of racism at its worst and continue to turn up for life each and every day hoping that one day, just maybe one day …

Whatever develops, I believe Citic Pacific has cemented its place in the Australian mining industry as the first Chinese company to design, construct and operate a project of this scale outside of China.

The benefits will not only flow to China but will have a 25-year flow-on effect within the Australian economy. Let’s hope it is the first of many, and that the Sino project proves to be a successful and profitable experience for all concerned because here is proof that in Australia … China is the real deal