Iron Ore

AIMR 2013
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Iron Ore

Iron (Fe) is a metallic element which constitutes about 5% of the Earth’s crust and is the fourth most abundant element in the crust. Iron ores are rocks from which metallic iron can be economically extracted. The principal iron ores are hematite (Fe2O3) and magnetite (Fe3O4).

Hematite is an iron oxide mineral. It is non-magnetic and has colour variations ranging from steel silver to reddish brown. Pure hematite mineral contains 69.9% iron. It has been the dominant iron ore mined in Australia since the early 1960s. Approximately 96% of Australia’s iron ore exports are high grade hematite, most of which has been mined from deposits in the Hamersley province in Western Australia (WA). The Brockman Iron Formation in the Hamersley province is a significant example of high grade hematite iron ore deposits.

Magnetite is an iron oxide mineral which is generally black in colour and highly magnetic, the latter property aiding in the beneficiation of magnetite ores. Magnetite mineral contains 72.4% iron, which is higher than hematite but the presence of impurities results in lower ore grade, making it more costly to produce the concentrates, which are used in steel smelters. Magnetite mining is an emerging industry in Australia with large deposits being developed in the Pilbara region of WA.

At the end of 2012, the two major magnetite projects, Sino Iron and Karara projects were commissioned, with the Karara project officially opened in April 2013. The Karara project is in the ramp-up stage to achieve a target capacity of 8Mtpa.

Mining and processing hematite and magnetite ores

High grade hematite ore is referred to as direct shipping ore (DSO) because it is mined and the ores go through a relatively simple crushing and screening process before being exported for use in steel making. Australia’s hematite DSO from the Hamersley region averages from 56% to 62% iron. Like hematite ores, magnetite ores require initial crushing and screening, but undergo a second stage of processing which relies on the magnetic properties of the ore and involves magnetic separators to extract the magnetite and produce a concentrate.

Further processing involves the agglomeration1 and thermal treatment of the concentrate to produce pellets which can be used directly in blast furnaces, or in direct reduction steel making plants. The pellets contain 65% to 70% iron, which is a higher iron grade than hematite DSO currently being exported from the Hamersley region. Additionally, when compared to hematite DSO, the magnetite pellets contain lower levels of impurities, such as phosphorous, sulphur and aluminium. These magnetite pellets are premium products which attract higher prices from steel makers, offsetting the higher costs of production.

Worldwide Production Trends

Hematite ores dominate the world production of iron ores and are sourced mainly in Australia and Brazil. Magnetite ore has established its presence in world production and contributes to the increase in Australia’s Economic Demonstrated Resources (EDR) mainly as a result of the commissioning of large magnetite projects in WA, as well as numerous magnetite developments in South Australia (SA). More than 90% of SA’s iron ore is magnetite. The world's production of iron ore for 2012 was dominated by Australia with 27% or 520 Mt, followed by Brazil with 19% or 375 Mt and China with around 14% or 281 Mt.

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Resources

Australia’s iron ore reserves and resources are in both hematite and magnetite ores. Because of the high average grades (% Fe) of hematite ores when compared to the average grades for magnetite ores, it is necessary to report national resources in terms of contained iron. The national resource estimate for iron ore are reported in two categories namely:

  • Tonnes of iron ore, and
  • Tonnes of contained iron.

This form of reporting is mainly because of an increase in magnetite resources resulting from ongoing exploration and assessment of known and new magnetite deposits.

Economic Demonstrated Resources (EDR) of iron ore in 2012 increased by 18 per cent to 44 650 Mt. The Pilbara EDR had a 3% increase during the 2012 period. The volatility of the iron ore price during 2012 resulted in deferrals of ongoing exploration and development for some major iron ore projects in the Pilbara region. Based on GA’s assessment, a 17% increase in the Pilbara Inferred Resources indicates that, in this current economic environment, exploration activities were confined to minimal exploration drilling aimed at defining Inferred Resource at new deposits. During the 2012 in the Yilgarn region of WA, EDR increased by approximately 23% compared with 2011 indicating more resource definition and development activities in the region.

During the same period, SA has increased its EDR by 79% from 2011 contributing to the overall increase in Australia’s iron ore EDR (SA’s EDR which is mostly magnetite ore amounts to approximately 8% of Australia’s iron ore EDR for 2012). The national EDR for magnetite is approximately 19 282 Mt.

Australia’s EDR has a resource life of 86 years. Figure 1 shows the proportion of iron ore EDR in States and in the Northern Territory.

Figure 1 Proportion of Iron Ore EDR in States and NT(Tas, Qld, NT and NSW combined resources constitute less than 1 per cent of Australia's total EDR).

Figure 1: Proportion of Iron Ore EDR in States and Northern Territory.

Contained Iron: As at December 2012, Australia's EDR of contained iron was estimated to be 20 638 Mt while Paramarginal Resources were 224 Mt and Inferred Resources were 33 851 Mt.

Maps showing locations of Australia hematite and magnetite deposits and total resources are available as a free download at:
http://www.ga.gov.au/metadata-gateway/metadata/record/gcat_74858/

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Accessible EDR

Australia has Accessible EDR (AEDR) of iron ore totals 44 650 Mt, of which 91% occurs in WA.

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JORC Reserves

The total Joint Ore Reserve Committee (JORC) Code reserves of iron ore were estimated to be 15 305 Mt, representing 34% of accessible EDR. The JORC reserve contained iron is 7931 Mt, or 38% of the EDR contained iron. However, unreported reserves and resources are not included. Based on the data which is publicly available, JORC Code reserves are sufficient for approximately 29 years at the current rate of mine production.

The increase in EDR during 2012 is mainly the result of an increase and reclassification of resources at iron ore projects being developed. Initial resources from new deposits also contributed to the EDR. These include, Jimblebar mine project by BHP Billiton Limited, which reported an increase of approximately 499 Mt on its Brockman Ore reserves. Macarthur Minerals’ Lake Giles hematite project deposits, Banjo, Snark, Central DSO and Drabble Downs, all reported an increase and upgrade of resources to JORC reserves. Atlas Iron’s Mount Webber and Abydos project deposits also reported an increase in EDR for 2012. Rocklea deposit owned by Dragon Energy Ltd also increased and upgraded its Inferred Resource to Indicated. Fortescue Metals Group’s Christmas Creek and Cloudbreak has also reported an increase of its EDR to approximately 347 Mt for 2012. There were new resources for Red Dragon project’s Iron Peak (Indicated Resource of 213 Mt at 21% Fe) and an increase in resources for Razorback Ridges (Indicated Resource of 980 Mt at 21.6% Fe) deposits during 2012.
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Exploration expenditure

Australian Bureau of Statistics (ABS) data indicates that mineral exploration expenditure in Australia for 2012 totalled $3655.8 million, a 2% increase on the $3,573.3 million spent in 2011. About $1040.8 million was spent on iron ore exploration in WA, which represented 91% of Australia’s total iron ore exploration expenditure. Western Australia also accounted for 56% of total mineral exploration expenditure in Australia during 2012 of around $2052 million. Iron ore exploration expenditure in SA was $79.7 million, the Northern Territory (NT) $10.4 million and Tasmania (Tas) $6.8 million.

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Production

Australia’s total production of iron ore for 2012 was 520 Mt with WA producing 505 Mt, or 97% of overall production. South Australia had a slight increase in its iron ore production from approximately 10 Mt in 2011 to 10.7 Mt in 2012, representing 2% of Australia’s total iron ore production. South Australia’s iron ore resource is small when compared to WA, but it is emerging to become Australia’s second major iron ore producing State.

The Bureau of Resources and Energy Economics (BREE) reported Australia’s iron ore exports during 2012 to be 494 Mt, a 13% increase on 2011 figure of approximately 439 Mt. BREE has forecast an increase in iron ore exports to approximately 571 Mt or 16% in 2013 with project expansions by companies such as Rio Tinto, BHP and Fortescue Metals Group support the projected increase. Major consumers of Australia’s iron ore exports are developing countries such as China, Brazil and India. BREE forecasts an increase in steel consumption in China of 4% to 725 Mt coinciding with development of the Chinese government’s infrastructure program.
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World Ranking

Australia has the world’s largest iron ore EDR with 25%, followed by Brazil with 17%, Russia with 14% and China with 13%. In terms of contained iron, Australia has 25% of world EDR while Brazil has the second largest EDR with 19%.

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Industry Developments

Western Australia

Rio Tinto Ltd: The company reported an increase of 4% or 239 Mt in production at its Pilbara mine operations in 2012. The increasing production is likely to continue as new mines, such as the new operation at Hope Downs 4 are commissioned. Mines that were included in the expansion are Marandoo mine, which is expected produce 15 Mt per annum (Mtpa) for an extended mine life of approximately 16 years and Yandicoogina mine which will increase capacity to 56 Mtpa by 2021.

BHP Billiton Limited: The company’s WA Iron Ore Rapid Growth 5 project is among six major projects approved during 2012 achieved its first production in the same year. Included with the approved projects is Orebody 24, which commenced production in late 2012. Budget capital expenditure for the Orebody 24 project is US$698 million with the project production maintaining the company’s Newman joint venture output.

Fortescue Metals Group Ltd (FMG): Has reported the resumption of the Kings Deposit development to become the company’s second mine at its Solomon Hub operation. Kings mine will produce approximately 40 Mtpa, contributing to the company’s production capacity target of 155 Mtpa by the end of 2013. The most recent estimate (2011) of Kings Deposit reserves was 257.9 Mt at 55.8% Fe.

Atlas Iron Ltd: The company has announced significant increases in reserves from its three projects, McPhee Creek, Abydos and Mount Dove. The increase also included an upgrade of resources for Mount Webber. The increase was the result of infill and extension drilling to some of the project’s deposits, including Main Range (at McPhee Creek), Mettams, Mullaloo, Scarborough and Leightons at the Abydos project. Similarly, an upgrade to the Mount Webber project resource was generated through an increase in resource from the project’s Daltons deposit. Atlas and its joint venture partner, Altura Mining Limited, have announced the development of the Mount Webber mine, which is to become Atlas Iron’s fifth DSO mine in the Pilbara. Other Mount Webber DSO deposits include Ibanez, Fender and Gibson.

Gindalbie Metals Ltd: The first magnetite concentrate from the company’s Karara Magnetite project was produced in late 2012 and approximately 55 000 tonnes was shipped in early January 2013. The company stated that the commissioning and the ramping up of production will continue to progress over the coming months, with the aim of achieving a production target of 8 Mtpa.

For project development, Gindalbie has announced the commencement of feasibility studies for its Hinge and Shine DSO deposits. The Hinge deposit is 11 kilometres north of the company’s direct shipping hematite ore mining of the Terapod deposits.

Brockman Resources Ltd: The company reported a series of initial resources for its Opthalmia Iron project at the Kalgan Creek, Siruis and Coondiner tenements and the Palla and Castor deposits. The total mineral resource at the Ophthalmia iron project is approximately 290 Mt at 59.10% Fe. The company stated that there is great potential for an increase in resources for the Ophthalmia project resulting from the consolidation of its newly acquired tenements at Coondiner area. Importantly, Brockman Resources says that Ophthalmia’s increased resource tonnages will warrant the company’s proposed independent railway. The Ophthalmia project is approximately 80 kilometres southeast of the company’s Marillana Iron project.

Mindax Ltd: The company reported that its Mount Forrest Project phase 2 drilling program had reportedly identified four areas of detrital mineralisation. The project is located in Yilgarn region about 650 kilometres from the Port of Esperance. As previously reported, one of the project’s potential products is the beneficiated hematite DSO. It also reported an aggregated regolith (goethite-hematite-martite-magnetite) JORC Code Indicated Resource of approximately 12.3 Mt at 45.5% Fe for Mount Forrest.

Iron Ore Holdings Ltd (IOH): An initial Ore Reserve of 134 Mt at 58.5% Fe was reported for the company’s Iron Valley project. The reported reserve is part of the total JORC Code mineral resources of approximately 259.1 Mt at 58.3% Fe. The project has successfully obtained a mining approval from the WA Department of Mines and Petroleum. An early mine development of the Iron Valley deposits has been indicated by Iron Ore Holdings post Mine Gate Agreement with Mineral Resources Limited.

Pluton Resources Ltd: An initial shipment of iron ore from its Cockatoo Island mine operation in late 2012 has been reported. Cockatoo Island stage 4 has a global resource of 10.8 Mt exclusive of JORC Code Probable Ore Reserve of 1.2 Mt at 68% Fe. Progress on development work for the company’s Irvine Island iron project continues with announced project JORC Code reserves of approximately 143 Mt at 28% Fe.

BC Iron Ltd: .An increase of reserves to 10 Mt and resources of around 108.7 Mt were reported for the company’s Nullagine Joint Venture (NJV) Outcome 1 & 2 deposits in the Pilbara during 2012. The production capacity target rate of 5 Mtpa was achieved and exported in 2012.

Jupiter Mines Ltd: Feasibility studies at the company’s Mount Mason DSO hematite deposit are in progress for development into a DSO mine. The initial scoping study for Mount Mason project envisages production of 1.5 Mtpa for an approximate four year mine life.

Aquila Resources Ltd: The company has reported maiden Inferred Resources for its Kumina Creek deposit of 102 Mt at 57.3% Fe and its Headon deposit with 97 Mt at 53.9% Fe which both occur within the company’s West Pilbara Iron Ore Project. A resource update for the company’s Hardy Bedded iron deposit has resulted in an increase in the Measured Resource during 2012. The Hardy Bedded deposit forms part of the company’s proposed Stage 2 development of the West Pilbara Iron Ore Project.

Dragon Energy Ltd: The mining lease approval for the company’s Pilbara Iron Project was announced in May 2013. Dragon Energy states that the mining lease covers Rocklea’s “North” and “Central” channel iron deposit s (CID). North and Central deposits have a combined JORC Code resource of approximately 93.6 Mt at an average grade of 52% Fe. The resource is inclusive of Inferred Resources of 14.66 Mt at 51.24% Fe.

Mount Gibson Iron Ltd: The T1 deposit with an estimated Reserve of 801 000 tonnes at 61% Fe was reported, with project commencement of production in September 2013. The deposit is located 1 kilometre east of the company’s Tallering Peak iron ore mine. Mining at Tallering Peak is scheduled to cease in the middle of 2014 and mining of T1 is expected to conclude later in the same year. Tallering Peak Iron Ore mine operation is 260 kilometre east of Geraldton, WA.

Radar Iron Ltd: The company’s primary focus is to define the hematite resource at its Johnston Range Iron Ore Project in the Yilgarn region. An initial JORC Code Inferred Resource for the project’s Muldoon prospect of 2.1 Mt at 57.6% Fe with a cut-off of 55% was announced in 2012. Radar Iron states that the Johnson range area has the potential to host numerous hematite enriched deposits.

South Australia

Royal Resources Ltd: An increase in Inferred Resources was reported at the company’s “Ironback Hill” prospect resource to 1 187 Mt at 21% Fe. Ironback Hill prospect is located within the company’s Red Dragon Venture. The company said that the resource increase had brought the total resources for Red Dragon Venture to three billion tonnes and included the Razorback Premium Iron Project Indicated and Inferred Resource of 1 815 Mt at 21% Fe. Prefeasibility study works were conducted for the company’s Razorback Premium Iron project during 2012.

Iron Road Ltd: The Definitive Feasibility Study for the company’s Central Eyre Iron Project (CEIP) is progressing. A major part of the study is to extract 110 Mtpa of magnetite ore for a potential mine life of more than 30 years. The drilling program in 2012 at the CEIP’s Rob Roy prospect has increased the CEIP mineral resource of magnetite gneiss to 2597 Mt at 16% Fe.

Arrium Ltd: The company reported the sale of 12 Mtpa iron ore from its Southern Iron and Middleback Ranges mine operations and said it aimed to maintain the sales capacity for at least 10 years. In support of the company’s objectives, increased exploration drilling is being conducted for resource definition at existing mine operations, including at Iron Princess, Iron Monarch and Iron Chieftain North prospects at the northern end and south of the Middleback Ranges. In addition, at the company’s Southern Iron Project, resource definition drilling is being conducted at Hawks Nest project’s Buzzard and Tui prospects. As at 30 June 2013, Middleback Ranges Hematite has reported total Reserves of 42.2 Mt at 58.3% Fe. Magnetite Ore Reserves for Middleback Ranges is approximately 66.3 Mt at 38.9% Fe. Southern Iron project has also reported total hematite reserves of approximately 24.5 Mt at 62% Fe, consisting of reserves for Hawks Nest deposits (Buzzard and Tui) and for Peculiar Knob deposits.

Centrex Metals Ltd: The company’s joint venture Bungalow Magnetite project has reported an upgrade of resources amounting to a combined JORC Code Measured, Indicated and Inferred Resource of approximately 338 Mt at 31% Fe. The combined JORC Code mineral resource consists of Minbrie deposit’s Inferred Resource of 99 Mt at 27% Fe and Bangalow deposit’s Measured Resource of 22.3 Mt at 29.1% Fe, Indicated Resource of 163.5 Mt at 30.5% Fe and Inferred Resource of 53.3 Mt at 31.9% Fe. The project’s pre-feasibility study is progressing and is due to be completed sometime in 2013.

The company’s Fusion Magnetite joint venture project has also reported an increase in resources from its Koppio, Brennand and Kapperna (KBK) deposits to a combined total of 652.7 Mt at 24.7% iron. Centrex reports that mining and project studies are currently being conducted at these deposits. They are planned to become the startup mines for the Fusion project.

IronClad Mining Ltd: The drilling program commenced at the company’s Hercules prospect approximately 15 kilometres southeast of its Wilcherry Hill iron ore project. The program aims to intersect near surface, low strip ratio mineralisation with the grade being suitable as DSO or for upgrade through simple beneficiation products. The development of the Hercules deposits is part of the company’s overall three stages mining development plan which involves stage 1 mining and shipping of DSO and stage 2 processing and shipping of non-DSO for the company’s Wilcherry Hill project.

Apollo Minerals Ltd: The scoping study result for the company’s Commonwealth Hill Iron project’s Sequoia deposit has reportedly confirmed the economic potential for development. Apollo Minerals reports that the study was based on the Sequoia deposit JORC Code compliant mineral resource of 72 Mt at 25.9% Fe. An assumption of the study is a production capacity of 2.5 Mtpa for a proposed mine life of approximately 17 years

New South Wales

Carpentaria Exploration Ltd: A small-scale processing pilot plant study for the company’s Hawsons Iron Project was initiated during 2012 with positive test results being quantified for the coming launch of a Bankable Feasibility Study and full scale pilot plant test studies. The Hawsons Iron Project, which is located 60 kilometres south-west of Broken Hill, has a current Inferred magnetite Resource of approximately 1.4 billion tonnes at Davis Tube Recovery (DTR2 ) rate of 15.5% using a 12% cut-off. This represents 220 Mt of high grade iron concentrate averaging 69.9% Fe.

An additional highlight for the company is the declaration by the NSW Government that the Hawsons Iron Project is a “State Significant Development” project, which represents a significant initial step toward granting a mining lease.

Tasmania

Grange Resources Ltd: The company’s Savage River magnetite mineral resource was reported at 30 June 2012 to be 343.7 Mt at 51.3% DTR2. In the company’s 2012 annual report, it stated that the increase resulted from the inclusion of estimated minerals resource of 48.8 Mt at 44.6% DTR2 for its Long Plains deposit approximately 10 kilometres south of Savage River. The company anticipates an extended mine life for Savage River of three to five years.

Shree Minerals Ltd: The company has received approval from the Circular Head Council and Environmental Protection Authority to develop its Nelson Bay River Iron Project. A mining lease was granted also by Mineral Resources Tasmania during the September quarter of 2012. The project mine plan includes mining DSO iron ore through two separate open cut mines during the first two years of operation. The company has reported DSO reserves of 0.33 Mt at 57.4% Fe. Mining of the magnetite ore which underlies the oxide cap (DSO) will be conducted at stage 3 of the mine development plan. On 29 February 2012, the company announced that its Nelson Bay River Iron Project had estimated magnetite resources of approximately 7.8 Mt at 38% DTR2 using a 20% cut off.

Northern Territory

Sherwin Iron Limited: The company’s Roper River Iron Ore Project was progressively working towards production during 2012. In addition to the lodgement of the mining lease for deposit C within the Sherwin Creek prospect, the company reached agreement with the Northern Land Council in regard to mining at the Roper River Iron Ore project, which also was awarded a major project status by the Northern Territory Government. As at 30 June 2013, the Roper River Iron Ore Project had an overall mineral resource of approximately 488 Mt at 41.7% Fe, inclusive of Inferred Resources of approximately 432.4 Mt at an average grade of 31.4% Fe. The project is located approximately 120 kilometres east of Mataranka and 475 kilometres southeast of Darwin.

Western Desert Resources Ltd: The company reported that during 2012, regulatory requirements, including the Environmental Impact Statement, were granted by the Federal Minister for Environment for its Roper Bar Iron Ore project. The company has also reported an upgrade to some deposits, bringing a current overall resource total of approximately 611 Mt at an average grade of 40.3% Fe, inclusive of DSO resource for Area F of 30.8 Mt at 59% Fe and Area E of 16.6 Mt at 54.2% Fe.

Victoria

Eastern Iron Limited: The company has reported the completion of scoping studies at its Nowa Nowa iron project with results indicating the project has potential for development. The project has several deposits of hematite and magnetite including the Five and Seven Mile deposits, which as at September 2012 had a combined mineral resource of 6.8 Mt at 50.4% Fe. Nowa Nowa project is approximately 270 kilometres east of Melbourne.

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Notes

  1. Agglomeration is the process in which magnetite grains are aggregated into pellets using a chemical binding reagent. Pellets are produced in a pelletising plant.
  2. Davies Tube Recovery (DTR) testing is a laboratory technique which uses a Davis Tube to recover magnetic particles from an ore samples. The per cent mass recovery of magnetic material is determined from the mass of sample recovered compared to the sample mass. The recovered magnetic and non-magnetic portions can be analysed for chemical composition (taken from Minotaur Exploration report explanatory notes)
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