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Iron sand exports to boom as BlueScope adds Taharoa capacity

Iron sand exports could soar to almost 10 million tonnes a year by 2016 as Australia's BlueScope Steel adds shipping capacity at its Taharoa site and Trans-Tasman Resources remains hopeful of approval for its offshore mining venture.

ASX-listed BlueScope said last week it will introduce a 175,000 tonne slurry loading vessel at Taharoa, south of Kawhia, in 2016 and spend $A50 million through 2018 on mining, processing and ship loading equipment.

The third ship will add 1.3 million tonnes a year of export capacity at Taharoa, which is expected to rise to about four million tonnes annually in 2016, the Melbourne-based company says. It estimates the resource at Taharoa is sufficient to produce four million tonnes a year for 15 years.

Trans-Tasman plans to extract 4-5 million tonnes a year starting in 2016 from a 65.76sq km area off the North Island coast, west of Patea.

Its application suffered a setback this month when the Environmental Protection Authority extended the submission period until January 28 and pushed back the start date for public hearings after administrative mis-steps.

The company has said it plans to raise as much as $US500 million in debt and equity from a combination of existing and new shareholders, and prospective Chinese customers in mid-2014, assuming it wins regulatory approvals.

BlueScope's shares have soared about 66 percent on the ASX this year as it acquired businesses, made progress in Asia and stabilised its Australian business.

BlueScope's New Zealand operations accounted for just 8 percent of revenue last year at $A681 million. Sales and earnings both fell as an increase in iron sand volumes wasn't enough to offset weaker iron ore prices on which iron sand is benchmarked.

"With a low cost of extraction, our iron sands operations are a valuable part of BlueScope's business portfolio - making an excellent contribution to earnings from exports and providing low cost iron unit feed to New Zealand steelmaking," chief executive Paul O'Malley says.

The stock was last at $A5.72 and is rated a 'buy' based on the consensus of 12 analysts polled by Reuters. It is trading at about 17.6 times forecast earnings, versus 15.4 times for its peers, based on Reuters data.

A BlueScope spokesman says the company is likely to hire more workers at Taharoa following the expansion.

The Taharoa mine site is leased from local Maori landowners and has been in production since 1972. It is one of two sites where BlueScope extracts iron sand in New Zealand, along with the 1.2 million tonnes a year from the Waikato North Head mine.

BlueScope also operates the Glenbrook steel mill south of Auckland.

(BusinessDesk)

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Comments and questions
7

Isnt it all a bit short sighted to export this stuff, which could turn out to be quite a useful strategic asset one day.

Further, Is the export of these iron sands taking place under the consent originally granted for the use of the sands in the steel mill.

The total identified resource is over 850 Mt of concentrate
assaying - Fe, - TiO2 and 0.3 - 0.4% V2O5. BHP New Zealand
Steel Limited produces about 2.4 M tpa of titanomagnetite
concentrate, for export and for domestic steel manufacture,
from two mines south of Auckland....

At Waikato North Head, south of Auckland, BHP mines 6
M tpa of ironsand which is concentrated on site to produce
1.2 M tpa of titanomagnetite concentrate. Mining of the
deposit began in 1969, and production to the end of 2000
is about 18 Mt of concentrate. The concentrate is slurried
18 km to the steel mill at Glenbrook ...

At Taharoa, ironsand is mined by dredging beach and dune
sand to produce concentrate averaging 40%
titanomagnetite. Annual production has been about 1.4
Mt since the operation opened in 1972. The concentrate
is slurried through a 3 km long pipeline to an offshore
loading facility for export. Total exports to the end of 1996
were 31 Mt, mainly to Japan, with small quantities to South
Korea and China.
http://www.nzpam.govt.nz/cms/pdf-library/minerals/publications/fact-sheets/CO11916_4_mineralSands.pdf

2008:

on December 17 the application of Hong Kong-based Cheung Kong Infrastructure (CKI) to the New Zealand Overseas Investment Office for approval of the proposed acquisition of New Zealand Steel's Taharoa Iron Sands Business was declined

The BlueScope annual report ... said that the company had been looking at the option of producing pig iron at the Taharoa site to produce added value and meet growing demand for pig iron and ferrous scrap.

Business Refusals Are Very Rare: I am not aware of any refusals of consent by the Overseas Investment Commission or the Overseas Investment Office as a result of the conditions that apply to business investment. The closest was, perhaps ironically, one early in the term of this Government (in December 2008) when an investor evidently decided to pull out of an investment due to the financial crisis. However this in the end relied on the fact that land was involved so the stronger criteria could be used. The Government refused consent, but the investment was not going ahead anyway. Cheung Kong Infrastructure Holdings Limited and Ironsands Investments Limited (CKI), owned mainly in Hong Kong was refused approval to acquire New Zealand Steel Mining Limited (NZSM) for $250,000,000 from BlueScope Steel Limited of Australia. ... “CKI did not meet the Overseas Investment Act 2005 criteria of substantial and identifiable benefit which was relevant to the acquisition of business assets which included sensitive land”. (Bill Rosenberg)

TTR's application for permit, filed under the Crown Minerals Act, covers an area of 65.76km² within the Exclusive Economic Zone (EEZ) between 22km and 35km off the coast of Patea, within the firm's current prospecting licence 50753.
New Zealand Petroleum and Minerals will review TTR's technical data on the proposed resource, the geology, the proposed work programme, as well as the company's ability to manage the project and address health and safety issues.
In addition, TTR plans to apply for environmental marine consent in October 2013 under new EEZ legislation.
Trans-Tasman Resources chief executive Tim Crossley said the permit for offshore mining of iron sands is the first step in the overall approvals process. - Trans-Tasman Resources seeks licence for iron sand extraction in New Zealand 30 July 2013

NZ Steel derives its ironsands resource pursuant to a licence entered into under the Iron and Steel Industry Act 1959 and also an authorisation granted under that Act and an associated mining lease with the relevant landowner. In most respects NZ Steel’s rights to mine at Waikato North Head and Taharoa are not directly affected by the proposed review, and nor should they be. (Submission to the Ministry of Economic Development
in respect of its Discussion Paper entitled “Reviewing the Crown Minerals Act 1991” by New Zealand Steel Limited 8 October 2010)

The Taharoa operations are based on the Taharoa Licence entered into with a Maori Incorporation (the Proprietors of the Taharoa “C” Block). No Crown Minerals Act permit is involved and the Taharoa land is Maori freehold land. (Submission of New Zealand Steel Limited on the Marine and Coastal Area (Takutai Moana) Bill 19 November 2010)

As well as the ironsand mining operation at North Head, two similar ironsand mining operations were developed on the west coast of the North Island here at Waipipi near Wanganui in 1971 and further north at Taharoa in 1972.Gravity and magnetic separation are used to produce concentrate which was pumped through pipelines to an offshore buoy for loading into specially designed ships. The Waipipi plant closed in 1987 having produced about 15.7 million tonnes of concentrate.

The ironsand resources of the North Island are very large. Detailed investigations of only parts of the coast have given resource estimates of 1444 million tonnes of titanomagnetite and 8.4 million tonnes of ilmenite. These resources would keep the existing scale of operation going for several hundred years. geocaching.com Waipipi ironsands, Taranaki

Firm wants mining to begin by 2014, Taranaki Daily News, 11.9.2009

- It is getting impossible to post text and links. They are triggering the spam filter, why is that?