Ironsand could produce trillion-dollar profit - Elder

The "in-ground resource value" of New Zealand's extensive ironsand deposits could be between $1 trillion and $5 trillion, says state-owned energy company Solid Energy.

The iron ore contained in ironsands off the west coast of the North Island has been estimated to be worth a trillion dollars, but Solid Energy chief executive Don Elder said that "the industry view is increasingly that (the value) could be substantially greater than that".

The final value would depend on the price of steel, and the availability of technology to smelt ironsands, he told Parliament's commerce select committee yesterday.

"Resources are attracting margins or profits in the order of 20 percent of the revenue."

Prices seen in 2008 would mean profit margins of 50 percent or "significantly higher" could be available from ironsands.

A New Zealand-based company, Trans Tasman Resources Ltd (TTR), and overseas rivals are looking at exploiting New Zealand ironsands, and TTR has suggested that a domestic steel mill could use local high-grade coking coal to refine the ironsands.

Dr Elder said Chinese companies had cheaper labour and capital and could do such projects faster, but New Zealand had an advantage in the availability of the water needed for such a refinery.

"If you could process those in New Zealand, it's a much much better value opportunity and would certainly compete with doing the same thing in China under the right circumstances, with the right technology".

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