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Iron sand exports to boom as BlueScope adds Taharoa capacity

Mon, 30 Dec 2014

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.


Mon, 30 Dec 2014
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Iron sand exports to boom as BlueScope adds Taharoa capacity