WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE

March–May 2005 $3 (inc GST)

Gold: Time for Telfer

Petroleum: Exploration excitement Print post approved PP 665002/00062 post approved Print

Diamonds: D-day for Argyle DEPARTMENT OF INDUSTRY AND RESOURCES Investment Services 168 St Georges Terrace PERTH Western Australia 6000 Postal address: Box 7606 • Cloisters Square Perth Western Australia 6850 FROM THE DIRECTOR GENERAL Tel: +61 8 9327 5555 • Fax: +61 8 9222 3862 Email: [email protected] www.doir.wa.gov.au Growth brings its challenges INTERNATIONAL OFFICES Europe n this edition, Prospect highlights the importance of both European Offi ce • 5th fl oor, Australia Centre the petroleum and diamond industries to the State. The Corner of Strand and Melbourne Place LONDON WC2B 4LG • UNITED KINGDOM Ipublication also features the A$1.4 billion restart of the Telfer Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637 gold mine and the renewed focus on magnetite iron ore deposits Email: [email protected] in Western Australia. However, the buoyant state of the economy Jim Limerick India — Mumbai Director General Western Australian Trade Offi ce in Western Australia has created many challenges — not the Department of Industry and Resources 93 Jolly Maker Chambers No 2 least being the recruitment and retention of qualifi ed industry 9th fl oor, Nariman Point • MUMBAI 400 021 INDIA Tel: +91 22 5630 3979/74/78 • Fax: +91 22 5630 3977 personnel. Email: [email protected] From welders and mine managers in the resources sector, to skills to support India — Chennai value added industries, Western Australia is fi nding it diffi cult to recruit suitably Western Australian Trade Offi ce - Advisory Offi ce 1 Doshi Regency • 876 Poonamallee High Road qualifi ed people who can help sustain the current wave of economic development. Kilpauk • Chennai 600 084 • INDIA To help alleviate the shortage, the Department of Industry and Resources has Tel: +91 44 2640 0407 • Fax: +91 44 2643 0064 E-mail: [email protected] established a Skilled Migration Unit, to attract suitably qualifi ed people to Western Indonesia — Jakarta Australia to fi ll numerous vacant positions. Western Australia Trade Offi ce Established in the New Year, the unit is already attracting about 15 enquiries a JI H R Rasuna Said Kav C15 - 16, Kuningan Jakarta 12940 • INDONESIA day, from people keen to bring their knowledge, and families, to Western Australia. Tel: +62 21 2550 5331 • Fax: +62 21 522 7103 The new unit is essentially a fast-track program, which recognises the demand of E-mail: [email protected] the resources industry for qualifi ed people to meet industry expansion. Successful Indonesia — Surabaya Western Australian Trade Offi ce applicants agree to work in one of nine regional areas of Western Australia for at Graha Pena 17th fl oor • Jalan Ahmad Yani 88 least 12 months and live in that region for two years. Surabaya 60234 INDONESIA Tel: +62 31 829 9979 • Fax: +62 31 829 9975 Most of the applications to date have been from the United Kingdom, with a Email: [email protected] strong response also expected from South Africa, South East Asia and New Zealand, Japan — Tokyo some of them already in Australia who want to move to Western Australia. Government of Western Australia, Tokyo Offi ce 13th fl oor, Fukoku Seimei Building The next edition of Prospect magazine will carry a full coverage of the Program. 2-2-2 Uchisaiwai-cho Chyoda • TOKYO 100-0011 JAPAN Tel: +81 3 5214 0791 • Fax: +81 3 5214 0796 Email: [email protected] Japan — Kobe Western Australian Government Offi ce Gallop Government returned 6th fl oor, Golden Sun Building • 3-6 Nakayamate-dori 4-Chome Chuo-Ku • KOBE 650-0004 JAPAN Tel: +81 78 242 7705 • Fax: +81 78 242 7707 he Labor Government in Western Australia, led by Email: [email protected] Dr Geoff Gallop, was returned in the State Malaysia Western Australian Trade Offi ce elections held on 26 February. 4th fl oor, UBN Tower • 10 Jalan P Ramlee T The Labor Party retained a comfortable majority KUALA LUMPUR 50250 MALAYSIA Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177 over the Coalition group, comprised of the Liberal and Email: [email protected] National Parties. Middle East The former Minister for Education, Mr Alan Carpenter Western Australian Trade Offi ce • Emarat Atrium PO Box 58007 • Dubai • UNITED ARAB EMIRATES has been appointed as the State Development Minister, Dr Geoff Gallop Tel: +971 4 343 3226 • Fax: +971 4 343 3238 to replace the retiring incumbent, Mr Clive Brown. E-mail: [email protected] Peoples’ Republic of China — Shanghai Western Australian Trade & Investment Promotion Shanghai Representative Offi ce • Room 2208, CITIC Square 1168 Nanjing Road West • Shanghai 200041 PEOPLES’ REPUBLIC OF CHINA Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889 EDITOR’S OVERVIEW Email: [email protected] Peoples’ Republic of China — Hangzhou Western Australian Trade & Investment Promotion elcome to another edition of Prospect magazine, the 109th since the Hangzhou Representative Offi ce magazine was initially issued in the fi rst quarter of 1978. Room 910 • World Trade Offi ce Plaza Due to the recent State election and a change in the Minister Zhejiang World Trade Centre W 15 Shuguang Road • Hangzhou 310007 responsible for resources development in Western Australia, there is no message PEOPLES’ REPUBLIC OF CHINA from the Minister in this edition. Instead, I have taken the liberty of writing a short Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295 E-mail: [email protected] editor’s overview. South Korea Having specialised as a resources journalist for the past quarter of a century, it is Mr Young Chan Yu, Regional Director clear that the resources sector in Western Australia has never been in better shape. Western Australian Trade & Investment Offi ce 11th Floor, Kyobo Building The industry is buoyant on a number of fronts, not involving just a few 1 Jongro 1-Ga, Jongro-Gu • SEOUL, KOREA commodities in a few areas, but right across the State. Signifi cantly, more Tel: +82 2 722 1217 • Fax: +82 2 722 1218 than A$45 billion worth of resource projects are either committed or under E-mail: [email protected] consideration for development in Western Australia. Taiwan WA Business Development Manager The article on page 11 of this edition “WA: Australia’s No. 1 export State” points Australian Commerce & Industry Offi ce to why so many resource companies are choosing Western Australia as an ideal Suite 2606, International Trade Building #333 Keelung Road Section 1 • TAIPEI 110 TAIWAN investment location. Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707 Share Western Australia’s success — and a magazine that has a print run of Email: nicholas.mckay@austrade,gov.au 10,000 and attracts about 18,000 Internet hits every quarter. Thailand WA Business Development Manager MARK DIXON Australian Trade Commission • Australian Embassy 37 South Sathorn Road • BANGKOK 10120 • THAILAND Tel: +662 287 2680 Ext 3307 • Fax: +662 287 2589 E-mail: [email protected] in this issue 8

Petroleum soars: Higher prices and strong global demand underpins the Western Australian exploration industry.

8 Projects add bite 24 Telfer gears up Western Australia’s robust economic growth looks The A$1.4 billion redevelopment is fueling Newcrest’s sustainable as a strong investment wave gathers expansion plans, with the company confi dent a world- strength throughout the resources sector, enhancing class gold mining operation has been created through the State’s reputation as a “can do” place for the makeover. responsible development. 26 Pilbara in space age 10 New magnetite focus Ancient Aboriginal rock art is being carefully monitored Long regarded as the poor relation of the iron ore for effects from emissions through new technology. industry, the development of the lower grade magnetite ores may be coming closer, with companies looking 27 Refreshed gold quest seriously at processing them to produce high-grade products. A previously shunned area of the Pilbara has captured exploration imagination after an intriguing gold 15 Decision time for Argyle discovery. The latest deadline set for the potential extension of 36 Resources Map the giant diamond mine is the middle of the year, a timeframe that looms as pivotal for the State’s industry.

Front cover: Prospect Western Australia’s LNG export Western Australian Prospect ISSN 1037 4590 magazine is published quarterly by the Western Australian Government’s industry continues to be dynamic, Department of Industry and Resources (DoIR) and Ray Burns Media. with new generation LNG carriers Editorial management: Mark Dixon, DoIR Communications & Marketing Division. Tel: (08) 9327 5555 • Fax: (08) 9327 5500. now in service on the supply run to Advertising management: Ray Burns Media, PO Box 1230, South Perth Westerm Australia 6951 Japan. These feature sleek 137,500 Tel: (08) 9227 6688 • Mobile: 0408 474 328 • Email: [email protected] Prospect has been compiled in good faith by the Department of Industry and Resources from information and data cubic metre membrane-containment gathered in the course of the magazine’s production. Opinions expressed in Prospect are those of the authors and not systems, compared with the older necessarily those of the Department of Industry and Resources. No person or organisation should act on the basis of any style dome-shaped carriers which matter contained in this publication without considering, and if have a storage capacity of only necessary taking, appropriate professional advice from other sources. Department of 125,000 cubic metres of gas. The Department of Industry and Resources, its employees and Industry and Resources contracted personnel undertake no responsibility to any person www.doir.wa.gov.au or organisation in respect of this publication.

Prospect March–May 2005 1 2 Prospect March–May 2005 Exploration backs thriving petroleum industry

By DR DARREN FERDINANDO Research Geologist Department of Industry and Resources

he growth of petroleum exploration The company is targeting gas discoveries addition to the Apium and Xyris South and production in Western Australia within their L1/L2 permit that can be gasfi elds that are currently undergoing Tover the past year has been rapidly tied into spare pipeline capacity. feasibility studies. encouraged by the global ARC also drilled two

demand for sweet light Sumba Timor development wells into its wholly

0m SIGNIFICANT 200 Joint Petroleum Sawu Development Area 0m 0m 100 crude and LNG, and the 00 Roti owned Dongara gasfi eld targeting HYDROCARBON DISCOVERIES 4 m Buffalo 000 Laminaria 5 0m 600 0m in WESTERN AUSTRALIA 20 Ba yu- Und subsequent price rises. an p “attic” gas that had not been as at January 2005 ip elin e (U nde r co nst ruct ion) Much of this exploration Oil Territory of Ashmore Saratoga previously accessed by the fi eld’s and BONAPARTE SCOTT Prometheus Petrel Gas Cartier Islands (N.T.) has been in the offshore PLATEAU Tern production facilities. BASIN Dinichthys Cornea Oil and Gas Scott Reef Polkadot Barrow and Exmouth BROWSE Titanichthys The ARC Energy and Origin Blacktip Brecknock Ichthys

BASIN Gorgonichthys Sub-basins, and onshore GASCOYNE Brecknock South Energy joint venture had a slight ARGO ABYSSAL PLAIN Waggon Creek northern Perth Basin, while ABYSSAL I N D I A N WYNDHAM hiccup with their gas exploration successful farmouts in the PLAIN O C E A N mid-year when the Centella 1 Point Torment ORD DERBY Lennard Shelf Canning and central Perth Oilfields gas exploration well discovered ELF SH BROOME Yulleroo BASIN

Basins indicate renewed Pictor oil instead of gas. Assessment ST St George Range WE Refer to North West Shelf Map frontier exploration activity Looma of this new oilfi eld is under way RTH NO Cudalgarra in the medium-term for EXMOUTH and plans for its development are PORT HEDLAND TE LFER PI PLATEAU PE DAMPIER LIN E CANNING ROEBOURNE those areas. KARRATHA expected in 2005.

Telfer BASIN During 2003–04 there CUVIER ONSLOW Exploration drilling on the EXMOUTH were 77 wells drilled, ABYSSAL North West Shelf yielded a new gas PLAIN a 17 per cent increase on the NEWMAN discovery for ChevronTexaco in previous fi nancial year. SAVORY BASIN AMADEUS excess of 2 Tcf at Wheatstone 1.

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200m Energy supply issues m identifi ed. Target seams have a 1000 2000m Department of 3000m Industry and Resources ALBANY 4000m

GEOCENTRIC DATUM of AUSTRALIA in Perth have encouraged NTv2 GRID FILE TRANSFORMATION S O U T H E R N O C E A N combined thickness in excess of proactive junior explorer 20 m and appraisal drilling is ARC Energy to undertake an expected in early 2005. aggressive onshore exploration program in During 2004 ARC discovered the Xyris With the increase in oil prices and a the northern Perth Basin. gasfi eld, which is now in production, in number of new openings in foreign LNG

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4 Prospect March–May 2005 ‘It is hoped exploration dollars are directed towards true greenfi elds areas where potential exists for huge discoveries’

markets there has been a push to monetise project remains on target for production Although the quantity and quality discoveries as soon as possible. to start in 2005. of the gas is proved, the wells were The most extreme example of this was Appraisal drilling around the Eni Australia sole-risked by BHP Billiton Petroleum Apache Energy’s Monet discovery early in operated Woollybutt oilfi eld yielded excellent after its 50/50 joint venture partner in the permit, ExxonMobil, declined to share the 2004, which discovered a (roughly) 600,000 results with an estimated extra 10 million barrel oilfi eld in the Barrow Sub-basin and cost of appraisal drilling. barrels of oil added to reserves. was put into production within two months of Sustained high prices for oil and an Perhaps the most interesting development discovery, using spare capacity at the nearby increase in demand from gas and LNG project for 2004 was late in the year when Simpson platform. With oil prices reaching markets over the next year will see the BHP Billiton Petroleum recommenced cornerstone hydrocarbon regions of more than US$50/barrel during Monet’s peak appraisal drilling of the giant Scarborough Western Australia — the North West Shelf production, Apache was laughing all the way and the northern Perth Basin — continue to the bank. gasfi eld. to grow. Development drilling on Santos’ Indications are that gas from Scarborough It is hoped that exploration dollars will Mutineer–Exeter fi elds commenced in will form the supply cornerstone for a gas- also be directed towards some of the true the second half of 2004 and despite some to-liquids plant in the Pilbara and an LNG greenfi elds areas of Western Australia, both disappointing results which lowered some receival terminal in California, if the company onshore and offshore, where potential still of the upside potential of the oilfi eld, the can obtain the required approvals. exists for huge discoveries. P P

Prospect March–May 2005 5 New deal to boost oil and gas

il and gas research in Western signalled the company’s intention to unique operating conditions, including Australia has been signifi cantly signifi cantly increase investment in deep water exploration and production Oenhanced by a new deal between research in Western Australia. It would and environmental considerations, key players. also help establish a centre of excellence created a need for technology solutions for energy research in the State. in areas such as subsea engineering, One of the world’s biggest petroleum production and processing technology companies, ChevronTexaco, and the The alliance is meant as a vehicle to and reservoir characterisation. Western Australian Energy Research maximise investment in research projects Alliance (WAERA), have agreed to in Western Australia that involve oil “These solutions will be of benefi t to establish a strategic research alliance and gas exploration and development, the industry internationally, making aimed at increasing Australia’s premier hydrocarbon processing, and health, WAERA an important global hub for State’s oil and gas output. safety and training initiatives. hydrocarbon research, technology development and education and training ChevronTexaco Australia managing WAERA acting chief executive, Robert services,” Mr Johnson said. P director, Jay Johnson, said the alliance Johnson, said Western Australia’s often KRE2150 COAL KEEPS the lights on Griffin Coal can supply Western Australia with cheap, clean, reliable power.

Competitive Collie Coal is 40-50% cheaper than gas. Clean Collie Coal is one of the cleanest coals in Australia because of its low sulphur and ash content, and no associated methane. Sustainable Griffin Coal owns more than 200 years of reserves in Collie to meet future demand. Secure Griffin Coal is converted to electricity in Collie - no need for a 1500km gas pipeline. www.colliecoal.com

SUSTAINABLE • COMPETITIVE • SECURE

6 Prospect March–May 2005 ASX Code: GUN

• Bankable Feasibility Study completed in December 2004, with positive results.

• Production scheduled to commence in mid 2006.

• Estimated 20 year mine life with revenue $A75 million per annum.

• Project revenue dominated by zircon, which is in short supply and has an excellent market outlook.

• Strong interest from European and East Asian consumers.

• Coburn is currently the second largest zircon development project in the world.

Head office: Level 2, 33 Richardson Street, West Perth Western Australia 6005 PO Box 1217, West Perth Western Australia 6872 Telephone: (08) 9226 3130 Facsimile: (08) 9226 3136 Email: [email protected]

Prospect March–May 2005 7 RResourcesesources pprojectsrojects aadddd bbiteite ttoo Western Australian economy

here is an air of optimism in Western Australia, as a strong and Tseemingly sustainable investment wave kicks in. Australian and international investors are either committed or plan to spend upwards of A$48 billion on resources projects across a State that boasts the highest level of new resources investment in Australia. Signifi cantly, much of this investment will eventually add to Western Australia’s already impressive exports. From it will come opportunities that Gas projects Iron ore industry Another sector building a strong head are normally experienced only once every The biggest area of further growth is of steam is Western Australia’s iron generation. This will create thousands likely to come from gas projects, with industry, with projects valued at about of new construction and permanent approximately A$15 billion worth of A$6.5 billion either committed or on the jobs, making Western Australia a better projects on the horizon. drawing board. place to live — further enhancing the The China National Offshore Oil Among them are Rio Tinto and Robe State’s reputation as a “can do” place for Corporation has already signed a River’s mine, rail and port expansions responsible development. Memorandum of Understanding with costing A$1.25 billion, and the HIsmelt The Western Australian Government partners in the A$11 billion Gorgon iron making plant under construction supports this growth, and will continue to project for the long-term supply of LNG at Kwinana, costing A$800 million. BHP provide support as long as projects are to China, while the United States is also Billiton also has major expansion plans, safe for the environment and workers, keen to take supplies of LNG from and proposals are expected soon for the and in the overall best interest of Western Australia. development of the Hope Downs iron ore Western Australians. Importantly for Western Australia, the mine in the Pilbara worth around Recent major project progress in Gorgon project promises to create an A$2 billion. Western Australia includes: estimated 3000 construction jobs and 600 Fortescue Metal Group’s proposed • The North West Shelf joint venturer’s permanent jobs. mine, rail and port development in the A$25 billion liquifi ed natural gas (LNG) Completion of the North West Shelf East Pilbara worth A$1.8 billion and supply agreement with China joint venturer’s LNG Train-4 this year and Mineralogy’s proposed Cape Preston • Rio Tinto’s A$15 billion iron ore supply a possible commitment to a fi fth LNG mine and pellet plant worth A$1.4 billion agreement with China processing train will lift total spending on are potential new entrants to the iron • BHP Billiton’s A$12 billion iron ore gas projects in the State’s North West to ore industry seeking to capitalise on the supply agreement with China A$15 billion. strong worldwide demand for iron ore. • Construction start-up on BHP Billiton’s Downstream gas processing facilities Further south, the Midwest A$1.4 billion Ravensthorpe nickel on the Burrup Peninsula represent Corporation Limited has plans for A$1.3 project potentially another A$3.3 billion worth of billion worth of projects including the • Construction of a A$630 million projects. These include Burrup Fertilisers’ development of an iron ore mine at Weld ammonia plant on the Burrup A$630 million ammonia plant, which Range, the re-opening of the Koolanooka Peninsula near Karratha is now under construction and due to and Blue Hills hematite iron ore mines • Expansion of the Telfer gold mine in begin production in the third quarter near Morawa, and an iron ore pellet the East Pilbara worth A$1.2 billion of 2005. Land has been allocated for production facility at Koolanooka. • Development of Woodside Energy’s another fi ve chemical projects within Enfi eld oilfi eld worth A$1.48 billion the gas processing precinct on the • Signing of an in-principle native Burrup. Employment for more than 4000 title agreement for the proposed construction workers and more than 500 development of the A$600 million full-time jobs can be expected if all of Stage 2 Ord Irrigation Scheme. these chemical projects reach fruition on the Burrup Peninsula. 8 Prospect March–May 2005 add bite to WesternWestern AustralianAustralian economyeconomy

Alumina Gold and sundry projects Irrigation Alumina refi nery expansion and Expansion of the Telfer gold mine in the The A$600 million Ord Stage 2 irrigation optimisation works are underway or State’s Pilbara (worth A$1.4 billion) is project in the State’s far north moved planned in the State’s South West. almost complete. a signifi cant step forward recently They include A$440 million on effi ciency Beyond these are many smaller with the signing of a Memorandum upgrades at Alcoa’s Pinjarra alumina resource projects that are collectively of Understanding for an in-principle refi nery, and A$750 million on expansion worth more than A$10 billion. Some native title agreement with the State of the Worsley alumina refi nery. Work on of which are subject to fi nal feasibility Government. the Pinjarra refi nery expansion started in studies, while others involving desktop The traditional owners of the land, the April 2004, while the proposed refi nery studies are confi dential at this stage. Miriuwung Gajerrong people, say they are expansion at Worsley is currently under Mineral and petroleum exploration now committed to the resolution of native environmental assessment. Many Western Australia continues to be the title and heritage issues over the 65,000 hundreds of construction jobs and at least most popular target for mineral and hectares of land earmarked for expansion. 150 permanent jobs are likely from these petroleum exploration in Australia. In The MOU paves the way for the rapid two projects. 2003–04, mineral exploration across development of Ord Stage 2. Alcoa has also triggered the Australia rose 8.9 per cent to A$783 The Ord Stage 2 project team is now environmental assessment phase for million, of which 59 per cent or A$465 focusing on securing a fi nal native title a proposed A$1.5 billion expansion million was spent in Western Australia. agreement within the next six months, and of its Wagerup refi nery to take capacity For petroleum, Western Australia attracted preparing for the next steps in community to more than four million tonnes per A$670 million worth of exploration, or consultation before commencing year, which promises to create 150 new about 60 per cent of the national total. marketing and tender processes for permanent jobs. development of the land in the fi rst half Research and development of 2005. Power generation Research and development initiatives Griffi n Coal Mining Company plans to are important adjuncts to the resources Summary develop the Ewington 1 coal deposit sector in Western Australia, with several With strong exports, the lowest 7 km east of Collie to provide fuel for important cooperative research projects unemployment rate in Australia, and a Griffi n Energy’s proposed Bluewater currently under way at universities and 20-year high in consumer confi dence, power station in the same area. The power other sites around the State. One example Western Australia can look forward to P station is currently under environmental is a major oil and gas research alliance continuing robust growth. assessment, with a go-ahead decision between the CSIRO, ChevronTexaco and likely in the fi rst half of 2005. If it does two Western Australian universities (UWA proceed, the power station will cost A$400 and Curtin) worth A$20 million. million and generate 250 construction and 40 full-time jobs.

Prospect March–May 2005 9 Growing interest in magnetite iron ore

By JOHN TERRELL and BILL PRESTON PRINCIPAL MAGNETITE IRON ORE RESOURCES IN WESTERN AUSTRALIA Department of Industry and Resources DEPOSIT COMPANY GRADE OF Fe RESOURCE

he development of low-grade George Palmer orebody Mineralogy 33.5% 800 Mt (indicated) magnetite iron ores, long regarded Balmoral (Fortescue) Mineralogy 31.8% 3250 Mt (inferred) as the poor relation of the iron ore T Koolanooka Midwest Corporation 35% 430 Mt industry in Western Australia, may not be Koolanooka South Mount Gibson Iron n/a n/a too far away in the nation’s premier iron ore State. Tallering Peak Mount Gibson Iron n/a n/a While commonly mined in countries Mount Gibson Asia Iron/Mount Gibson Iron n/a 200 Mt like China, Russia and the United States of Southdown Grange Resources 35% 54 Mt America, magnetite iron ore deposits have TOTAL 4734 Mt (minimum) historically held “last cab off-the-rank” status in Western Australia. country that has extensive experience During the 40-year history of iron ore in producing and using this type of

mining in Western Australia, the centre material. In fact, magnetite ores provide Yampi Sound stage has been exclusively reserved for the standard domestic baseload for iron high-grade enriched iron ores commonly and steel operations, with many examples referred to as hematites (typically of feedstock being transported more than Brockman and Marra Mamba-type ores) 1000 km by road and rail for processing. Port Hedland q q Pilbara iron and pisolites. Most of Western Australia’s magnetite Dampier ore province George Palmer The magnetites are the primary ores or deposits have been known for many Balmoral protores of the hematites, which have been decades, but for various reasons — among formed over long periods (up to two billion them competition from higher-grade years) of alteration and enrichment. hematites and the need for benefi ciation Due to the strong demand for iron and — they have never been exploited. steel in China, Japan, Korea and other parts However, with forecasts of strong Yilgara iron of South East Asia, companies are now industrial growth in South East Asia, Tallering Peak Geraldton ore province it may not be too long before magnetite q Koolanooka looking very seriously at processing lower Mt Gibson grade magnetites to produce high-grade iron ores are used to supplement hematite products like concentrates and pellets. and pisolite ores in Western Australian marketed products. PERTH This is creating potential opportunities q The development of magnetite for many local companies in an industry Southdown iron ore deposits in Western Australia that has long been dominated by global q Esperance would signifi cantly extend Western Albany iron ore giants, BHP Billiton and Rio Tinto. q Australia’s exploitable iron ore The table above lists companies with resources base. large and, as yet, undeveloped magnetite WA magnetite iron ore resources Western Australia currently has Figure 1 iron ore resources in Western Australia. 12.9 billion tonnes of marketable quality 400 In addition, there are a number of early- iron ore resources, though the defi ned stage exploration prospects in Western resource base is something like 34 billion 350 Australia for which magnetite ores are being tonnes, excluding low-grade magnetites, targeted. Magnetite iron ore deposits are which amount to at least another 300 generally characterised by low grades of 4.7 billion tonnes. around 30-35 per cent iron and high levels Iron ore production in Western Australia of silica. Typically, the treatment process has risen rapidly in recent years and will 250 involves removing the silica and producing continue to rise. In 2004 mine production Million tonnes high-grade concentrates or pellets. This was 227 Mt, up from 207 Mt in 2003. 200 involves tried and tested technology that Production capacity is expected to rise to is commonplace in places like China, the around 300 Mt in 2006, and possibly reach 150 United States, Mauritania, India, South 400 Mt by the end of the decade. America and Russia. The future for the iron ore industry 100 There is a particularly high demand in Western Australia is therefore 2002 2009 2010 2000 2001 2005 2006 2007 2008 1994 1995 1998 1999 2003 2004 P 1996 1997 for magnetite concentrates in China, a particularly bright.

Figure 2 Western Australian iron ore expansion potential 10 Prospect March–May 2005 Production history and projections WWA:A: AAustralia’sustralia’s No.No. 1 eexportxport StateState

estern Australia’s ever-buoyant EXPORTS resources sector underlines 2002–03 2003–04 Growth rate Wthe State’s importance to the A$ million A$ million % national economy. New South Wales 38,489 38,776 0.7% Figures supplied by the Australian Bureau of Statistics show that Western Victoria 28,013 28,312 1.1% Australia produced A$39.3 billion worth Queensland 27,781 27,938 0.6% of exports in 2003–04, an increase of South Australia 9360 9643 3.0% 4.5 per cent — the highest of any other Western Australia 37,605 39,312 4.5% Australian State or Territory. A lion’s share of Western Australia’s total Tasmania 2624 2488 -5.2% exports came from minerals and petroleum, Northern Territory 3357 2635 -21.5% contributing A$26.5 billion or about two- Australian Capital Territory 744 768 3.2% thirds of the total. AUSTRALIA 147,973 149,873 1.3% Western Australian ranks ahead of New South Wales and Queensland in terms of the Source: ABS Catalogue # 5220.0 Australian National Accounts: State Accounts annual value of exports. Further pointers for sound investment 1 Business investment in WA jumped Exports are likely to continue to grow, prospects in Western Australia include: 18% per cent in 2003–04 to be the highest in because more than A$45 billion worth of • Western Australia is the most popular place Australia — Access Economics’ Investment resource projects are either committed to or in Australia for new project investment1 Monitor (September 2004 quarter) under consideration in Western Australia over • Growth prospects are the highest in 2 Westpac — Melbourne Institute report the next few years. Australia2 3 Westpac — Melbourne Institute report And a myriad of non-resources • Consumer confi dence in Western Australia 4 WA Dept of Treasury and Finance industries such as information and is at its highest ever level3 5 WA Dept of Treasury and Finance P communications technology, biotechnology • Western Australia’s economy is growing at and education are rapidly expanding in a record rate4 Western Australia, adding to the State’s • Western Australia’s unemployment rate is impressive export performance. the lowest in Australia5

80 Western Australian iron ore resources (the second largest in the world) 70 Total defi ned resource base (high grade hematite/goethite and pisolite) 34.1 billion tonnes 60 Current marketable quality resources 12.9 billion tonnes 50 Low-grade magnetites (a conservative estimate) 4.7 billion tonnes 40 Million tonnes 30

20 Seaborne trade of iron ore exporter

10 COUNTRY YEAR MILLION TONNES %SHARE Australia 2000 157 35 0 Brazil 2000 160 35.7 1975 1979 1983 1987 1991 1995 1999 2003 2004 1973 1977 1981 1985 1989 1993 1997 2001

Figure 3 WA iron ore supplies into China Australia 2004 >203 37.7 Brazil 2004 >240 34.6

Prospect March–May 2005 11 GOLD -iÀۈVˆ˜}Ê 7

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By ROSS LOUTHEAN Ê here’s nothing like a gold discovery to Reality hit some over zealous gold pundits fi nds north of Wingina Well, including Last regenerate interest in an area that has when the company announced that its Crusade, Edkins, Turner, and Orchard Well Thad limited focus in the past. Wingina Well prospect in the Turner River near the eastern boundary of the prospect. zone had a resource, at a 1.5 grams/tonne That is what happened early in 2004 This will be a busy exploration year for cut-off grade, of 1.751 million tonnes grading after De Grey Mining had some highly De Grey for it will not only continue drilling 2.6 g/t for 146,000 oz of contained gold. signifi cant drill intersections on its Turner this structural system but the larger system Using an 0.5 g/t cut-off grade, the resource 10 km north, the Mallina Shear, that extends River prospects in the Indee belt that was 3.444 mt @ 1.7 g/t for 203,300 oz. for hundreds of kilometres through this suddenly placed a major focus on this sector The base of this drilling has been to 200 region, south of Port Hedland. of the Pilbara for both explorers and metres, for primarily open pittable targets. the investment community. The company’s prime target on the Mallina De Grey’s share price was hit, but not Shear is Mount Berghaus where mineralisation The carrot was not only the high grade the company’s enthusiasm as seasoned has now been picked up over a 1.2 km strike, and wide high and medium grade drill observers considered Wingina Well was and late December results included 21 m at intersections, but also that De Grey had a in its infancy and was in a well-mineralised 3.25 g/t gold, including 4 m at 10.31 g/t and series of rock suites with the potential not belt. Big mining banker Macquarie Bank 4 m at 7.84 g/t, to complement earlier hits only to host more than one style of gold decided to provide a A$5 million feasibility such as 5 m at 11.58 g/t. mineralisation, but also platinum group fi nance facility. De Grey’s managing director Denis O’Meara metals (PGM), as well as good sniffs for has gained recognition for his work in the copper and nickel. Turner River takes in a structural strike linked to the Tabba Tabba Shear for about 5 km Indee belt and for past prospecting when he De Grey basked in the spotlight but, like all from south of the Mount Dove PGM target and his principal consulting geologist Geoff good stories in the industry, there can be — joint ventured with South African platinum Blackburn jointly won the 2004 Prospector of the Year Award given by the Association of overkill and that came through expectations miner Impala Platinum Holdings (earning Mining and Exploration Companies. P on how much gold had already been found. 60 per cent) — and takes in a series of gold

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Prospect March–May 2005 13 Diamond feature By Mark Dixon and Ross Louthean A major year ahead for explorers

he world’s dominant diamond miner One De Beers’ discovery taken up by be recovered and examined to provide a and marketer, De Beers Group, has a junior is the Seppelt pipes in the north reasonably reliable estimate of grade and Tdecided after 40 years to cease direct Kimberleys, now the focus of Striker Resources’ diamond value from any pipe.” exploration for diamonds in Australia. proposal to get into production. UKD now plans to prove or disprove Aries However, it has left a legacy of having Striker has begun 2005 by sampling and and will use wide-diameter Bauer drill rigs found at least half the kimberlite and valuing diamonds recovered from Seppelt 2 to provide comprehensive and rapid bulk lamproite pipes and fi ssures in Australia — all part of a feasibility study to see whether samples, as did Kimberley Diamond two years and has passed on or sold some of the more Striker’s board will give the green light for an ago to accelerate activity at its Ellendale mine attractive pipes to Australian juniors. open cut development later this year. to the south. De Beers’ main focus is now an Developing Seppelt 2 would be a fi rst step When the new fi eld season begins investment in the west Pilbara region, for Striker which is fi nding grades increasing UKD will drill for new pipes north of Aries having relinquished or joint ventured off its at depth in this relatively small pipe, based on including the Helene and Persephone remaining prospects in the Kimberleys and 5500 carats recovered to late last year. discoveries picked up by BHP Billiton using the Northern Territory. At this stage Seppelt 2 has 200,000 tonnes the Falcon airborne technology. Headlines have just been produced on inferred, and it is stepping up evaluation on Meanwhile, Thundelarra has struck some of the early success De Beers is having its Seppelt 5 discovery between the original a deal with Rio Tinto to acquire the De Beers pipes that includes Seppelt 2, which on the west Pilbara joint venture with Helix Chamberlain diamond project, 70 km west of has an inferred 1.7 million tonnes of resources Resources, a diamond quest on part of Helix’s the Argyle diamond mine that takes down to 140 m depth and grading 40 carats Munni Munni property, south of Karratha, in a dolerite dyke system covering 50 km per hundred tonnes. where a platinum group metals search has by 3 km. Chamberlain straddles the river of These prospects are along a northeast that name and lies southwest of Thundelarra’s been stymied by the soft palladium price. striking corridor covering 12 km, with elongated leases beginning immediately De Beers can earn 51 per cent in the Seppelt 2 to the south and Striker’s emerging south of Argyle and stretching south towards diamond potential of the joint venture area Coolabah kimberlite at the northern end. Halls Creek and enveloping the Sally Malay and has its own 100 per cent-owned ground In the same region Striker has the Ashmore nickel mine development and Platinum enveloping the joint venture ground to the kimberlites further north and the Pteropus Australia Ltd’s Panton platinum project. west, north and east. pipes, originally held by Rio Tinto Group, Thundelarra has used De Beers Group’s De Beers has picked up micro diamonds as to the south. airborne Hyperspectral survey system, well as strong samples of diamond indicator Late last year United Kimberley Diamonds designed to locate minerals associated with minerals in a part of the Pilbara perceived to (UKD) was fl oated, taking in Thundelarra kimberlites, over Chamberlain and has picked be a cold craton belt. Here diamond pipes Exploration Ltd’s Aries pipe and adjoining up 12 “high priority” targets. could have been preserved by the granite and regional discoveries. “We are going to chase every rabbit down other overlying rocks, as opposed to the heavy Test work at Aries by earlier partner every burrow,” Mr Crabb said. erosion found to have taken place in the BHP Billiton showed it to be sub-economic The northern of the leases to the south of Kimberleys diamond hunt, where many pipes but Thundelarra and UKD chairman Phillip Chamberlain are joint ventured with LionOre are mere root systems. Crabb said: “a minimum of 2000 carats should International Mining. P

Sparkling future: De Beers departure has opened many diamond doors.

(pics of Clayton Dodd & Tom Reddicliffe available – graphic of loca- tion of Seppelt and Ashmore pipes on World Diamond Conference CD)

14 Prospect March–May 2005 Decision time for extending a giant’s life

he middle of this year will be the project and its number crunchers a pivotal time for the Western must be keeping a watchful eye on the Australian diamond mining disparity between the Australian and Tindustry. United States dollars. That is the latest deadline set by The workforce at Argyle, which has Rio Tinto Group for a fi nal decision on been mainly a fl y in, fl y out team whether to proceed with underground commuting by jet from Perth to site, development at the giant Argyle will be scaled back if underground Diamond mine that would take its mining goes ahead. There are moves mining life through to 2024. afoot to foster a more regional working environment, including encouraging a Should the decision be negative — build up of Kimberley Aborigines something that does not seem practical in the team. Argyle diamond mine given the huge amount of money being has maintained a strong indigenous spent on feasibility studies — then training program. Argyle will close. The quest to be more ‘Argyle sent shockwaves Kimberley centric is to have about through the diamond world’ 80 per cent of employees When Argyle was discovered it sent living locally and indigenous shockwaves through the diamond employment doubling to 40 per cent. mining and marketing world. When At the recent World Diamond commissioned in 1983 it dominated Conference in Perth the Argyle global output and when it ramped up to Argyle mine’s development manager, Simon maximum output in 1994 to 42.8 million Hanrahan, outlined just how serious carats it single handedly put Western Rio Tinto is about the quest to go Australia clearly ahead as the world’s underground. major producer. The feasibility study has a current For most of its life Argyle has produced budget of A$20 million along with a about one-third of global diamond further A$60 million being spent on production. the development of an exploratory Production comes from the massive decline. Simon Hanrahan said that AK1 lamproite pipe and until recent the contractor, Roche Mining, was years was supported by the recovery expected to complete the current scope of diamonds from the adjacent Smoke of work in the second half of 2005. Creek alluvials. The fi nal mine design would involve Argyle has a large cache of near-gem 38 km of development, 2.3 km of diamonds and 90 per cent of rough vertical development and 87,000 square PERTH diamond production goes to India’s metres of undercut with 153 draw bells. diamond manufacturing industry. This As with any mine going underground, represents employment for about the processing and ore recovery tapers 300,000 in the cutting and polishing dramatically and Argyle, now a mature businesses there. operation producing about 30 million The Argyle diamond mine. Rio Tinto is holding talks with the carats per annum, may drop to about Western Australian Government on half that fi gure. P

Prospect March–May 2005 15 You don’t have to dig too deep to find the perfect partner.

Partnerships run deep.

A century and more of diamond mining experience has taught us that innovation is key to true, long-term success. We are never too old to learn. As a leader in its field, De Beers has built its business by developing strong relationships with others throughout the diamond pipeline.

For more information speak to: Group Manager Exploration Bill McKechnie: + 27 (11) 374 7785 [email protected] Africa Mike de Wit: + 27 (12) 673 5232 [email protected] Australia and East Asia Stuart Vercoe: + 61 (8) 9378 0000 [email protected] India Alan Campbell: + 91 (112) 688 0093 [email protected] North and South America Martin Doyle: +1 (416) 645 1756 [email protected] Europe Wolf Skublak: + 7 (095) 589 1070 [email protected] Exploration Services James Campbell: + 27 (11) 374 7104 [email protected]

16 Prospect March–May 2005 Ebony & Ivory 4871 Back to Bow River

ne of the juniors with a two- Bow River was the second diamond mine tonnes at 0.21 carats/tonne and a measured- pronged attack on diamonds when developed in Western Australia after Argyle, inferred 2.6 Mt @ 0.19 ct/t. Othe northern fi eld season opens this a discovery by Gem Diamond & Exploration Conquest’s technical director David year will be Conquest Mining NL. and the Freeport group that later went Burton said there would be a major focus on The junior holds the old Bow River into the hands of the Robert de Cresigny- the untouched M&M gravels. alluvial mine leases, partially acquired managed Normandy Mining. Before the onset of the latest wet It operated from 1988–96 and produced season Conquest also undertook drilling at when Joseph (Diamond Joe) Gutnick’s Astro about 7.5 million carats. A factor behind Ellendale 17 and material put through an on- Mining left the area, and adjoining leases it being mothballed was the inability of site heavy media separation plant was being taking in the M&M alluvials, a terrace area Normandy to strike a deal with landholders sent to a Perth laboratory. believed to contain more sheddings from the to develop new areas. Ellendale 17 is described as a fi ssure Argyle lamproite pipe. Conquest has persevered in recent years and modelling has indicated to Conquest Conquest also has the Ellendale 17 pipe and, according to West Perth-based research that there are 83.8 Mt of lamproite and that licence, 15 km north of Kimberley Diamond’s group Intierra, the old Bow River mine on about 36.9 mt (about 40 per cent of this) are operating Ellendale 4 pipe. 1995 data had a proven-probable 1.6 million prospective for microdiamonds. P TM Full throttle search in the Ellendale fi eld

Ellendale expansion: The second lamproite pipe in the fi eld is being opened.

company that made the big graduation that has strong demand in the prime markets runs Blina Diamonds of which Kennedy is from diamond explorer for KDC’s diamonds — the United States, Asia chairman. Blina is 54 per cent controlled A to miner in Western Australia has and Dubai. Fancy yellows represent about 30 by KDC. added another important mark on the global per cent of stones recovered but 70 per cent of Blina runs the exploration on all leases diamond production map. value, with the value of an Ellendale diamond around the mining lease and also has the right Kimberley Diamond Co NL (KDC) is on an now averaging US$280/ct to test and trial mine the Terrace 5 alluvial expansion trail by opening up the second of its Linked to the production expansion channel that runs into the mining lease. well-established lamproite pipes in the Ellendale is lifting the accommodation facilities at A recent Fugro AEM electromagnetic diamond fi eld, acquired from Rio Tinto about Ellendale to 380, a 180 hectare tailings survey fl own over all the leases picked up three years ago. dam, new water storage and water supply signifi cant virgin targets. Sampling and KDC began in July 2002 amid industry borefi elds, to collectively cost A$12 million. drilling has also elevated other targets. doubts that a project area that had been In announcing the expansion, KDC also These include E15 — a lamproite pipe deemed somewhere between uneconomic disclosed a major new marketing deal, where not considered to have been given strong and sub-economic could be made to work 50 per cent of its diamonds will be taken up attention by the discoverers of the Ellendale by a minnow. by the pearl and diamond jewellery specialists fi eld — which is now being evaluated as the There was early success in testing the Paspaley Pearls Group, which has diamond two main pipes Ellendale 9 and 4 (E9 and cutting and polishing and retail outlets in possible source of the Terrace 5 diamonds. E4), the identifi ed key targets, when grades Tokyo, Osaka, Shanghai, Hong Kong, Bangkok, Terrace 5 was KDC’s original holy in the zone overlying the pipes was found Antwerp, New York and Dubai. grail — where it picked up diamonds in to be higher as was the value of the stones The seeds for this deal were probably sown palaeochannels and followed them for — helped by a steadily increasing price for in the formative years of the early 1990s when about 30 meandering kilometres to diamonds in the rough. Mr Kennedy was living in Broome and was the doorstep of the Ellendale fi eld — a Mining began on E9 because, of the then introduced to Nick Paspaley by fellow director fundamental reason why the main Ellendale established resources, that is where there and Broome resident and renowned bush pipes were then sought. were better valued stones. geologist Graeme Hutton, whose family also There were some lean years for KDC, In late December KDC confi rmed its has a pearling business there. formed by Mr Kennedy late in 1993 after planned expansion of production to take in E4 KDC expects this deal to represent he and fellow director Karl Simich left that would see total treatment from the existing A$80 million a year in revenue and would management roles in Macraes Mining Co Ltd 2.8 million tonnes per annum to 8.2 Mt/a. see Paspaley paying fair market value plus (now OceanaGold ) which is New Zealand’s This would come from a new 4.4 Mt/a 5 per cent and selling under the brand premier gold miner. Mr Simich manages plant at E4 to cost A$36 million, to be “Ellendale diamonds”. KDC’s other controlled entity Namakwa commissioned by April 2006. The target by The balance of KDC’s production is Diamond Co which is mining diamonds on then, said KDC executive chairman Miles expected to be sold through Antwerp and the shoreline of South Africa’s Namaqualand Kennedy, would be to have Ellendale lifting executive director Peter Danchin will establish diamond coast production from an existing 120,000 carat/pa an offi ce in the European diamond capital. KDC started life in the West Kimberleys to 700,000 ct/pa. KDC accelerated its regional exploration trying to prove up a better resource at the Mr Kennedy said the production lift would quest the best way possible, by getting it huge Calwynyardah diamond pipe but it see Ellendale become the Western World’s funded by a new vehicle that not only raised remained uneconomic, so it turned to its fi fth biggest diamond producer. The pinks are the capital for several years prospecting but the prized stones of Argyle but for Ellendale consolidated some licences that were joint nearby Blina leases and that led to the quest P it is the fancy yellows, a yellowish diamond ventures. KDC’s former exploration manager along ancient river beds to Ellendale. Prospect March–May 2005 19 Coburn New focus on on target Mt Ida goldfi eld ustralia’s next major mineral sands resource is on track to be developed after a favourable bankable A feasibility study found the Coburn deposit viable. he continued prospectivity of the Eastern Goldfi elds region has been reinforced with Coburn, south of Shark Bay in Western Australia’s giant French company Cogema reaching an agreement to further develop the Mt Ida Gascoyne region, is a virgin area relatively rich in zircon. Tarea, north of Kalgoorlie. Zircon will represent about 25 per cent of the fi nal Through subsidiary Mines and Resources Australia (MRA), Cogema has entered an product and 60 per cent of the revenue for the project, arrangement with Western Australian-based International Goldfi elds (IGL) to spend A$7.5 with the remainder coming from titanium minerals. million to further evaluate the goldfi eld. The A$128 million project is scheduled to come into Mt Ida was mothballed in 1965 after six decades of recording high-grade production. production either late in 2006 or early 2007, with an IGL resumed mining in April last year through the historical Timoni mine. That operation initial life expectancy of at least 20 years. That is based will cease under the agreement to allow MRA to evaluate deeper potential at the goldfi eld, on the Amy deposit, which is more than 35 km long, up which would be accessed through a decline to about 850 metres depth. to 3 km wide and between 10 and 50 metres thick. Previous exploitation of Mt Ida went only to a maximum depth of 300 metres and was The owner, Perth-based Gunson Resources, expects through shaft and narrow stope development. to generate more than A$1.4 billion in revenue from the IGL started mining again at the leases at an initial rate of 40,000 ounces a year, based on project and has been negotiating marketing agreements resources which included 60,300 tonnes in the Baldock lode at 32.9 g/t, 61, 000t at the Meteor with Italian, Dutch, Chinese and United States interests. lode at 16.5 g/t and 8200t at the Whinnen lode at 16.6 g/t. Operating cash surplus is forecast at A$560 million over IGL will retain gold resources at 100,000 oz as defi ned under Australia’s Joint Ore Reserve the life of the mine. Committee (JORC) code. The JORC code is the professional standard for reporting. Product at this stage is intended to be shipped from The company’s executive chairman, Tony Sage, said the agreement would allow the company the port of Geraldton, about 300 km to the south, but to focus on its potentially world-class Evanston gold project. longer term plans could see exports from Shark Bay. The underlying promise behind the redevelopment of the Mt Ida fi eld lies in the The bankable feasibility study concluded that market strength of the respective companies. IGL, while regarded as a junior, has a market Coburn would supply about 5 per cent of the world’s capitalisation of about A$40 million, which has been largely raised through European backers. current zircon demand when in full production. P MRA’s owner, Cogema, has a backing of US$900 billion. Its attraction to Western Australia has been in part inspired by its successful operation at the appropriatedly named Frog’s Leg gold mine, to the south of Mt Ida. Southdown nears “The agreement will ensure a well-funded and agressive exploration program at the Mt Ida project,” said Mr Sage. “Importantly, it will enable the exploration of both the near mine and starting block the deep plunge extensions of the known resources.” P

he Southdown magnetite iron ore project could be on stream within three years if a Tnew bankable feasibility study is positive. Portman bid puts Sole owner Grange Resources announced it had launched the A$13 million study on Southdown, 90 km northeast of Albany in Western Australia, with new card on table the aim of commencing construction next year. Project capital costs are forecast to run to US$640 estern Australia’s massive undeveloped magnetite iron ore ore deposits million, distributed between facilities in Australia are set to come under increasing scrutiny through the A$605 million bid for and South East Asia. Operating costs are estimated Westablished Perth miner Portman by the United States-based Cleveland-Cliff. at US$32/tonne. Grange’s executive director, Geoff Wedlock, Cleveland-Cliff is an acknowledged miner of lower grade iron ore and has stated that said the resource had the potential to position the should its bid for Portman be successful it would look to further acquisitions in Australia. company as a preferred supplier of high quality The company has been mining iron ore in the United States since 1847. Chairman John pellets to Asia. A JORC-compliant mineral resource Brinzo said that Cleveland-Cliff’s particular expertise was in economically processing estimate has the western section of the prospect lower grade iron ore, which is in abundance in Western Australia (see separate article at 83.3 million tonnes containing 37.5 per cent pages 10–11). magnetite at 69.1 per cent Fe. Mr Wedlock said the development plan was The bid for Portman, which owns and operates the Koolyanobbing and Cockatoo to open pit mine the deposit over 25 years to Island iron ore mines, has been welcomed and recommended by the target company’s process and produce about six million tonnes a directors in the absence of a higher offer. year of magnetite concentrate grading 68 per cent Mr Brinzo said Cleveland-Cliff had a unique global experience in mining and processing Fe. The concentrate, mixed with water, would lower grade iron ore deposits. “Should development of lower grade ores in Australia be transported to the port of Albany in a buried become popular we would be in a position to be active in that area,” he told journalists pipeline, fi ltered to remove the water then shipped at a briefi ng to announce the Portman bid. to a new pelleting plant to be developed by Grange in South East Asia. While both Koolyanobbing and Cockatoo are based on the higher grade hematite ores, The deposit was discovered by airborne magnetic Western Australia’s magnetite deposits have to date remained untouched. survey in the early 1980s. P Cleveland-Cliff also did not rule out potentially targeting higher grade iron mines in the State. P 20 Prospect March–May 2005 Seismic study looks for jackpot

Exploration cutting edge: New seismic work near Kambalda.

ineral exploration companies were applied to the data, then it might be Through the alliance it is envisaged that could soon be hitting the jackpot possible to produce seismic sections through new methods of 3D recording of seismic Mmore often as a result of research the earth. data will be developed for mine site use, so from Curtin University’s Exploration A major innovation has been the that even more complex processing routines Geophysics Department. application of new data processing could be developed and run on the ISA Dr Milovan Urosevic and Professor Brian algorithms. Professor Evans said that the computers. This would allow the display of Evans recently embarked on a MERIWA- complexity of the algorithms, and the ore bodies in 3D on the immersive screens funded project to test seismic methods for slow speed at which they run on standard — either at the ISA facility in Technology imaging orebodies in the goldfi elds, with the computers, may have been an issue if not for Park, or remotely. aim of assisting both the development of the two high performance supercomputers The success of the Curtin–MERIWA known mineral deposits and determining the recently installed by local company ISA project in 2004 — with new potential location of new potential deposits. Technologies at its Technology Park premises. mineralised zones having been delineated — Supported by MERIWA and industry The researchers are now looking to form has resulted in an application for a Western partners PlacerDome, St Ives Gold, Anglogold an alliance with ISA and major software Australia State Centre of Excellence for High and Sons of Gwalia, the project’s concept provider, Landmark Graphics, to readily Defi nition Geophysics. If funded, it is was that if seismic data were recorded in a deliver the data processing power required. expected the Centre will become an similar but modifi ed manner to conventional ISA is also developing the capability to international hub for imaging gold deposits recording methods used in oil exploration, view any images through an interactive in 3D, resulting in improved ore extraction and if new complex data processing routines visualisation system currently being installed. and local exploration success. P

Achieving Export Growth A.B.N. 22 007 871 892

A growing, independent Australian iron ore producer

Level 11, The Quadrant, 1 William Street, PERTH, Western Australia 6000

Telephone: 61 8 9426 3333 Facsimile: 61 8 9426 3344 Web site: www.portman.com.au JAZ1556

Prospect March–May 2005 21 Sh

Bill Tinapple By JOHN TERRELL Department of Industry and Resources

exas is big; we all know that. But Mr Tinapple said despite having a Mr Tinapple was one of three before becoming a petroleum reputation of producing more gas than Australian government offi cials Tgiant, the Lone Star State of oil, Western Australia was still highly represented at NAPE, the others being America, like most people and places, had prospective for both oil and gas. from the Commonwealth Department infancy and grew over many years before “It used to be a damning factor of Industry, Tourism and Resources and reaching maturity. being gas prone, however, in today’s Geoscience Australia. While impressed with its size and world where there’s a shortage of Mr Tinapple said more than half range of achievements in the petroleum environmentally clean gas, it can be of the 60 direct enquiries received at fi eld, Western Australia’s Bill Tinapple an advantage, especially if there’s low the Australian display booth related to came away from the recent North petroleum exploration opportunities sovereign risk involved and you are a cost American Prospect Expo in Houston in Western Australia. feeling that his home State had the He also received potential to emulate some of Texas’ another 10 enquiries achievements. from company The Director of Petroleum and representatives after Royalties for the Department of delivering a paper at Industry and Resources noted that an earlier exploration in oil-rich Texas approximately 1000 seminar. exploration holes were currently being His message to sunk every month. them was the same: Astonishingly, that’s equivalent to Western Australia is the total number of wells put down, the most prospective both onshore and offshore, during the place in Australasia for entire 50-year history of petroleum petroleum exploration, exploration in Western Australia. Popular: More than half of the 60 enquiries about Australian it has numerous “It shows that Western Australia oil and gas opportunities focused on Western Australia. is largely under-explored, that we have acreage releases coming untapped potential, and that we have up, and people can access the potential to catch up with Texas and effective and reliable LNG supplier like detailed information about exploration offshore areas of the Gulf of Mexico,” Mr Western Australia.” opportunities via the department’s online Tinapple said. Mr Tinapple said the North American WAPIMS database. “In some respects, our potential is far Prospect Expo (NAPE) attracted about Currently available and upcoming greater than Texas. 12,000 participants from around the acreage releases in Western Australia “We have a land mass more than world. The annual event began about include areas in the: • Perth Basin, both onshore and offshore three-and-a-half times greater than Texas, 20 years ago when a group of Texas oil • Carnarvon Basin, both onshore and and the area of our sedimentary basins is men got together for a lunch in Houston much bigger again than Texas. offshore to compare and swap deals. It quickly “And while speculators in Texas are • Canning Basin, onshore. P outgrew its original venue, and has grown targeting wells with reserves of just every year since then. 100,000 barrels, we in Western Australia Further information: The current venue, the George W. have several locations that offer investors Brown Convention Centre, can cater for the chance to fi nd reservoirs with billion Bill Tinapple barrel-plus potential. 50,000 delegates, just as it does Director of Petroleum and Royalties “Several of these are located in the for the highly popular Offshore Department of Industry and Resources, onshore Canning Basin, inland from Technology Conference in Houston in Western Australia Derby, in the (theoretical) path of a future May every year, and NAPE could grow to Tel: +61 8 9222 3291 trans-continental gas pipeline.” that size one day. [email protected]

22 Prospect March–May 2005 Signifi cant resource projects underway Get online and visit us

Prospect magazine or planned in is produced quarterly by the Department of Industry and Resources Western Australia as an internationally circulated publication that showcases Western Australia’s mineral and petroleum industries. Project value Employment (estimated A$m) Construction Permanent And we are online. Figures Iron and steel show that Prospect attracts up to 18,000 website hits Hamersley Iron’s port and rail expansions 700 800 195 Robe River rail program 200 100 10 an issue, which signifi cantly BHP Billiton future growth strategy 2500 n/a n/a adds to the more than 10,000 Hope Downs iron ore mine 1500 1000 300 hard copies of the magazine Mineralogy (Cape Preston) mine and pellet plant 1400 2000 400 already distributed. East Pilbara (Fortescue Metals) mine, rail and port 1800 1000 300 Prospect is squarely aimed at industry Kwinana HIsmelt pig iron and steel plant 800 320 65 executives, fi nanciers, suppliers and Midwest Corporation Weld Range mine 785 900 220 other people involved in the world’s most Midwest Corporation iron ore pellet project 540 1200 266 Yandicoogina expansion 290 330 n/a exciting industry. Extension Hill 250 400 210 Prospect can be downloaded from the internet Southdown 640 n/a n/a by visiting the Department’s website at: Sub total 11405 8050 1966 www.doir.wa.gov.au Nickel/cobalt Ravensthorpe mine 1400 1000 300 Goongarrie mine 1400 1000 300 Sub total 2800 2000 600 Petrochemicals Burrup Fertilisers ammonia plant 630 500 60 Japan DME — di-methyl ether plant 1000 1000 150 GTL Resources methanol plant 770 600 85 Dampier Nitrogen ammonia–urea plant 900 1000 130 Sub total 3300 3100 425 Gas Gorgon project 11000 3000 600 Enfi eld oilfi eld development 1480 100 80 LNG Train-4 and trunkline 2400 2500 80 LNG Train-5 project 2000 2000 70 Santos Mutineer–Exeter oilfi eld development 480 540 90 Onslow LNG plant 4000 2500 150 Santos Tern–Petrel gasfi eld development 1000 n/a n/a Sub total 22360 10640 1070 Other Alcoa Pinjarra alumina refi nery optimisation 440 1000 n/a Alcoa Wagerup refi nery Train-3 expansion 1500 1000 150 Worsley refi nery expansion 750 500 150 Boddington Wandoo gold mine expansion 750 500 400 Kemerton titanium dioxide pigment plant expansion 470 500 200 Telfer gold mine expansion 1400 1222 620 Sunrise Dam underground gold project 87 n/a n/a Transfi eld gas turbine power plant 400 250 45 Griffi n coal-fi red power station 400 250 40 Ord irrigation (stage 2) project 600 200 525 Burrup Ammonium nitrate 300 700 150 Sundry projects (Projects valued at less than A$200 million) — at least another 1737 1965 300 Sub total 8834 8087 2580 TOTAL 48699 31877 6641 ewcrest Mining Ltd chairman Ian It’s a problem being faced in other parts of the Johnson has been through some tough country and Mr Johnson said getting the right TTelferelfer Ntimes in his seven-year stewardship of people for the critical parts of a new mining the gold mining company but the recent venture had placed limits on the pace that recommencement of production from the giant companies like Newcrest could grow. ffuelsuels tthehe Telfer mine in Western Australia following four Telfer needs experienced operators to run its years of shutdown and a A$1.4 billion underground operations. The Telfer orebody runs redevelopment is poised to put a fi re to a vertical depth of more than 1000 metres and in the company’s belly and fuel its will require signifi cant optimisation over its fi rree fforor growth profi le. lifespan to get the most from the operation and Telfer is the emerging giant in Newcrest’s maintain production cash costs in the lowest portfolio. Despite having produced more than quartile for global gold production. six million ounces from 1975 to 2000, Telfer was However, Mr Johnson places a lot of weight NNewcrestewcrest poorly designed from the start in both its ability on the ability of Newcrest managing director, to extract gold and copper from its mineralised Tony Palmer, to pull in the right people. He said By DAMON FRITH ore and to take advantage of the massive when Newcrest was in crisis in the late 1990s — orebody’s deeper buried riches. following its doomed takeover offer for Robert Mr Johnson’s confi dence in Telfer is Champion de Crespigny’s Normandy Mining unreserved. He told Prospect the project would and signifi cant concerns in the market place produce more gold than the Kalgoorlie Super Pit over the company’s gold hedging book — in Western Australia over its 25-plus year minelife Mr Palmer had taken over from ousted — not an idle boast as the mine is one of the managing director John Quinn and restored world’s top 10 gold deposits based on reported morale to the company. reserves. He said Mr Palmer was a person people The consummate optimist, Mr Johnson also wanted to work for and that Newcrest would bide said Newcrest’s Cadia gold mining operations in its time to ensure its expansion rate was matched New South Wales would also grow to rival and by the quality of people it attracted to its exceed the Super Pit. If he is right Newcrest is operations. in an enviable position with 100 per cent of Ironically, the mining of the underground both projects. orebody at Telfer is a legacy of the Telfer commenced previous managing director, commissioning of the open ‘The next 12 months Mr Quinn. pit operations in the Prior to Telfer’s shutdown in December quarter last year will be critical’ 2000 Mr Quinn had been and gone is the old cyanide progressing a plan to mine the treatment circuit, with gold and copper now underground orebody through a greatly being extracted from the ore via a dual circuit expanded operation at Telfer. However, fl otation recovery mill. Previously the Telfer the ill-fated Normandy takeover distracted operation used cyanide worth A$70 for every ounce of gold extracted, while the copper was a management from running the company and cost burden that was produced at a loss. cost Mr Quinn his job before he could realise his The new mill comprises two trains with the plans for Telfer. fi rst in the commissioning phase. The second The next 12 months will be critical for train is expected to be commissioned in March Newcrest to show that Telfer is all that this year and the commencement of the Mr Johnson expects it to become. The smooth underground operations has yet to be transition from mining the open cut to combined announced, but is expected to commence early open cut and underground operations will send next year. the right message to the industry that Telfer has The new mill will process 17 million tonnes of placed its previous problems behind it and that a ore a year from the open pit and underground A$1.4 billion makeover has created a world-class operations to produce 800,000 ounces a year of mining operation. gold and 28,000 tonnes of copper. Newcrest and its partners, AngloGold and Another major change for the operation has Newmont Mining, will also have to decide this been the construction of a 400 km gas pipeline year on the fate of the shut down of Boddington from Port Hedland and the resulting signifi cant gold mine in Western Australia’s southwest. reduction in energy costs. Previously Telfer used Under the joint venture agreement diesel to generate its electricity. all the joint venture partners have Telfer’s commissioning has not gone without to agree on the go ahead for mine hitches. Operations were slowed late last year recommencement and the development of the when Cyclone Fay dumped an extraordinary Wandoo underground operation. amount of rain on the operations. The mine has That leaves Newcrest as the deciding also suffered from an inability to attract suffi cient partner. Both AngloGold and Newmont need skilled labour and it ran over initial budget Boddington to maintain their gold estimates by about A$300 million. production profi les. Newcrest is not Mr Johnson said major expansions in Western in that position and over the next few Australia‘s iron ore operations and the strength months will have to decide whether it in the Western Australian economy had shrunk wants to commit to the mine or keep the labour pool available to the company. 24 Prospect March–May 2005 it on care and maintenance. P New centre searches for a breakthrough

new research centre is aiming for Parker Centre chief executive, Mark The new centre will have four main breakthrough technologies that Woffenden, said the funding would allow the activity themes — breakthrough technologies, A have the potential to change centre to continue to improve the effi ciency process fundamentals, technology transfer the competitive basis of the entire and international competitiveness of the and developing staff. minerals industry. Australian minerals industry. Breakthrough technologies will involve The centre, the Parker Cooperative “Industry has shown its support for research directed at critical challenges identifi ed by the minerals industry. Research Centre for Integrated the new centre by making a substantial Mr Woffenden said an example was that Hydrometallurgical Solutions (Parker Centre), fi nancial investment,” he said. “The core and new processing technologies for high-silica has seen 10 minerals-related companies join supporting industry participants will invest A$15 million over seven years.” bauxite could convert vast uneconomic fi ve research providers as core participants to The 10 companies joining the new deposits into valuable assets. maximise returns from Australia’s minerals centre are Alcan, Alcoa, AngloGold Ashanti, Process fundamentals will address through improving hydrometallurgical Aughinish Alumina, BHP Billiton, Hatch industry’s need for advances in the knowledge. Associates, Queensland Alumina, Rio Tinto understanding of the fundamental science The new centre will transfer research and WMC Resources. controlling existing hydrometallurgical outputs to industry and help develop Additionally, Barrick Gold, Central TAFE, processes. Technology transfer will focus on Australia’s expertise in hydrometallurgy. Ciba Speciality Chemicals, Hydro Aluminium, effective delivery of research outputs The Parker Centre, which is headquartered Minara Resources, the Minerals Council of to industry. at Perth’s Murdoch University, has been Australia, Nalco Company, Outokumpu, The Parker CRC for Integrated funded for the third time by the Australian Straits Resources, Worley and Zinifex are Hydrometallurgical Solutions will come on P Government to the tune of A$20 million. joining as supporting participants. stream on 1 July.

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p!šF’˜š^p£V^˜aš’˜’zF3a!da’š˜)£’amF’’˜ £maš˜p!šF’˜OO’^pF:˜’F¥a3F’˜pad˜!m=˜ V!’˜pzF!šapm’˜¦pd=¦a=F˜Oph˜š^F˜ £pzF!m˜pš^˜F!˜šp˜£’š!da!m˜!m=˜ m=pmF’a!m˜pOO’^pF˜=F¥FdpzhFmš’ p!šF’˜OO’^pF˜^!’˜!˜œ«˜¨F!˜ Fz£š!šapm˜am˜š^F˜’£zzd¨˜pO˜’zF3a!da’š˜ pOO’^pF˜F„£azhFmš:˜’F¥a3F’:˜ h!m!VFhFmš˜F§zFša’F˜!m=˜’zF3aP3!dd¨˜ =F’aVmF=˜3p’š˜3pmšpddamV˜3phz£šF˜ ’¨’šFh’˜p!šF’˜OO’^pF˜!d’p˜=F¥Fdpz˜ ’zF3a!dd¨˜=F’aVmF=˜3phzF’’p’˜!m=˜ ammp¥!ša¥F˜zp=£3š’˜am3d£=amV˜£ma„£F˜ 3pmš!amFa’F=˜F„£azhFmš˜!m=˜z£zp’F˜ )£adš˜’šF!h˜VFmF!šp’˜=F’aVmF=˜šp˜ hFFš˜¥!aF=˜3FšaP3!šapm˜’š!m=!=’˜ !p£m=˜š^F˜¦pd= p˜Pm=˜p£š˜hpF˜!)p£š˜^p¦˜p!šF’˜ 3!m˜^Fdz˜¨p£˜z^pmF˜sœ˜sQ˜Q¡˜ £’š!da!˜a=F˜p˜¥a’aš˜p£˜¦F)’ašF˜ !š˜¦¦¦3p!šF’3ph!£

Prospect March–May 2005 25 Ancient ancestory: The Burrup is home to both world class industry and important Aboriginal heritage sites

Technology boost for rock art The space age has come to the Pilbara

ew technology, developed by recently prompted the Western Australian “The studies are aimed at assessing CSIRO and Western Australia’s Government to commission a series of whether industrial emissions are affecting NMurdoch University, is being monitoring studies,” Professor Murray said. the natural weathering of the rock used to monitor ancient Aboriginal rock The monitoring program consists of fi ve surfaces.” In a related study, CSIRO scientists art on the Burrup Peninsula for signs of separate studies, two of which entail the any damage which could be caused by are recording the differences over time in measuring of the current condition of the industrial emissions. colour between engravings and adjacent rock art. The Burrup is home to some of undisturbed rock surfaces. They are also The fi rst involves a team of CSIRO Australia’s major industries, including conducting accelerated weathering tests exploration and mining researchers using the giant North West Shelf project and of rock samples to assess what changes a state-of-the-art mineral mapping tool Hamersley Iron’s export facilities. may be expected over many decades of The chairman of the Burrup Rock Art — a visible/infrared spectrometer — to exposure to industrial emissions. Monitoring Management Committee, accurately record any subtle change in the Studies of the micro-organisms that Associate Professor Frank Murray, said the surface minerals of the rock art over time. can live on the rock art are also being carried out, with Dr Graham O’Hara, region was notable for its indigenous rock “This monitoring program, which a microbiologist from Murdoch University, art which dated back thousands is supported by the local Aboriginal looking at the growth of organisms such as of years. communities, will be the most thorough bacteria and fungi. “Concerns about possible effects of scientifi c research of impacts on rock art CSIRO said a comprehensive analysis current and future industry emissions ever undertaken in Australia,” Professor of atmospheric conditions rounded out on the signifi cant rock art collection Murray said. the package. P

26 Prospect March–May 2005 MINING INTERNATIONAL LTD

Listing Codes - Toronto (LIM), Australia (LIM), London (LOR)

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United Kingdom Canada Australia Botswana LionOre UK Ltd LionOre Mining International Ltd LionOre Australia Pty Ltd Tati Nickel Mining Company 81a Walton Street, 20 Toronto Street, Level 2, 10 Ord Street, (Pty) Ltd South Kensington, 12th Floor, Toronto, Ontario West Perth Western Australia 6005 PO Box 1272 London, SW3 2HP Canada M5C 2B8 Telephone: 61 8 9481 5656 Francistown, Botswana Telephone: 44 207590 8888 Telephone: 416 777 1985 Facsimile: 61 8 9481 5823 Telephone: 267 210 701 Facsimile: 44 207590 8899 Facsimile: 416 777 1320 Email: [email protected] Facsimile: 267 216 215 Email: [email protected] Email: [email protected] Website: www.lionore.com.au Website: www.lionore.com Prospect March–May 2005 27 the big picture 8

Global growth slows but momentum remains household borrowing has gone into housing and consumption. Estimates of global growth for 2004 suggest that, at around Some analysts now suggest that a potentially dangerous housing 5 per cent, the world economy had one of its best years in three price bubble has developed. Should this bubble defl ate and/or decades. Recent surveys of economic forecasts indicate that households cut consumption to rebuild savings and run down while growth is expected to be slower at just over 4 per cent in debt, growth in the US economy could be substantially lowered. 2005, growth will remain signifi cantly above its long-term average. An additional risk is that the US$ may fall rapidly in response Recent consensus forecasts suggest that the United States and to fi nancial market concerns about the US current account and China will remain the mainstays of growth in 2005 as Japan slows fi scal defi cits. This would potentially signifi cantly reduce global and European growth remains roughly stable. growth by constraining exports-led growth in Europe and Japan. Economic Growth – 2003–2006 Japan’s growth moderates but recovery continues Japan’s economy has slowed from the strong growth it 2003 2004 2005 2006 experienced at the start of 2004. In the September quarter 2004 Estimate Consensus forecasts growth softened signifi cantly, to a lower than expected 0.1 per United States 3.0 4.4 3.6 3.4 cent, which brought the annual growth rate back to 2.5 per cent. Euro Area 0.5 1.8 1.7 2.0 Exports and capital spending, both recent drivers of Japan’s Japan 1.3 2.9 1.1 1.9 recovery, were weak. The former refl ected slower demand for China 9.3 9.5 8.2 7.8 Japan’s ITC exports and generally softer global demand. Other East Asia 3.7 5.7 4.4 4.9 World 3.8 4.9 4.2 4.2 This overall softness is consistent with other indicators such as Source: Reserve Bank of Australia: Statement on Monetary Policy, February 2005. industrial production, which has slowed in recent months, falling by 1.4 per cent in December 2004. The US continues to grow strongly, but risks remain News from most recent business surveys has been more upbeat, The US economy continues along a strong recovery path. In the however, and the labour market has strengthened somewhat. December quarter 2004, GDP rose by 0.8 per cent to be up 3.7 per cent in the year to December. Strong household consumption • Business surveys, including the Tankan and Shoko Chukin and a broadening of the business investment recovery were the surveys suggest that, while easing, business sentiment key drivers of growth in the quarter. Net exports continued to remains at high levels. detract from US growth due to strong domestic demand-driven • Though volatile, unemployment fell to 4.4 per cent in December imports and lower exports as global demand softened. 2004, in part refl ecting employment growth of around 0.5 per cent over 2004. Surveys of business hiring intentions and An improvement in the labour market has been helping to drive consumers’ employment prospects remain upbeat. strong household consumption, which rose by 1.1 per cent in the December quarter, to be up 3.9 per cent over the year. Other partial indicators also remain solid. Machinery orders • During the second half of 2004 more than 160,000 jobs were rose strongly in November 2004 and exports recovered some created each month, pushing down the US unemployment rate strength following weakness in recent months. The missing link to 5.4 per cent in December. in previous Japanese recoveries, household spending, has also picked up, in part in response to the improvement in the labour • The outlook for further employment gains is good, with Institute market, which has boosted consumer sentiment. Over the for Supply Management (ISM) surveys of the manufacturing September quarter consumption rose by 2.1 per cent. and non-manufacturing sectors showing employment indices at high levels consistent with strong employment growth over the Business investment is expected to remain robust, supported by next few months. strong growth in profi ts, which rose by 33 per cent in the year to the June quarter. The return to profi tability has allowed signifi cant A climate of still-low interest rates, despite a 150 basis point repair to Japanese corporate balance sheets, such that corporate increase in US offi cial interest rates since June 2004, along with debt levels have fallen to levels (as a share of Japan’s GDP) last rising household wealth due to higher stock and real estate seen in the late 1980s. In addition, the capital stock overhang, prices, have also supported consumption. which has deterred investment over the past decade, now US business investment growth has continued to broaden beyond appears to have been worked off. the information technology and communications (ITC) sector and China slows a little grew by 2.5 per cent in the December quarter 2004 to be nearly 10 per cent higher than a year ago. Solid profi tability and strong China’s quarterly GDP growth rate eased modestly in the second corporate balance sheets have boosted business confi dence half of 2004 though, in year average terms, growth still rose from along with easy access to low cost investment fi nance. 9.3 per cent in 2003 to 9.5 per cent in 2004. Underlying US infl ation has moved up modestly over 2004 to be Tighter credit restrictions and controls on over-investment appear around 2.2 per cent in the year to December, providing part of the to have produced a modest slowdown, with industrial production rationale for the Federal Reserve’s steady tightening of monetary growth remaining strong at 14.4 per cent in the year to December policy. 2004 down from its peak of over 19 per cent in the year to March 2004. Exports remain a key driver of Chinese growth, rising by An important risk to the US economy is the current and projected 33 per cent over the year to December 2004, refl ecting China’s level of the Federal fi scal defi cit and low levels of household strong competitive position. saving. Many analysts have focused on the symptom of these issues, the high level of the US current account defi cit. China’s aggregate fi xed capital investment growth has fallen from However, the key forces driving the rise in the US current rates of over 50 per cent a year in early 2004 to 21 per cent in account defi cit are the deterioration in the US’s fi scal position the year to December. Interestingly, the share of investment in allied with a sharp rundown in household savings and increase Chinese GDP rose to about 45 per cent over 2004, the highest in household borrowings. It is here that the risks to the US, and share on record in both Chinese and global terms. This high global economies lie. For example, a signifi cant proportion of level may suggest that investment could ease further in coming quarters. 28 Prospect March–May 2005 Economic trends

Compiled by DoIR’s Economics Analysis Branch

East Asian growth remains solid Growth in the rest of East Asia remains solid following some modest softening. GDP grew by 5.6 per cent over the year to the September quarter 2004. Hong Kong and the Philippines showed the strongest Chart 1: Annual economic growth in the major economies growth, with the region’s growth driven by rapid growth in exports. per cent per cent Strengthening domestic demand underpinned by expansionary 6 6 macroeconomic policies and fi rming employment growth is expected across the region with the exception of Korea, which continues to see 4 4 weak household spending.

2 2 The region’s export growth slowed mildly as 2004 developed, possibly refl ecting slower growth in China, a key market for simply transformed 0 0 manufactures for the region. There are also signs that the strong recovery in global ITC demand, which is a key component of the

-2 -2 region’s exports, has plateaued. The outlook for domestic demand in the region remains promising, -4 -4 with still low interest rates and rising capacity utilisation. Improving Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 employment growth is supporting household disposable incomes and US Euro area Japan thus spending. Rising property and equity prices are also boosting Source: RBA household wealth. Korea remains the exception with consumption falling and employment prospects deteriorating. In response, the Bank of Korea has reduced interest rates and fi scal stimulus is planned during 2005. Sustained high oil prices are a key risk to the region’s economies given their intensity of imported oil use. Chart 2: Global sharemarkets Europe’s recovery disappoints Index: June 2000=100 Europe’s recovery has faltered somewhat as 2004 has progressed, 120 US Japan Euro-zone Australia with GDP growth slowing to 0.3 per cent in the September quarter for 110 an annual growth rate of 1.8 per cent. Exports have remained the only 100 signifi cant stimulus to the region as a whole. 90 Unfortunately, growth in most of the major regional economies 80 has converged at a low level. France, which previously had grown 70 relatively strongly, has fallen back to the pack of Germany, Italy and the Netherlands, which have shown only modest growth. Only Spain now 60 stands out as growing at a respectable pace. 50 European industrial production growth has slowed from around 3 per 40 Jun-00 Dec-00 Jun-01Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 cent in mid-2004 to 0.7 per cent in November due to falls in German

Source: RBA and Italian production. It remains the case that for European growth to recover signifi cantly, domestic demand will have to improve. However, despite better business sentiment and strong profi tability, business investment remains weak. Household consumption has also shown little sign of recovery, with the exception of France where rapidly rising housing prices are helping to boost wealth and thus consumer sentiment. High levels of unemployment continue to constrain consumer sentiment and spending. Chart 3: Exchange rates against A$ TWI, Yen US$, Euro The UK economy continues to grow solidly, but has softened modestly 90 TWI Yen US$ Euro 0.85 as manufacturing production and net exports have weakened. The 85 0.80 detraction from growth due to falling net exports refl ects higher levels 80 0.75 of imports due to strong domestic demand and rising imports offsetting 75 0.70 healthy export growth. A slowing housing market has also contributed 70 to softer growth due to the effect of higher mortgage interest rates on 65 0.65 consumption. On the positive side, consumer and business sentiment 60 0.60 is high and labour market conditions remain strong. 55 0.55 The A$ approaching early 2004 peaks 50 0.50 45 The A$ approached its early 2004 high of around US80cents in 40 0.45 February 2005, driven by strong global commodity prices, a robustly Nov-99 Sep-00 Jul-01 May-02 Mar-02 Jan-03 Nov-04 Source: RBA performing domestic economy and an increased expectation of higher domestic interest rates. The A$’s rise against the US$ has been paralleled by solid rises against the yen, euro and trade weighted index (TWI) since mid-September 2004. (Chart 3)

Prospect March–May 2005 29 the big picture 8

Commodity prices outlook Average Price Comparison 2003 and 2004 In 2004 resource commodity prices performed very strongly. The cumulative impact % Change of several years of strongly growing demand in China coupled with healthier demand 80 growth in other big consuming regions during 2004 resulted in very tight commodity markets. Currently, oil prices continue to tread a tightrope of high demand and 70 A$ controlled supply, currencies and interest rates support the gold price and inventories of US$ base metals are either at all time lows, or seem to be approaching such levels in 2005. 60 This environment appears to have at least weakened, if not broken down the traditional link between base metals prices and western world/OECD (industrial production) leading 50 indicators discussed in the previous issue of Prospect. For example, while the OECD leading indicator peaked in May 2004, the base metals price index has continued to 40 climb to new highs. 30 Oil prices remain very strong 20 In 2004 the average price of Brent, Tapis and West Texas crude oil prices was US$40.25/ bbl. This average masked a year which saw prices dramatically escalate from around the 10 low to mid US$30/bbl in the fi rst half of the year to surpass US$55/bbl on 25 October 2004. The US consumes a quarter of the world’s crude oil and at the commencement of 2005 crude oil prices rose to a two-month high as freezing weather in the US northeast Oil Iron Ore Nickel Gold Copper Lead Zinc Lump increased consumption of heating fuels. By late January crude oil price futures for March Source: LME, Kitco, TEX report, Metal Prices 2005 had risen to US$48.60/bbl. Demand pressure also continues to emanate from China where it was considered that consumption would grow more slowly this year. However, a recent report from the Organisation of Petroleum Exporting Countries (OPEC) paints a different picture with China’s oil consumption predicted to increase a further 7.2 per cent in 2005. Oil prices remain high By comparison, in 2004 China’s demand surged 15.5 per cent. US$/barrel 60 Overall, OPEC, the supplier of more than a third of the world’s oil, has raised estimates for annual world consumption and demand for oil. It now expects global demand to rise 55 by 1.65 million barrels per day (MMbbl/d), or 2 per cent, to 83.64 MMbbl/d. ... and supplies are tight 50 On the supply side of the global oil equation, OPEC members agreed on 10 December 45 2004 to maintain an agreed ceiling of 27 MMbbl/d and individual production levels 40 (since confi rmed again at an OPEC ministers meeting on 30 January 2005). However, member countries, which responded to the market need for additional supply in 2004 35 by producing above their allocations, agreed to collectively reduce their over-production by 1.0 MMbbl/d from their current actual output, effective 1 January 2005. This was to 30 prevent a potential post-winter surplus and price crash. 25 Unrest before the Iraqi election on 30 January 2005 also helped push up prices with 20 sabotage halting exports from Iraq’s northern oil fi elds around Kirkuk. In line with its average production over the past 12 months, Iraq pumped 1.96 MMbbl/d in December 01//1/03 01/11/02 01/05/03 01/07/03 01/03/03 01/09/03 01/01/04 01/03/04 01/05/04 01/07/04 01/09/04 01/11/03 2004. However, this output was 21 per cent below the 2.48 MMbbl/d pumped in 01/11/04 01/01/05 February 2003, the month before the US-led invasion. On a technical, security and Source: EIA (Official Energy Statistics from the US Government) political basis, the immediate future for the Iraqi oil industry seems to be getting grimmer. Analysts point to the continuing inability to keep pipelines and wells secure plus growing indications of serious reservoir damage caused by neglect, misuse and under investment. Gold prices buoyant Gold prices also up but production down US$/oz 500 The strength in oil prices indirectly supported continued improvement in the price of gold during 2004 with the average annual price rising by 17 per cent to US$409/oz. However, because the value of the Australian dollar relative to its US counterpart 450 increased signifi cantly during the year, in local currency terms the average gold price remained almost static in 2004. 400 The main driver pushing up gold prices has been weakness in the US dollar. Signifi cant increases in world oil prices weakened fi nancial market expectations as to the extent of US interest rate increases. As a result, the value of the US dollar declined against other major international currencies. In 2005, the strength of US economic growth, changes in 350 US interest rates and consequent movements in the value of the US currency will therefore continue to be the dominant factors affecting the US dollar denominated gold price. 300 Gold prices have also been supported with continued producer dehedging and lower mine production. At 2478 tonnes, world gold production in 2004 was down by 114 tonnes compared to the previous year, which was the largest decline since the 250 early 1940s. This was chiefl y due to the temporary impact of production disruptions in 1 Nov-02 20 Jul-03 30 Jul-04 30 Apr-03 29 Apr-04 24 Oct-03 29 Oct-04 30 Jan-03

Australia and in particular Indonesia, where a major pit wall failure was experienced at 17 Jun-03 12 Jan-04 16 Jun-04 13 Feb-04 13 Mar-03 25 Nov-03 17 Dec-02 22 Sep-03 21 Aug-03 14 Dec-04 15 Sep-04 16 Mar-04

Freeport’s Grasberg mine. Several new mines are likely to reverse this decline in 2005 London PM Fix

30 Prospect March–May 2005 Commodity trends

Compiled by DoIR’s Economics Analysis Branch

including Newcrest Mining’s Telfer operation in Western Australia which would add Australian and Brazilian iron ore prices – 25 tonnes a year to the world total and Barrick Gold’s Alto Chicama mine in Peru. total cost including freight Iron ore prices may be in for a signifi cant increase $US/t cif 55 For the Japanese fi scal year 2004–05 (April-March) negotiated prices for iron ore into Brazil Japan increased by 19 per cent. Prices increased by this amount because of strong Australia demand for iron ore coupled with capacity constraints in Australia, South Africa and 50 Brazil. The strong demand for iron ore principally emanated from China where imports are estimated to have increased by 53 million tonnes to 201 million tonnes in 2004. 45 In 2005 China’s iron ore consumption is expected to continue to increase albeit at slower pace with imports forecast to rise by 48 million tonnes to around 249 million 40 tonnes.

35 China’s appetite for iron ore has created a reported shortage with rises in China’s imports being partly met by shipments negotiated on a one-off spot basis at prices far in excess of negotiated contract prices. These conditions have shaped an 30 environment for substantial price rises in iron ore. In January 2005 price negotiations for annual contract prices for iron ore were re-opened. While the outcome of fi nal price 25 negotiations is unknown at the time of writing, the prognosis has been for dramatic price increases. In addition to the tight supply and demand situation, this outlook has 20 been based on possible far reaching major change in the historic relationship between buyers and sellers. Analysts have indicated the possibility of a ‘paradigm jump’, 94/95 00/01 96/97 93/94 01/02 95/96 99/00 02/03 04/05 92/93 98/99 03/04 97/98 91/92

Source: Metal Prices referring to a potential increase in iron ore prices for Australian producers to close up the price gap which has emerged between Australian and Brazilian iron ore after taking into account the signifi cant freight differential. Zinc and lead prices Aluminium prices increase — but with production to react accordingly

1400 World aluminium production grew by 6 per cent (or almost 1.8 million tonnes) in 2004 Lead with China accounting for over half of this increase. Prices increased 20 per cent in 1300 Zinc 2004 to average US$1716/tonne. This translated to received alumina prices in Australia 1200 increasing by 10 per cent to average A$299/tonne during the course of 2004. Strong 1100 prices are expected to encourage companies to re-open previously idled aluminium 1000 smelting capacity as currently experienced at a number of Alcoa’s US operations. 900 In China, the government export tax rebate on aluminium was recently reduced from

800 15 per cent to 8 per cent. The effect of this export tax rebate measure is to reduce US$ cents/dltu the incentive for Chinese companies to produce aluminium for the export market. 700 However, with excess capacity in the Chinese aluminium industry and increased 600 electricity availability and reliability, China’s aluminium production is forecast to 500 nevertheless increase by around 9 per cent in 2005. 400 Can base metal prices increase further? 300 Very low stocks and industrial disputes at a number of mines and smelters around the 200 world caused copper prices in October 2004 to peak at a 14 year high of US$3287/tonne. Copper prices were on average 43 per cent higher in 2004. Global copper consumption 1 Jul-04 1 Jul-03 1 Jan-05 1 Jan-03 1 Jan-04 1 Sep-03 1 Nov-03 1 Sep-04 1 Nov-04 1 Nov-02 1 Mar-04 1 May-04 1 Mar-03 1 May-03 is expected to continue to grow, bolstered in particular by demand from China. However,

Source: LME Cash Official the rate of world growth in copper demand may be relatively lower in 2005 compared to 2004 and global production is expected to increase as producers respond to the favourable prices. Cobalt price Lead prices also had a very good year and were on average 54 per cent higher in US$/t 2004. Analysts continue to forecast a lead market defi cit in 2005 and also point to low 70,000 London Metal Exchange (LME) stocks. This augurs for tight lead metal supplies and at 65,000 least a maintenance of high prices. However, the ultimate price outcome will depend 60,000 on the degree to which increasing lead mine production will be able to match demand. 55,000 Zinc on the other hand, recorded a comparatively modest price increases in 2004 of 50,000 12 per cent due to relatively high LME zinc stock levels. 45,000 Nickel and cobalt stand out with huge price increases 40,000 35,000 Nickel stocks fell to record lows in 2004 and prices increased accordingly, averaging 30,000 US$13,830/tonne in 2004. This represented a 44 per cent increase on the previous 25,000 year. Prices are expected to remain strong as there are limits to bringing on-stream, 20,000 at short notice, increased supply in an environment of strong demand. 15,000 In 2004 cobalt prices increased by an astounding 106 per cent to average 56,886/ 10,000 tonne. Despite production of cobalt increasing steadily in recent years, prices have 5,000 been recovering since the second half of 2003 and continued to climb in the fi rst half 0 of 2004. This has refl ected growing demand for cobalt coinciding with short-term supply diffi culties. The near-term outlook for cobalt prices appears to be optimistic as demand for cobalt is expected to continue to grow strongly, while supply, as in the 1-Mar-03 1-Sep-03 1-Jan-04 1-Mar-04 1-Nov-02 1-Jan-03 1-May-03 1-May-04 1-Jul-03 1-Jan-05 1-Jul-04 1-Sep-04 1-Nov-04 1-Nov-03 case of nickel, may struggle to keep up, with most major new projects not due Source: Metalprices on-stream until 2006. Prospect March–May 2005 31 Commissioned Projects Committed Projects (for fi nancial year 2004/2005) (as at 14/2/2005) OIL & GAS DEVELOPMENTS fi rst train of the 17 Mt/a processing plant being West Angelas - West Angelas Mine Expansion completed in November 2004 and commissioning of ROBE RIVER MINING CO PTY LTD North West Shelf - Project Expansion - 4th the second train planned for February 2005. When full Robe River is currently expanding operations at its West LNG Train, Second Trunkline production is reached, it is estimated it will average 800 Angelas mine to increase production from 20 Mt/a to WOODSIDE ENERGY LTD 000 oz/a of gold and 30 000 t/a of copper over a 24-year 25 Mt/a. The increase in production will be achieved Proposals by the NWS partners for additional period. A major component of the project is a 440 km through an increased mining rate at Deposit A, minor LNG Trains 4 and 5 received environmental gas pipeline from Port Hedland to the mine site, which plant modifi cations, an expansion to the product approval in 2000. Environmental approval for a was commissioned in December 2004. stockyard, minor increases in supporting infrastructure second trunkline and gas plant debottlenecking Expenditure: $1.4b. and purchase of additional mobile equipment. was given in 1998. The LNG expansion is based Employment: Construction: 1222; Operation: 620 Expected completion by mid 2005. on growing Asian energy markets. In April Yandicoogina - Yandicoogina Mine Expansion 2001 the joint venturers committed to develop HEAVY MINERAL SANDS a fourth LNG processing train costing A$1.6 Gingin - Mineral Sands Mine HAMERSLEY IRON PTY LIMITED Hamersley Iron is currently expanding operations at billion. Construction commenced in Q3 2001. ILUKA RESOURCES LIMITED its Yandicoogina mine to increase production from 24 In December 2001 the joint venturers approved Iluka Resources plans to construct and operate a Mt/a to 36 Mt/a. Hamersley will expand the current expenditure for a A$800 million second subsea 2.8 million tonnes per annum mineral sands mine operation by establishing a new wet processing plant trunkline linking the offshore production approximately 2.5 km northwest of Gingin (about 80 (to process low grade ore), an overland conveyor facilities to the onshore gas plant on the Burrup km north of Perth). The Environmental Protection and tertiary crushing/screening facilities. Expected Peninsula. Construction commenced in 2002. Authority approved the project in November 2004. completion by April 2005. First gas began fl owing through the trunkline in Pre-production of the mine site will begin fi rst quarter Expenditure: $290m February 2004, with Train 4 completed in of 2005, with production from June 2005 to December Employment: Construction: 330 Q3 2004. 2008 and rehabilitation from May 2008 to April 2011. Expenditure: $2.4b. The Heavy Mineral Concentrate will be separated IRON ORE PROCESSING Employment: Construction: 2500; Operation: 70 onsite, prior to transporting to Iluka’s processing Kwinana - HIsmelt Commercial Iron Making Plant operation in Geraldton. TIMBER HISMELT CORPORATION LIMITED Expenditure: $40 million HIsmelt Corporation, in a joint venture with Nucor Neerabup - Laminated Veneer Lumber Employment: Construction 30 - 40; Operation 20 Plant (25%), Mitsubishi (10%) and Shougang (5%), is WESBEAM PTY LTD IRON ORE developing a commercial-scale HIsmelt process plant The Wood Processing (Wesbeam) Agreement Pilbara - BHP Billiton’s Rapid Growth Project 1 at Kwinana, near Perth. The fi rst stage of the plant will produce 800 000 t/a of pig iron from iron ore fi nes, coal Act 2002 is facilitating the development of a BHP BILLITON IRON ORE and fl uxes. Construction commenced in January 2003, laminated veneer lumber (LVL) plant at Pederick In February 2004, BHP Billiton announced that it would fi nal hot commissioning expected to commence late in Road, Neerabup. Construction of the plant, be spending A$145 million to expand its Pilbara iron the fi rst quarter of 2005. which commenced in early 2003, has been ore operations from 85 Mt/a in 2003 to 110 Mt/a by the Expenditure: $800m. completed and commissioning is underway. end of 2004. The move will include a 50% increase in Employment: Construction: 320; Operation: 65 Timber feedstocks will be pine trees harvested capacity of the Mining Area C (MAC) operation, BHP from State owned plantations at Gnangara and Billiton’s newest mine. Additionally, the company is LEAD other areas. The project will sell LVL and veneer undertaking feasibility studies with a view to increasing Wiluna (Magellan) - Lead Mine products to Australian and overseas markets. its Pilbara operations to in excess of 145 Mt/a by MAGELLAN METALS PTY LTD Expenditure: $80m. 2007/08. The project is based on a lead carbonate deposit 30 km Employment: Construction: 200; Operation: 140 Employment: NA west of Wiluna. Proven and probable reserves total Expenditure: $145m. 12.1 Mt at a grade of 6.8% lead. The project involves Pilbara - Dampier Parker Point Port Expansion open-pit mining and a simple crushing, grinding and Committed Projects HAMERSLEY IRON PTY LIMITED fl otation circuit producing lead concentrate. The Hamersley Iron is currently expanding the capacity of company will aim to complete Phase 1 construction (as at 14/2/2005) its port facilities at Parker Point (near Dampier) from and development and begin lead concentrate 74 Mt/a to 95 Mt/a at a cost of A$700 million. This production in Q1 2005; and continue exploring the BAUXITE/ALUMINA work includes a new car dumper, new rail loop and property for further resources and other economic construction of two new berths with a new ship loader, Pinjarra/Huntly - Alumina Refi nery lead deposits. In the intermediate-term, the company as well as expansion of the stockpile facilities. Expected will complete Phase 2 with the installation of a refi nery Effi ciency Upgrade completion by the end of 2005. to produce lead metal by 2007, with further plans to ALCOA Expenditure: $700m. increase the production rate of approximately 70 000 Alcoa commenced construction in April 2004 Employment: Construction: 600 t/a to 90 000 t/a lead metal. on an effi ciency upgrade of its Pinjarra alumina Pilbara - Power Infrastructure Enhancement Expenditure: $48m. refi nery. Refi nery capacity will increase by 0.6 HAMERSLEY IRON PTY LIMITED Employment: Construction: 100; Operation: 80 Mt/a to a total 4.2 Mt/a The additional capacity is Hamersley Iron intends to install up to two expected to come on-stream at the end of 2005. NICKEL additional 35 MW gas turbine generators at Paraburdoo Expenditure: $440m. to increase generating capacity in the Pilbara. Lake Johnston (Emily Ann/Maggie Hays) - Nickel ELECTRICITY Hamersley also intends to convert an existing Mine/s (sulphide ore) Kemerton Industrial Park - Kemerton Gas diesel-fi red gas turbine generator to duel fuel capability. LIONORE AUSTRALIA (NICKEL) LTD LionOre Mining is developing the Maggie Hays deposit Turbine Power Plant To supply gas to these turbines, Hamersley proposes to construct a short (approximately 18 km in length) as an integrated development with its nearby Emily TRANSFIELD SERVICES gas pipeline spur from the Goldfi elds Gas Transmission Ann mine near Lake Johnston. Construction at Maggie The Kemerton Power Station is the result of a pipeline to the Paraburdoo mine site. Hamersley Iron Hays is nearing fi nalisation with the main decline competitive bidding process to supply Western is also undertaking several high-voltage transmission having reached the upper massive sulphide level and Power with 260 MW of peak generating capacity projects to cater for increase power demand - one such ore from the mine was initially processed during late over the next 25 years. The plant, to be owned and project involves installing a 220 kV transformer at the 2004. Production at Maggie Hays will double LionOre’s operated by Transfi eld Services, will be an open Hamersley Iron Yandicoogina substation to meet the production in the region to about 10 000 to 12 000 t/a of cycle gas turbine and be capable of using diesel power needs of the current 36 Mt/a mine expansion. contained nickel. Nickel in concentrate will be shipped fuel as a back up. Construction of the plant begun Another project involves construction of a substation to Inco Ltd of Canada under a life-of-mine offtake in Q2 of 2004 and is expected to be completed to interconnect the Hamersley Iron Dampier-Tom Price agreement negotiated for the Emily Ann mine. and operational before the start of the 2005/06 220 kV transmission line and the Robe River Expenditure: $28m. summer peak electricity demand period. In Cape Lambert-Pannawonica 132 kV transmission line, Employment: Construction: 25; Operation: 167 addition to the A$260 million capital expenditure at a point where they cross, approximately 75 km south Ravensthorpe - Lateritic Nickel Mine and Hydro- on the plant itself up to A$40 million will be of Karratha. spent on connecting the plant to the South West metallurgical Processing Plant Employment: Construction: 30 - 40 Interconnected System, upgrading the Kemerton BHP BILLITON - RAVENSTHORPE NICKEL substation and building a terminal substation at Pilbara - Rail Duplication from Tunkawanna to OPERATIONS PTY LTD Hazelmere in the eastern suburbs of Perth. Rosella Siding On 23 March 2004, BHP Billiton approved the Expenditure: $260m. ROBE RIVER MINING COMPANY PTY LIMITED development of the Ravensthorpe Nickel Project Robe River Mining is currently expanding the that will produce up to 220 000 t/a of mixed nickel/ GOLD capacity of its rail facilities by duplication of Hamersley cobalt hydroxide to be processed at QNI’s Yabulu Telfer - Gold Mine (Expansion) Iron’s railway between Tunkawanna Creek and Rosella refi nery in Queensland. Plant construction is NEWCREST MINING LIMITED Siding, which is operated by Pilbara Rail Company on expected to take 30 months and the fi rst shipment of Feasibility studies for the Telfer expansion behalf of Robe River and Hamersley Iron. Expected product from Esperance to Yabulu is to commence in identifi ed a large low-grade resource in excess of completion is mid-2006. early 2007. 500 Mt and containing more than 26 Moz gold. Expenditure: $200m. Expenditure: $1.4b. Newcrest commenced construction of the mine Employment: Construction: 1000; Operation: 300 extension in late 2002, with commissioning of the

32 Prospect March–May 2005 Committed Projects Projects under consideration (as at 14/2/2005) (as at 14/2/2005) OIL & GAS DEVELOPMENTS versus a single full development of the Ord Stage 2 M2 residues to produce a similar amount of power. area. Possible crops include sugar, cotton, leucaena Enfi eld (Carnarvon Offshore Basin) - Oil Fields Expenditure: $160m. and horticultural crops. Employment: Construction: 280; Operation: 40 WOODSIDE ENERGY LTD Expenditure: $600m. Development of the Enfi eld project was approved Employment: Construction: 650; Operation: 550 GALLIUM in March 2004. The oil fi eld will be developed via Pinjarra - Gallium Extraction Plant subsea wellheads with fl owlines tied back to a fl oating AMMONIUM NITRATE GEO SPECIALTY CHEMICALS INC. production, storage and offl oading (FPSO) vessel with Burrup Peninsula, former Syntroleum site - In March 2001, GEO Speciality Chemicals Inc of the disconnectable mooring. After stabilisation, export Ammonium Nitrate USA announced plans to construct a major new crude oil will be produced on board the FPSO and DEEPAK FERTILISERS gallium metal extraction facility at Pinjarra, south periodically exported through an offl oading hose Deepak is investigating the feasability of an ammonium of Perth, on the site of the former Rhodia gallium to tandem moored offtake tankers. The facilities are nitrate complex on the Burrup Industrial Estate for a chloride plant. The facility is planned to have an designed for 20 years operation, with production plant capacity of 300 000 t/a of ammonium nitrate, ultimate capacity of 100 t/a of ‘4N’ gallium metal. The expected to start up at the end of Q3 2006. 270 000 t/a of nitric acid and 150 000 t/a of ammonia. gallium will be extracted from the Bayer liquor stream Expenditure: $1.48b. Deepak are moving to rapidly develop the project. Employment: Construction: 100; Operation: 80 generated in Alcoa’s adjacent alumina refi nery. Timing Expenditure: $300m is dependent on favourable market conditions and Mutineer-Exeter (Carnarvon Offshore Basin) Employment: Construction: 700; Operation: 150 statutory approvals. - Oil Fields Expenditure: $75m. SANTOS LIMITED BAUXITE/ALUMINA Employment: Construction: 150; Operation: 50 Approval for development of the Mutineer-Exeter oil Wagerup/Willowdale - Alumina Refi nery Train 3 fi elds was given in October 2003. The development Expansion GOLD of the fi elds is based on a fl oating production, storage ALCOA WORLD ALUMINA AUSTRALIA Boddington - Gold Mine (Wandoo Expansion) offtake (FPSO) facility with subsea production Alcoa is investigating the feasibility of a third train BGM MANAGEMENT COMPANY PTY LTD manifolds at each of the fi elds. The FPSO facility will expansion at Wagerup for a plant capacity of 4 Mt/a. Boddington Gold Mine is managed by BGM be moored on a disconnectable turret system and will The environmental assessment process including Management Company Pty Ltd on behalf of have provision for production of 100 000 bbl/d of oil public consultation is in-progress for a decision Newmont, AngloGoldAshanti and Newcrest. BGM has and a gross liquids throughput of up to 140 000 bbl/d. expected August 2005. environmental approval for the expanded Wandoo Production from the fi elds is expected to commence Expenditure: $1.5b. project, based on mining the extensive bedrock that in mid-2005. Employment: Construction: 1000; Operation: 150 underlies the mined-out oxide resource. The project Expenditure: $480m. includes a dedicated 120 MW gas-fi red power station. Employment: Construction: 540; Operation: 90 Worsley/Boddington - Alumina Refi nery Expansion 3.7 to 4.4Mt/a Project go-ahead will be subject to commercial factors. PETROCHEMICALS/CHEMICALS WORSLEY ALUMINA PTY LTD Expenditure: $750m. Burrup Peninsula - Ammonia Plant BHP Billiton is planning to expand its Worsley alumina Employment: Construction: 500; Operation: 400 BURRUP FERTILISERS PTY LTD refi nery from 3.7 Mt/a to 4.4 Mt/a at the cost of Sunrise Dam - Gold Mine - Underground Burrup Fertilisers is developing an ammonia plant $750 million. The EPA has set the highest level of Development at the King Bay/Hearson Cove industrial area on assessment at Environmental Review & Management ANGLOGOLD AUSTRALIA LTD the Burrup Peninsula, near Karratha. Around 760 Plan, the Scoping Document has been released and AngloGold Australia Ltd began a three-year 000 t/a of liquid ammonia will be produced and Worsley is preparing its ERMP documentation for underground development in Q4 2003 at the exported to India and other world markets for the submission to the EPA in December 2004. Sunrise Dam gold mine to test the feasibility of later manufacture of fertilisers. SNC-Lavalin Australia Pty Expenditure: $750m. committing to a full-scale underground operation. Ltd, is the EPC contractor and Sinclair Knight Merz Employment: Construction: 500; Operation: 150 The study involves the development of two declines the environmental management consultant for the COAL totalling 9 km in the vicinity of previously defi ned project. The Harriet Joint Venture has an agreement reserves. The company expects to make a decision to supply 82 TJ/d of natural gas to the project. Collie - Coal (Ewington I) Mine on whether to proceed to full-scale underground Construction commenced on 30 April 2003 and THE GRIFFIN COAL MINING COMPANY PTY LTD mining in early 2007. A positive decision is expected to production is planned to start in Q3 2005. The Griffi n Coal Mining Company Pty Limited increase the life of the project to at least 2012. Expenditure: $630m. is planning to develop its Ewington I deposit Expenditure: $87m. Employment: Construction: 700; Operation: 60 approximately 7 km east of Collie, which has estimated recoverable reserves of 75 Mt. HEAVY MINERAL SANDS Environmental approval has been given, subject to Jangardup South - Mineral Sands Mine Projects under consideration acceptance of a fi nal environmental management CABLE SANDS (WA) PTY LTD (as at 14/2/2005) plan. The mine will produce about 2 Mt/a coal for Cable Sands has outlined a major titanium minerals customers, including the Griffi n Group’s proposed orebody adjacent to D’Entrecasteaux National nearby Bluewaters power station. Park. Feasibility and environmental studies are well AGRICULTURE Expenditure: $20m. advanced. An environmental impact statement for the Mantinea Flats - Ord River Irrigation Scheme COPPER project is expected to be released for public review in (Stage 2 Development) - Mantinea Flats mid 2005. HENRY WALKER ELTIN LTD. Whim Creek - Copper Mine Expenditure: $40m. The project consists of developing and servicing STRAITS RESOURCES LIMITED Employment: Construction: 100; Operation: 50 approximately 80 farms (about 4200 ha total) at The Whim Creek project is based on the production Kemerton - Titanium Dioxide Pigment Plant Mantinea Flats for irrigated intensive horticulture of 51 000 tonnes of LME Grade A copper cathode over Expansion four years from an ore reserve of 6.6 Mt/a grading which will then be offered for sale. Following MILLENNIUM INORGANIC CHEMICALS LTD 1% copper. The project is to be developed through an Expression of Interest process in late 1998, a Millennium has approval for a major expansion of the open pit mining of the Whim Creek and Mons consortium headed by Henry Walker Eltin Limited was its Kemerton titanium dioxide pigment plant near Cupri deposits. First production of copper cathode is mandated to carry out the development, subject to a Bunbury to 190 000 t/a. Environmental approval for the scheduled by end of 2004. successful feasibility study and associated approvals. proposal was given in April 1999. A decision to proceed Expenditure: $23m. The studies have been deferred pending resolution of to this capacity is dependent on market factors. Employment: Construction: 150; Operation: 100 land access issues. Expenditure: $470m. Expenditure: $108m. ELECTRICITY Employment: Construction: 500; Operation: 200 Ord River - Ord River Irrigation Scheme Collie - Bluewaters Coal-Fired Power Station Kwinana - Titanium Dioxide Pigment Plant ORD STAGE 2 M2 AREA GRIFFIN ENERGY Expansion The potential exists for a 30 000 ha irrigated Griffi n Energy is proposing to construct two TIWEST JOINT VENTURE agricultural development immediately to the 200 MWcoal-fi red power stations at the proposed Environmental approval for the staged expansion of a northeast of the existing Ord Stage 1 development. Coolangatta industrial estate, 10 km north-east pigment plant capacity to 180 000 t/a has been given. Environmental approval has been given for an A decision to proceed with further stages within this irrigated agricultural project in the M2 area. of Collie. The proposals are undergoing a Public expansion is dependent on market conditions. A signifi cant milestone was passed on 12 November Environmental Review level of assessment and an Employment: Construction: 108; Operation: 98 2004 when a historic in principle agreement was investment decision is not expected till the second executed. The in-principle agreement provided for the half of 2005. Shark Bay / Coburn - Heavy Mineral Sands Mine resolution of native title over the Ord Stage 2 project Expenditure: $400m. GUNSON RESOURCES LIMITED areas while providing sustainable education, training, Employment: Construction: 250; Operation: 45 Gunson Resources completed a bankable feasibility job and business opportunities for the Aboriginal Gnangara - Bioenergy study on the 710 million tonne Amy deposit south people. Further, Aboriginal heritage studies have been BEACONS CONSULTING of Shark Bay in December 2004. Development of the completed over the Ord Stage 2 M2 area. Finally, the Beacons Consulting International Pty Ltd is planning project is subject to Gunson gaining environmental State received (October 2004) an Ord Business Case to develop bioenergy power plants at Neerabup, approvals, offtake and funding arrangements. A public report that, among other things, investigated and north of Perth and at Mirrambeena, near Albany. The environmental review of the proposed development is reported on current engineering costs for Ord Stage 2 Neerabup project will burn timber waste from pine being prepared for release in January 2005. M2, crop options, bench marking these crop options plantations to produce 36 MW of power, while the Expenditure: $75m. on a world scale and compared the cost of a staged Albany project will utilise private eucalypt plantation Employment: Construction: 200; Operation: 20 Prospect March–May 2005 33 Projects under consideration (as at 14/2/2005)

IRON ORE Mid West Region - Weld Range - Iron Ore Mine The initial production stage of up to 23,000 t/a is expectedto take 12 months to construct. Manganese Cape Lambert - Cape Lambert Capacity - Midwest Region ore will be sourced from Consolidated Minerals’ Expansion and Stockyard Rationalisation MIDWEST CORPORATION LIMITED Woodie Woodie mine in the Pilbara, as well as ROBE RIVER MINING COMPANY PTY LIMITED Weld Range - Iron Ore Mine - Midwest Region Midwest Corporation proposes to develop a 15-20 manganese waste from OMG’s Cawse nickel plant. Robe River Mining is considering expansion of the Mt/a iron ore mine producing a mix of lump, fi nes and Expenditure: $136m. capacity of its port facilities at Cape Lambert. The possibly concentrate. The project will include a new expansion and rationalisation works will lift the design METHANOL standard gauge 350 km rail line and a new deep water capacity of the Cape Lambert facilities to 69 Mt/a. port facility at Oakajee. A new concentrator facility is Burrup Peninsula - Methanol Plant This work includes expansion of the stockpile stacker also being considered. GTL RESOURCES PLC and reclaimer facilities. Expected commencement Expenditure: $750-900m GTL Resources proposes to build a plant to produce 1 is mid-2005. Robe River Mining is also constructing Employment: Construction: 900; Operations 220 Mt/a of methanol by 2007. The plant will be situated at a Tug Pen at Cape Lambert. The Tug Pen will provide Pilbara - Iron Ore Mine Rail and Port Development Withnell East on the Burrup Peninsula. GTL Resources haven for up to four tugs and comprises of two new is seeking to secure a gas supply of 107 TJ/day before FORTESCUE METALS GROUP (FMG) breakwaters and a short access road to the facility. fi nancial closure can occur. Products will be sold to Swiss FMG is conducting a pre-feasibility study into a Expected completion is mid-2005. company Vitol for trading on international markets. Hope Downs - Iron Ore Mine new iron ore development in the Pilbara (based Expenditure: $770m. on prospects centred around Mt Nicholas, Mt HOPE DOWNS LIMITED Employment: Construction: 600; Operation: 85 Lewin, Mindy Mindy and the Chichester Ranges), Hancock and Kumba have completed a feasibility to be serviced by a multi-user railway and port NICKEL study of the Hope Downs project. The alliance is now infrastructure at Port Hedland. The EPA is considering progressing project fi nance, joint venture and market Goongarrie - Kalgoorlie Nickel Project - Mine public comments on the PER for the fi rst phase of the agreements. (laterite ore) and Hydrometallurgical Processing proposed project, namely the north-south railway Expenditure: $1.5b. Plant - and port facilities. The PER for the second phase Employment: Construction: 1000; Operation: 300 HERON RESOURCES LTD of the project - the east-west railway and the mine A detailed pre-feasibility study has commenced Koolan Island, Western Australia - Iron Ore Mine developments - was released for eight weeks public for the development of a 50 000 t/a mine and AZTEC RESOURCES LIMITED comment on 17 January 2005. A detailed feasibility hydrometallurgical processing plant at Goongarrie Aztec Resources proposes to develop a mining study has commenced for completion by mid 2005. some 85 km north of Kalgoorlie-Boulder. The operation based on the ex-BHP Koolan Island iron Construction on the rail and port facilities is planned project will be based on the company’s laterite nickel ore deposits in the Yampi Sound, 130 km northwest to start in mid 2005 to supply the Chinese market from resources of 903 million tonnes grading 0.74% Ni and of Derby in Western Australia. Aztec aims to become a mid 2007. 0.05% Co. The siliceous component of the resource, producer of premium grade iron ore at a production Expenditure: $1.8b. being some 460 million tonnes grading at 0.70% rate of 2 Mt/a over 15 years. The company plans to Employment: Construction: 1500; Operation: 300 Ni and 0.05% Co, is considered to be amenable to complete a bankable feasibility study during early Pilbara - Pilbara Future Growth Strategy benefi ciation by low cost screening to a leach feed 2005 and is currently progressing development and BHP BILLITON IRON ORE grade of 1.5% Ni. Heron is seeking equity partners to regulatory approvals. Aztec anticipates all statutory BHP Billiton Iron Ore is currently undertaking help develop the project. and fi nancial pre requisites to be in place by end feasibility studies as part of its future growth planning. Expenditure: $1.4b. July 2005 to enable development/construction to The studies are yet to be presented to the board for Employment: Construction: 1000; Operation: 300 commence thereafter. endorsement, but subject to board approval, total Lanfranchi Tramways - Nickel Mine Expenditure: $60m. expenditure for the projects is expected to be about SALLY MALAY MINING LIMITED Mid West Region - Extension Hill Magnetite A$2.5 billion. BHPBIO is planning to achieve 145 Mt/a The Lanfranchi mine has recently been subleased by Project capacity through a range of projects. A key part of the a joint venture of Sally Malay Mining and Donegal EXTENSION HILL PTY LTD studies is a comprehensive Social Impact Assessment. Resources from WMC Resources. The reequipping Extension Hill Pty Ltd (established for the formation Expenditure: $2.5b and rehabilitation of mine infrastructure has been of a 50:50 joint venture between Asia Iron Holdings Employment: N/A completed and the start of production is imminent. Limited and Nanjing Iron & Steel United Co Ltd) is Southdown - Southdown Magnetite - Iron Ore Output is expected to ultimately reach 9,000 t/a proposing to develop the Extension Hill iron deposit Project by 2006. Total output for the mine is expected to near Mt Gibson, 330 km south east of Geraldton. GRANGE RESOURCES be 25,000t. The ore produced will be toll treated at The project will produce up to 5 Mt/a of magnetite Grange Resources Limited has commenced a bankable WMCR’s Kambalda crusher/concentrator. The life of concentrate and 2.5 Mt/a of direct shipping grade feasibility study on the Southdown magnetite iron the project is expected to be four years with a possible hematite ore. The magnetite concentrate will be ore project, located approximately 90km north-east extension if additional ore is found. shipped from the Port of Geraldton in 50,000 DWT of Albany. The study is expected to be completed by Expenditure: $26m. vessels direct to 2 new 2.5M t/a pellet plants (being the end of December 2005, with statutory approvals Mt Keith - Nickel Mine constructed in tandem with the Extension Hill project) targeted for March 2006. The company proposes to WMC RESOURCES LTD at the port of Nanjing, Jiangsu Province, China. The produce 6.5 Mt/a of magnetite concentrate, which A feasibility study for an expansion of the Mount Keith project is currently being assessed through a Defi nitive will be transported via a slurry pipeline to the Port of operation from 11 Mt/a to 14.2 Mt/a throughput has Feasibility Study which is due to be completed in the Albany for export and pelletising overseas. been conducted. A range of projects has been planned second half of 2005. Environmental assessment of the Expenditure: $640m. to gradually increase throughput and recovery. To date project is underway and site construction is scheduled IRON ORE PROCESSING 19 projects have been completed and the recovery of to commence at the end of 2005. Construction and nickel metal has increased an average of 14%. Plant commissioning of the plant will take 12-14 months Fortescue (Cape Preston) - Mine and Pellet Plant throughput has also improved. Further improvement with fi rst product shipments planned for early 2007. MINERALOGY PTY LTD projects are planned at the knowledge gained is being Expenditure: $250m. The fi rst project based on the Fortescue magnetite transferred to other WMCR operations. In addition Employment: Construction: 400; Operation: 210 deposit is expected to be a 7 Mt/a pellet plant. The WMCR plans to spend $15-20 million in 2005 to Mid West Region - Koolanooka - Iron Ore Pellet project involves mining, concentrating through determine the feasibility of adding an additional Project magnetic separation, pelletising and export through concentrator module and low-pressure leach plant at MIDWEST CORPORATION LIMITED new port facilities at Cape Preston. Mineralogy has the Mt Keith operation, which could add up to 25 000 Koolanooka - Iron Ore Concentrate/Pellet Project recently entered a Memorandum of Understanding t/a to nickel production. Midwest Corporation proposes to develop a 4.5 Mt/a with Wuhan Iron and Steel to invest in the project. Expenditure: $150m. iron ore concentrate/pellet production facility and Environmental approval has been granted. Other Sherlock Bay - Nickel Mine projects based on the Fortescue deposits could include associated magnetite mining operation. The project SHERLOCK BAY NICKEL COMPANY an export DRI plant. will include gas and water pipelines and a dedicated Sherlock Bay Nickel Corporation (SBNC) is currently Expenditure: $1.4b. 120 MW gas fi red power plant. developing the Sherlock Bay nickel project, 100 km east Expenditure: $750-950m Employment: Construction: 2000; Operation: 400 of Karratha. Native title negotiations and a bankable Employment: Construction: 1200; Operation: 266 MANGANESE feasibility study have been completed and talks have Mid West Region - Koolanooka Hematite Iron Kalgoorlie Region - Manganese Dioxide Project been held with a number of parties regarding a life of Ore Mine - Stage 1 mine off-take agreement. A decision on the successful off take party is expected to be announced shortly. MIDWEST CORPORATION LIMITED HITEC ENERGY LIMITED Sherlock Bay intend to develop an approximately 9 000 Koolanooka - Iron Ore Mine - Midwest Region HiTec Energy Ltd proposes to produce t/a nickel project based on the Bioheap ore treatment Midwest Corporation proposes to re-open the electrolytic manganese dioxide (EMD) for alkaline process. Testing to date has resulted in upwards of 90% Koolanooka and Blue Hills hematite iron ore mines batteries. The hydrometallurgical plant will be a nickel recovery rates. SBNC has fi nalised its licencing near Morawa at an initial rate of 1 Mt/a. The project is brownfi eld development at Cawse, 55 km northwest proposed to commence end Q2 2005. agreement with Pacifi c Ore Technologies for the use of Kalgoorlie, built around an existing electro-winning of the Bioheap ore treatment method. The project is Expenditure: $19m cell house and SX plant, acquired by HiTec Employment: Construction: 50; Operation: 29 expected to come into production in mid to late 2005. in October 2003. Expenditure: $30m.

34 Prospect March–May 2005 Projects under consideration (as at 14/2/2005)

OIL & GAS DEVELOPMENTS approvals. Appraisal drilling and design work is a A$900 million world-scale ammonia and urea plant planned for 2005. on a 69 ha site on the Burrup West Industrial Estate. Gorgon (Carnarvon Offshore Basin) - Gas and The plant is expected to require approximately 100 Condensate Field Tern/Petrel (Bonaparte Offshore Basin) - Gas Field TJ/d of natural gas to produce around 1.2 Mt/a CHEVRONTEXACO AUSTRALIA PTY LTD SANTOS LIMITED The offshore Petrel gas fi eld, discovered in 1969, is of granular urea and 100 000 t/a of ammonia. In The Gorgon Joint Venture is considering an LNG December 2004, Agrium commenced its project (up to 10 Mt/a) and domestic gas development at located about 250 km west of Darwin on the WA/NT seabed border in the Bonaparte Basin. The offshore environmental approval process. Plant construction is Barrow Island, based on gas from the Gorgon fi eld. planned to start in Q1, 2007. The restricted industrial use of Barrow Island has Tern gas fi eld, discovered in 1971, is located about 300 km west of Darwin in WA waters in the Bonaparte Expenditure: $900m. been approved, in principle, by the Western Australian Employment: Construction: 1000; Operation: 130 Cabinet after evaluation of environmental, social, Basin. Field development options include installation economic and strategic aspects. Gas reserves have of unmanned offshore production platforms with a PLATINUM GROUP METALS pipeline to a gas treatment plant south of Darwin. The been enhanced by positive results from an exploration Munni Munni - Platinum Deposit program in the West Gorgon area. Development development possibilities for these fi elds have been enhanced by recent signifi cant discoveries by other HELIX RESOURCES NL decisions by the Gorgon Joint Venturers will be subject Helix Resources NL has established an indicated to market commitments. The joint venture has applied parties nearby, which may provide tie-in potential for Petrel and Tern to service domestic gas customers. A resource of 9.2 Mt at 2.9 g/t combined platinum, for environmental approvals so it is in a position to palladium, rhodium, and gold, 0.2% nickel, and 0.3% start construction in late 2005. conceptual plan involves initial development of Petrel with a pipeline to an onshore gas plant and a subsequent copper at its project site near Karratha. Preliminary Expenditure: $11b. mining studies suggested a mining rate of combined Employment: Construction: 3000; Operation: 600 phase that completes Petrel and develops Tern. Expenditure: $1b. open cut and underground production of 1.5 Mt/a. Macedon/Pyrenees (Carnarvon Offshore Basin) Whicher Range (Perth Onshore Basin) - Gas Field Further activity was postponed in early 2003, as a - Oil/Gas Fields result of poor exploration results and a decreased AMITY OIL NL BHP BILLITON PETROLEUM PTY LTD palladium price. The project is under review. These are two adjacent, but separate offshore The Whicher Range gas fi eld, located 21 km south of hydrocarbon fi elds within the West Muiron structure, Busselton, was discovered in 1968. Four previously RARE EARTHS about 50 km north of Exmouth. The Macedon gas drilled wells confi rmed a signifi cant-sized gas fi eld, Mt Weld - Rare Earths Operations but gas fl ow rates have been sub-commercial. fi eld was discovered in 1992 by the West Muiron-3 LYNAS CORPORATION LTD Subsequent work, including high-pressure injection well with a follow-up appraisal campaign in 1994. The Lynas is planning to mine up to 200 000 t/a ore, of carbon dioxide, to increase gas fl ow rates from the Pyrenees oil and gas fi eld was discovered in 1993 by producing 45 000 t/a of concentrate which is extremely tight sands, indicated the possibility of the West Muiron-5 well. Development of the Pyrenees equivalent to 15 000 t/a Rare Earths Oxides. The commercial development. The latest well (Whicher heavy oil accumulation would likely only proceed company is investigating an option of locating the Range-5), completed January 2004, was suspended as part of a larger heavy oil project undertaking. concentrator in China. The Board expects to consider as a potential gas producer. Geo-mechanical studies Macedon is under consideration for domestic market the feasibility study for this upstream project in the were subsequently undertaken to prepare and design opportunities. Recent nearby oil discoveries in the fi rst quarter of 2005. Lynas will market all products a high- pressure diesel fracture stimulation program. Exmouth Sub-basin have led to engineering studies to from the downstream processing under the Rare The fracture stimulation program, undertaken from select a development option for the project, known as Earths Direct “RED” brand. July to September 2004, resulted in fl ow back of ‘The Pyrenees Development’. Expenditure: $40m. fracture fl uids and gas at a relatively slow rate. It is Employment: Construction: 35; Operation: 5 Employment: Construction: 100; Operation: 35 not anticipated that this operation will result in a North West Shelf - Project Expansion - 5th LNG commercial well or future program for the Whicher SALT Train Range fi eld. Further evaluation is required before Exmouth - Exmouth Solar Salt Project WOODSIDE ENERGY LTD deciding the fate of this project. Proposals by the NWS partners, for project expansion, STRAITS SALT PTY LTD with a further two LNG Trains, received environmental PETROCHEMICALS/CHEMICALS Straits Salt Pty Ltd is currently investigating the approval in 2000. The LNG expansion is based on Burrup Peninsula - Ammonia Urea Plant feasibility of the Exmouth Salt Project. The company proposes to produce up to 10 Mt/a of salt. It has been growing Asian energy markets. LNG Train 4 was DAMPIER NITROGEN granted a number of exploration licences under the completed in Q3 2004. Development of Train 5, Plenty River Corporation and Thiess are shareholders Mining Act over the area of interest while it undertakes with associated second LNG loading jetty and extra in Dampier Nitrogen Pty Ltd a company seeking to its feasibility studies. The project will be assessed as processing facility support, is contingent on marketing build an ammonia and urea plant on the Burrup an Environmental Review and Management Program success and a fi nal investment decision is anticipated Peninsula. Dampier Nitrogen has recently announced under the Environmental Protection Act. Straits plan within the fi rst half of 2005. a development agreement with Dyno Nobel. Dampier to submit their environmental impact statement Expenditure: $2b. Nitrogen and Dyno Nobel will jointy develop the for public and government review in the fi rst half of Onslow - LNG Plant ammonia plant while Dampier Nitrogen will own 2005. Straits plan to submit their enviromental impact the urea plant. Dyno Nobel also plans to conduct BHP BILLITON PETROLEUM statement for public and government review in the a feasibility study into developing an ammonium BHP Billiton Petroleum is conducting a pre-feasibility fi rst half of 2005 and are currently in discussions with nitrate production facility, to be owned by Dyno study into the development of the Scarborough Gas government regarding appropriate tenure and other Nobel, adjacent to the ammonia/urea plant. The resource located 280 km northwest of Onslow, and an matters. development agreement could result in a combined associated 5-6 Mt/a LNG plant at a site approximately Expenditure: $120m. 4.5 km southwest of Onslow. It is intended that the complex producing 2300 t/day of ammonia, 1750 t/ bulk of the LNG produced will supply the United States day of urea and 235,000 t/a of ammonium nitrate. ZINC/COPPER west coast and Asian energy markets. The Pilbara Expenditure: $900m. Teutonic Bore - Jaguar - Base Metal Deposit LNG Project sanction is expected by Q1 2006 and Employment: Construction: 1000; Operation: 130 JABIRU METALS LTD construction is scheduled to commence during Q4 2006. Burrup Peninsula - Dimethyl Ether Project Ongoing prefeasibility studies of Jabiru Metals Ltd’s Expenditure: $4b. JAPAN DME LTD. Jaguar base metal prospect, 54 km north of Leonora, Employment: Construction: 2500; Operation: 150 Japan DME Ltd, a joint venture of Japanese companies have indicated a resource of 1.6 Mt/a of zinc/copper. Scarborough (Carnarvon Offshore Basin) - Gas comprising Mitsubishi Gas Chemical Company, It is planned to develop a A$40 million underground Field Itochu Corporation, Mitsubishi Heavy Industries mine, expected to have a 5-6 year life, with a possible EXXON MOBIL and JGC Corporation, plans to develop a world-scale start-up date of mid 2006. The fi eld is located in 900 metres of water, 300 km dimethyl-ether (DME) plant on the Burrup Peninsula offshore in the Carnarvon Basin with probable reserves near Karratha. DME is used as an aerosol propellant of approximately 8 Tcf of gas. BHP Billiton Petroleum and is a likely future environmentally clean fuel for the (BHPB) completed further 3D seismic survey work and power generation and transportation industries. The drilling of Scarborough-3 well is sheduled for December proposed plant will produce methanol for conversion 2004. BHPB is also conducting a pre-feasibility study into 1.7 Mt/a of DME from around 220 TJ/d natural to assess the viability of providing gas to its proposed gas. Detailed feasibility studies are underway. The standalone LNG development at Onslow. project was granted Major Project Facilitation status by Scott Reef/Brecknock (Browse Basin) - Gas Fields the Federal Government. Environmental consultant, Parsons Brinckerhoff (Aust) Pty Ltd, has commenced WOODSIDE ENERGY LTD work on obtaining environmental approval for the In February 2001, recoverable reserves for the Scott project. A commitment to proceed is expected by the Reef/Brecknock project were upgraded to 20.49 Tcf end Q1 2005. Current planning is for the plant to be of gas and 311 million barrels of condensate after operating by end of 2008. multi-disciplinary studies incorporating the results of Expenditure: $1b. drilling at Brecknock South. The fi elds are considered Employment: Construction: 1000; Operation: 150 commercially viable in the future. Woodside has developed a concept for an initial 7 Mt/a onshore Burrup West - Ammonia Urea Plant LNG train with a possible start up in 2011 depending AGRIUM AUSTRALIA on securing customers and obtaining regulatory Agrium Australia Ltd (Agrium) is proposing to develop

Prospect March–May 2005 35 As at March 2005 Major Resource Development Projects: Western Australia

Loxton Shoals N ExeterO N Sunrise OONorfolk INSET C Campbellu Mutineer O Pitcairn Bard N N INSET B Eaglehawk Egret !Hermes Wonnich EndymionuuSinbad Troubador Searipple O ! Lambert ; N Kelp Deep Capella uu O u Angel NDoric/Ulidia Jahal ! Cossack BambraN NLinda O Kuda Tasi Chudditch Perseus u u ! O Gaea/Ishmael North ! Legendre North B N Laminaria East N Wanaea Harriet/Gudrun C Lee Dockrell u Rankin ! ORoseuuMonty Buffalo OO Krill O Elang-Kakatua Keast uu Goodwyn ! North AlkimosVaranus Island! A uJosephine Io/Jansz Echo/Yodel u u Burrup Peninsula N Hingkip ;;Tidepole Legendre ! Gipsy!uBaker u NGoodwyn South/Pueblou @ Ammonia Agincourt! ! Bayu-Undan Urania Dixon/West Dixon South Monet/Simpson O S.Plato N Jansz Rankin/Sculptor ; @ Ammonia-urea Little Sandy/Pedirka/North Pedirka N N Iago/N Tryal Rocks @ /Tanami O ! Geryon Reindeer N Ammonia Nitrate @ N Hoover Victoria OliverN u Wilcox O Double island Tenacious N Audacious u 6 Desalination BarrowGorgon ! Maenad Corvus N Caribou N O Jabiru N Orthrus @ Dimethyl Ether Island Maple N Chrysaor/Dionysus Wandoo ! Barrow Island N O Challis u @ Synthetic Fuels Puffin O Swan u West Tryal Rocks O Stag @ LNG Padthaway O Talbot NO @ Methanol Tahbilk N Montara N Petrel John Brookes N SEE INSET C Cape Lambert N Crux Gorgon u Parker Point q q Spar N Dampier N Tern Dampier salt s East Spar N Karratha N N Scott Reef Brewster Blacktip N Woollybutt O u Ichthys n Radio Hill N Brecknock I Fortescue K Munni Munni N Brecknock South b Chinook/Scindian Mitchell Plateau ! Griffin O South Chervil ! Ord Stage 2-M2 Wyndham SkiddawEnfield q 6 Crest e 6 O Vincent ! in Ord Stage 2-Mantinea Flats O Yammaderry l StybarrowO O ! e 6 NRavensworth/Crosby ! Saladin p Koolan Island ! ! Pi Laverda !Pyrenees Cowle Skate s I Ord Stage 1 N ! a Cockatoo Island I I N G q l I Scafell ! Roller a Middle Robe Mesas Macedon r Robe Lake Argyle Hydro 6 CoasterO @ s Onslow tu I Robe Mesa J r Na Mesa A ie N Pilbara LNG p m I -Da Bungaroo Creek Tubridgi h KIMBERLEY t r Argyle d Pe N Point Torment Derbyq Lloyd s O Boundary Exmouth West Terrace OO Sally Malay n Homestead I O d Ellendale Silvergrass I Sundown nCopernicus Broomeq Blina Panton Sill K Nammuldi I Brockman 2 I

Brockman 4 I ZPillara Zn Pb 0 100 j Paulsens 200 km Z Kapok Zn Pb RESOURCE SYMBOLS Bauxite-Alumina a Alumina refineries b Mines and deposits Chemicals / Petrochemicals / Petroleum Coyotej SEE INSET B @ Processing plants / refineries Port Hedland N Natural gas field Scarborough N q s Port Hedland Salt O Oil field Boodarie HBI Y ! Natural gas / oil field I u Natural gas / condensate field n Sherlock Bay Yarrie ; Natural gas / oil / condensate field Z Whim Creek Cu Chromite jIndee c Wodginat Mines and deposits Z Panorama Zn Cu Clays Brick / tile procesing plants Woodie Woodier Z Coal j Telfer Au Cu Nifty Cu h Coal/coal bed methane (CBM) mines and deposits PILBARA Golden Eaglej ? Lignite mines and deposits r Ant Hill Z Copper-Lead−Zinc Christmas Creek Maroochydore Cu Co Z Mines and deposits Western 4 I Diamonds Marandoo I IYandi/BHPB I Mt Nicholas d Mines and deposits Tom Price I I Yandicoogina/HI Beasley RiverI I I Mindy Mindy Gold Mining Area C I I j Hope Downs I Rhodes Ridge Mines and deposits ParaburdooIWest AngelasI IEast Angelas Gypsum Eastern Range I Giles MiniI I IOrebody 23, 25 & 18 x ChannarI IJimblebar Mines and deposits j Mt Whaleback Heavy mineral sands c Coobina Mt Olympus m Mines and deposits — titanium-bearing sands G Mines and deposits — garnet-bearing sands J Ti02 pigment and synthetic rutile plants Iron ore Lake MacLeodq x Lake MacLeod I Mines and deposits s Y Downstream processing plants Limestone−Limesand 4 Mines and Deposits Carnarvon C Cement plants Plutonic j Magnesite Fortnum j p Horseshoe South r Mines and Deposits Manganese ore r Mines and deposits y Downstream processing plants Wingellina Nickel n jJundee/Nimary n Mines and deposits n Shark Bayqs Magellan PbZ v West Musgrave Bluebird–Meekatharra Smelters and refineries mCoburn j Wiluna j Phosphate I P Weld Range Honeymoon Well n Mines and deposits n j Platinoids Burnakura Gidgee j n Mt Keith K Mines and deposits Bronzewing/Mt McClure Yakabindie n j Rare earth elements R Cosmos n Mines and deposits Leinstern Salt Sandstone Plant jDarlot s Production facilities / pans Port Gregory Hill 50 Agnewj − Kwinana/Rockingham j j Lawlers j jThunderbox Silica Silica Sand INSET A G I Tallering Peak j p w Mines and deposits q AIS Jetty 0 50km nMarshall Pool V Lords Henry & Nelson p Sickle X Silicon smelters a Windimurra Jaguar Z Whisper j Alumina Refinery m Gullewa Au Cu j Kirkalocka Talc @ Gingin Oakajeeq j Tarmoolaj j BP Oil Refinery Narngulu Synthetic Z Golden Grove Zn Cu pn T Mines and deposits Geraldtonq j P C Cement and Lime Chandala J Rutile Minjarj Gossan Hill Ag Au Sons of Gwalia jMurrin j R Mt Weld Tantalum Alinta Wind farm8 Mount Horner IjMt Mulgine Murrin jSunrise Dam t Mines and deposits @ Chlor Alkali J Synthetic Yardarino Nu Blue Hills Mt Ida-Timoni j Granny Smith – Rutile Hovea–EremiaIKoolanooka Vanadium−Titanium @ Chemicals Dongara OO I Wallaby Neerabup OXyris Koolanooka South V Mines and deposits 6 Desalination 1 Cliff Head OOmDongara HM Jingemia u TThree Springs I Mt Gibson @ Fertilizers Malaga Brick N Davyhurst NON-MINERAL PROJECTS Middle Swan Brick Beharra Springs/ j Windarling Range j Goongarrie 6 @ Fused Alumina Midland Brick North Beharra u m Eneabba I Irrigation/water schemes Woodada Mt Gibson Sand Georgej n q Major port handling facilities •PERTH h j Carosue Dam @ Fused Zirconia Springs Central West Siberiaj Paddington 8 Caversham Tile Mt Jackson I Cawsen Major power stations Y HIsmelt y n Black Swan 1 Downstream timber processsing plant qFremantle 8 Emu Downs Wind Farm EMD/HiTec j Kanowna Belle – Red Hill @ LPG Mt Pleasantj jj nBulong Armadale Brick Cooljarloo m Koolyanobbing I Kundana v Avalon Plant v Nickel Refinery m jj jSuper Pit Gas pipeline Proposed gas pipeline Cardup Brick Cataby Frogs Leg 8 Power Station Cornishman Coolgardie v Kalgoorlie Ni Smelter j j j nBlair-Area57 @ Sodium Cyanide Westonia Mt Marionj Jubilee OPERATING PROJECTS ARE SHOWN IN BLUE SEE INSET A j n Kambalda Concentrator Marvel Loch – Long–Victor n POTENTIAL PROJECTS ARE SHOWN IN RED J Titanium Pigment j j Nepean n n n Beta-Hunt Southern Cross SpargovillenjSt Ives PROJECTS ON CARE AND MAINTENANCE ARE @ Zirconia Yilgarn Star t Bald Hill Pinjarra Armstrong n n SHOWN IN PURPLE a8 PERTH • Miitel–Redross Lanfranchi abHuntly Pinjarra Gallium j Boddington Au Cu Emily Ann – Maggie Hays n j Central Norseman mWaroona n Forrestania aWagerup b Kemerton Saddleback O'Sullivans? @ Chlor Alkali Kemerton X Silicon Smelter 8w Sandalwood m ? Scaddan Titanium aWorsley J JAustralind 8Bluewaters Rav 8 n Western Pigment q Bunbury h 8 Collie Phillips Riverh nRavensthorpe Australia m Ewington hPremier q8 Dardanup 1 Dardanup h Muja Esperance 8 h Vasse CBM Capel Synthetic Rutile J mGwindinup Jangardup m 1Manjiump m Yoganup West m Ludlow mm Jangardup South I Southdown Tutunup m Yoganup Whicher Range Mirambeena 1 N tGreenbushes q Albany

0 100 200 400 300 km unrise bador

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rave A Bright Future Planned for Investors in Victoria Petroleum N.L.

Victoria Petroleum N.L. set to increase oil & gas production net revenue by 350% in 2005 after 400% increase in 2004. Participant in onshore North Perth Basin 15 million barrel Jingemia Oil Field production tested at 5000 barrels of oil per day in 2004, Mirage and Ventura Oil Field 2004 discoveries and Flour Bluff Gas Field, Texas, USA. 4 Development drilling 300 BCF gas potential Flour Bluff Gas Field, Texas in February through to June 2005 4 Mirage oil discovery in South Australian Cooper Basin tested at 370 barrels of oil per day 4 Six well drilling program in South Australia Cooper Basin commencing in 2005 following on from 50% oil discovery success rate in 2004 4 Largest exploration acreage holder in South Australia and Queensland Cooper/Eromanga Basin 4 Successful development drilling program in Jingemia Oil Field with production now at 4,500 barrels of oil per day 4 Testing potential 250 billion cubic feet Coal Bed Methane play in Wyoming, USA in March 2005 4 Targeting Australia and US est. 2005 net oil production of 425 barrels of oil per day and $5 million net revenue with 12 wells planned in next six months