GBG 0.00% 2.9¢ gindalbie metals ltd

interesting article on proposed midwest pig iron p

  1. mpa
    142 Posts.
    This article was in the West, early in December. Thought you all might find it interesting if you haven't already seen it.

    Aviva chases ore for $200m pig-iron plan


    Perth junior Aviva Corporation is in talks with potential iron ore suppliers for a planned $200 million pig iron project in WA's Mid-West.

    Aviva believes it can succeed where others such as Kingstream Steel and Austeel have struggled, because its project is based on the company's own 80 million tonne coal resource at Eneabba.

    Aviva plans to use the coal as the key heat source to turn the iron ore into iron instead of the more costly option of gas, as favoured by previous steel hopefuls.

    The company has also flagged the potential to use the coal deposit, discovered in the 1960s and located on Iluka Resources' mineral sands tenements where Aviva has the coal rights, to drive a base-load power station to feed WA's growing electricity demands.

    Managing director Lindsay Reed, a former resources analyst, said a scoping study looking at capital and operating costs of the pig iron plant was due to be finished shortly.

    Securing an iron ore supply deal would help push the company into a full feasibility mode, he said.

    Mr Reed confirmed Aviva had already held preliminary talks with companies controlling Mid-West iron ore deposits, including Mt Gibson Iron, Gindalbie Gold and Midwest Corporation.

    "There certainly was interest there," he said.

    A 500,000-tonnes-a-year pig iron production plant would require about 400,000tpa of coal and 700,000tpa of iron ore.

    He said initial approaches to potential pig iron offtake partners in Australia and overseas had been encouraging and discussions would continue next month.

    Mr Reed said the other reasons Aviva was confident a pig iron project could work was the emergence of new rotary hearth technology for coal-based direct reduction of iron and the emerging global shortage of scrap iron.

    "Scrap iron supply is dictated by steel production seven to 30 years earlier and steel production is forecast to grow rapidly in the next 20 years driven by demand from China and India," he said.

    "Aviva believes that scrap supply will be tight as long as steel production growth rates are elevated and this creates an opportunity to produce pig iron as a premium substitute for scrap."

    The project economics would also benefit from more than $400 million worth of existing infrastructure in the Eneabba region, including employee accommodation, a port suitable for 55,000-tonne vessels, a rail line linking Eneabba and the Geraldton port, sealed roads and access to both the Dampier to Bunbury and Parmelia gas pipelines and the South-West electricity grid.

    Mr Reed said a pig iron project would itself also generate about 50MW of electricity that could be sold into the grid or utilised by other mining projects.

    Previous studies had shown the deposit was suitable for a base-load power station.

    A 300MW power station would require 1.8 million tonnes of coal a year.

    "The coal project offers two key advantages for power generation because it diversifies generation away from Collie coal and North West Shelf gas and provides some balance to the generation and transmission system which currently experiences large losses delivering power to the Mid-West," he said.

    © 2004 West Australian Newspapers Limited
    All Rights Reserved.

    I hold GBG. And of course, do your own research.
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.