Posted on 03 Jun 2021
Vietnamese steel producer Hoa Phat has bought Australia's Roper Valley iron ore project in the Northern Territory (NT), as part of its plans to secure at least 50pc of its iron ore demand or 10mn t/yr through Australian mine ownership.
Hoa Phat is also looking to acquire Australian coking coal mines to become self-sufficient in the key steel feedstock. While Australian iron ore mines and projects are currently trading at a premium because of the current high price environment, there are several coking coal mines up for sale following weaker coking coal prices because of China's ban on imports of Australian coal. These include the BHP Mitsui Coal mines in Queensland and some mines in the Illawarra region of New South Wales.
The Australian Foreign Investment Review Board has granted approval for Hoa Phat to buy Roper Valley, also known as Roper River, from UAE firm Al Rawda Resources, under a deal originally agreed in February. The mine contains 320mn t of reserves and has mining capacity for 4mn t/yr, according to Hoa Phat. Previous owners have struggled to maintain production at what has been a relatively high-cost, low-grade operation.
Al Rawda acquired the Roper River project from administrators in 2016 and applied, through its Australian subsidiary Northern Territory Iron Ore, to the NT government to reopen the mine in early 2018. But this did not happen and the mine has sat dormant.
The mine's previous owner, Sherwin Iron, was one of the first small Australian iron ore mining firms to enter voluntary administration in July 2014, when the 62pc Fe iron ore price was $95/t cfr China. It was a relatively high-cost mine and only shipped 300,000t at an average of 58.5pc Fe, which attracted a strong discount to the 62pc price, before the administrators were called in. Roper River when it went into administration had a resource estimate of 488mn t, with Sherwin forecasting that it had the potential to produce 81mn t of marketable product at an average 57pc Fe.
Operating costs are much lower in Australia than in 2014, although they are starting to creep back up as Covid-19 border closures make it difficult to attract skilled labour. Iron ore prices are also at close to record-high levels, prompting several more marginal projects back into production.
Argus assessed the ICX iron ore price yesterday at $209.30/dmt cfr Qingdao on a 62pc Fe basis, up from $188.55/dmt on 27 May, but down from a high of $235.55/dmt on 12 May. The 62pc Fe iron ore price was mostly below $100/dmt cfr China between mid-2014 and mid-2020. Argus assessed the price for 58pc Fe fines at $183.15/dmt yesterday, up from $159.60/dmt on 27 May but down from a high of $207.10/dmt on 12 May.
Local indigenous communities oppose the restart of Roper Valley because it includes barging the ore up the Roper river for transshipping in the Gulf of Carpentaria, although there is the higher cost option of trucking it to Darwin.
Source:Argus
