Posted on 15 Jul 2021
Australian iron ore producer GWR has signed a mine gate sales agreement with developer Macarthur Minerals aimed at getting more marginal iron ore supplies to the market quickly to capitalise on firmer prices.
Macarthur will use rail capacity agreed with haulage firm Pacific National to deliver 400,000 t/yr of iron ore from GWR's C4 deposit at the Wiluna West venture in the Goldfields region of Western Australia (WA) to the port of Esperance. This will be in addition to the 1mn t/yr that GWR plans to ship from the port of Geraldton.
The two firms will split the profit on the ore delivered into Esperance. The deal will allow GWR quicker access to export markets for its Wiluna West ore, while it will be a source of cash flow for Macarthur as it seeks to develop its 54.5mn t Ularring direct shipping ore (DSO) hematite project in the Yilgarn region of WA.
"It also provides the potential for Macarthur to create a physical or virtual DSO blend product that achieves improved pricing for its Ularring DSO," said Macarthur chief executive Andrew Bruton.
Ularring hematite is 47.2pc Fe, which is considerably lower grade than the 58-62pc ore typically shipped from the Pilbara region of WA. Projects with this low grade ore are typically only economically viable as DSO in periods of high prices, such as now. There are many low-grade iron ore projects across WA, South Australia and the Northern Territory that have similar economics to the Ularring proposal that could significantly add to supplies. These are on top of the around 120mn t/yr of higher grade projects further advanced in Australia.
GWR's 21.4mn t C4 deposit has an average grade of 60.7pc Fe. The firm shipped 328,262 wet metric tonnes (wmt) from Geraldton during January-June and is on track to ship 1mn wmt by the end of December, not including the Macarthur mine gate sales. It is focused on high-grade lump sales, which made up 298,537wmt of total shipments during January-June.
The C4 deposit is part of the larger Wiluna West project, which can produce up to 7mn t/yr of DSO hematite from a resource or 130mn t with an average grade of 60pc Fe. GWR currently trucks the ore to the Leonora railway for haulage to Geraldton for export.
Argus assessed the ICX iron ore price at $218.15/dmt cfr Qingdao on a 62pc Fe basis yesterday, up from $209.30/dmt on 1 June but down from a high of $235.55/dmt on 12 May. Yesterday's assessment was up from $167.45/t on 1 April and $159.90/t on 31 December. It last assessed 58pc Fe at $178.70/dmt cfr Qingdao, down from a high of $207.10/dmt on 12 May but up from $155.95/dmt six months earlier.
Iron ore prices ($/t)
Source:Argus
