AUSTRALIAN RESOURCES & INVESTMENT Feb 2022

VOLUME 16 NUMBER 1 | 2022

Australian Resources & Investment CHASING THE NEXT FOSTERVILLE

IRON ORE MINERS BOUNCE BACK

AUSTRALIA’S UNTAPPED COMMODITY

Commodities in 2022

THE RISE OF VANADIUM

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SIX KEY THEMES

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COMMENT

Grabbing the bull by the horns PAUL HAYES Paul.Hayes@primecreative.com.au

A

Coming off a year of significant development, the possibilities are endless as Australia’s mining sector embarks on 2022.

ustralia’s mining industry had to be resilient in 2021 as the COVID-19 curveballs kept coming.

Strategies were altered and game plans smartened as border restrictions caused labour constraints and strung-out company resources.

Despite these obstacles, friendly market conditions strongly positioned Australian miners; iron ore and copper hit record prices, coal prices surged to multi-year highs, and battery metals such as lithium and nickel continued their revival.

Embarking on 2022, the Omicron strain has changed the COVID-19 game yet again, and mining companies will be forced to adapt once more.

The demand for resources will continue to evolve as the world’s energy transition heats up.

New projects will progress from exploration to production, while established operations will advance their output.

In this edition, we chat to leading analysts Fitch Solutions and PricewaterhouseCoopers (PwC) about the year ahead and what can be expected of Australia’s commodities.

The future of iron ore is unpacked, while we also dive deep into the world’s growing critical minerals appetite and what that means for local producers.

Australia’s recent meeting with Republic of Korea (South Korea) President Moon Jae-in should hold a few clues in what’s to come of the nickels, lithiums, cobalts and other locally produced metals.

The outlook for coal, gold and uranium is also explored, the latter being a particularly intriguing matter in Australia as several companies vie for the title of next producer.

As investors, regulators and customers side with the green transition, the ESG (environmental, social and governance) agenda is going to be all the more critical to any mining company’s growth strategy.

Those who take the matter by the horns and embrace ESG’s economic opportunities will benefit most. Decarbonisation is no longer a taboo topic – it’s a necessity.

In the boardroom, we spotlight Chalice Mining’s gold spin-out and what the immediate goals are for the company’s demerged entity, Falcon Metals.

Falcon’s first priority will be the Pyramid Hill gold project near Bendigo in Victoria, located proximate to Kirkland Lake’s Tier-1 Fosterville mine.

Australia’s untapped industrial metal halloysite-kaolin takes centre stage as the ambitions of Andromeda Metals are explored.

Halloysite is a tough nut to crack, but Andromeda believes it’s onto a good thing with its Great White project in South Australia.

While the COVID-19 whirlwind keeps us guessing, 2022 will be another year of opportunities for Australian miners and investors, with the most vigilant stakeholders destined for the greatest success.

Paul Hayes Managing Editor

CHIEF EXECUTIVE OFFICER JOHN MURPHY PUBLISHER CHRISTINE CLANCY MANAGING EDITOR PAUL HAYES Tel: (03) 9690 8766 Email: paul.hayes@primecreative.com.au JOURNALIST TOM PARKER Email: tom.parker@primecreative.com.au CLIENT SUCCESS MANAGER JUSTINE NARDONE Tel: (03) 9690 8766 Email: justine.nardone@primecreative.com.au SALES MANAGER JONATHAN DUCKETT Mob: 0498 091 027 Email: jonathan.duckett@primecreative.com.au BUSINESS DEVELOPMENT MANAGER ROB O’BRYAN Mob: 0411 067 795 Email: rob.obryan@primecreative.com.au SALES ADMINISTRATOR EMMA JAMES Tel: (02) 9439 7227 Mob: 0414 217 190 Email: emma.james@primecreative.com.au DESIGN PRODUCTION MANAGER MICHELLE WESTON michelle.weston@primecreative.com.au ART DIRECTOR BLAKE STOREY blake.storey@primecreative.com.au GRAPHIC DESIGNERS KERRY PERT, AISLING MCCOMISKEY FRONT COVER IMAGE CREDIT: Pilbara Minerals SUBSCRIPTION RATES Australia (surface mail) $120.00 (incl GST) Overseas A$149.00 For subscriptions enquiries please contact (03) 9690 8766 subscriptions@primecreative.com.au PRIME CREATIVE MEDIA 11-15 Buckhurst St, South Melbourne, VIC 3205, Australia www.primecreative.com.au © Copyright Prime Creative Media, 2021 All rights reserved. No part of the publication may be reproduced or copied in any form or by any means without the written permission of the ­publisher.

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W W W. A U S T R A L I A N R E S O U R C E S A N D I N V E S T M E N T. C O M . A U

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CONTENTS

I N T H I S I S SU E 28

6

T H E F E AT H E R S T O N E REPORT

What to make of thematic ETFs

GOLD

24 Chasing the next Fosterville 28 Australia’s growing treasure chest 30 The gold outlook for 2022

42

IRON ORE

Iron ore miners bounce back

EVENTS

44 What’s happening in

F E AT U R E D

10 Analysis with Regina Meani 12 Australia’s bright critical minerals future

32

MINERAL SANDS

the resources industry?

Sands shining brighter

16 Commodities in 2022:

FOLLOW THE LE ADERS

45 The latest executive moves

Exploring six key themes

34

H A L L OY S I T E - K AO L I N

in the resources sector

Australia’s untapped commodity

ESG

20 Circular economies:

Mining’s way forward 22 Building sustainability from the ground up

MINING SERVICES

38

VA N A D I U M

The rise of vanadium

46 Mining’s most intelligent bull bar 48 Repairing damage caused by abandoned mines

46 –4–

A SMALL STEP ON OUR PATH TO CHANGE

FROM 2021, ALL CASTROL PRODUCTS WE SELL IN AUSTRALIA WILL BE

COMMITTED TO CARBON NEUTRALITY IN ACCORDANCE WITH PAS 2060** A SMALL STEP TOWARDS A MORE SUSTAINABLE FUTURE

* **

in accordance with PAS 2060, see www.castrol.com/cneutral for more information.

The C02e emissions are calculated in accordance with the Greenhouse Gas Protocol’s Product Life Cycle Standard and includes life cycle emissions. The demonstration of carbon neutrality will be assured by an Independent Third-Party and certified to BSI’s PAS 2060 carbon neutral specification. See www.castrol.com/cneutral for more information.

T H E F E AT H E R S T O N E R E P O R T

THE

Featherstone REPORT

INVESTORS JUMP AT THEMATIC ETFS IN MINING

BY TONY FEATHER STONE

Easy access to megatrends is an attraction, but there are opposing views on their investment value.

I

nvestors seeking exposure to global technology trends have sparked a boom in thematic exchange traded funds (ETFs). Less considered is how these ETFs could change resource-sector investing – and what they mean for emerging mining companies.

New mining-focussed funds from ETF issuers are attracting investors. ETF Securities’ ETFS Hydrogen ETF (HGEN) captured more than $60 million of funds in its first month after its November 2021 launch. HGEN provides exposure to hydrogen-related stocks.

ETF Securities’ ETFS Battery Tech and Lithium ETF (ACDC) has starred with a three-year annualised total return of 33 per cent to end-December 2021. Launched in mid-2018, ACDC has almost half a billion dollars in funds under management.

Investors, it seems, can’t get enough of thematic ETFs that provide exposure to emerging global megatrends. Like other ETFs, thematic ETFs aim to match the total return of an underlying index and are bought and sold on the ASX like shares.

However, unlike traditional ETFs that provide exposure to broad-based

Lithium miner Pilbara Minerals is one of ACDC’s top stock holdings.

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sharemarket indices or sectors, thematic ETFs cut across indices. A thematic ETF over electric vehicles, for example, could include car makers and lithium producers.

Thematic ETFs are growing quickly off a low base. They have more than $4 billion of funds, based on Australian Resources and Investments analysis of ASX ETF data. That’s tiny compared to a local ETF market worth almost $130 billion at endNovember 2021.

BetaShares, a leading ETF issuer and thematic ETF pioneer, predicts Australia’s ETF market will have $500 billion of

AUSTRALIAN RESOURCES & INVESTMENT

assets within five years. Of that, 15-20 per cent will be invested in thematic ETFs – or up to $100 billion from $4 billion now.

Thematic ETFs are booming overseas. Globally, 475 thematic ETFs held US$252 billion in assets at end-October 2021. That was up from US$119 billion a year earlier.

Locally, much of this expected funds flow into thematic ETFs will go to those providing exposure to cryptocurrency firms, semiconductors, cloud computing, cybersecurity, artificial intelligence and machine learning, video games and esports. Cleanenergy ETFs, which include some mining stocks and electric-vehicle-related ETFs, will also feature.

Established and emerging mining companies included in thematic ETFs could benefit from higher demand for their stock from passive index funds.

Moreover, emerging mining companies that are mostly bought by retail investors could find a new audience of younger investors who want exposure to mining-related megatrends.

U N D E R S TA N D I N G T H E M AT I C E T F S Like all investment products, thematic ETFs have pros and cons. Their supporters argue thematic ETFs provide exposure to global megatrends that are hard to access via the ASX. For example, investors who want exposure to the electric-vehicle boom must buy global car makers. An ASX-quoted ETF over EV stocks provides convenient, low-cost exposure.

The same is true of some sectors on the ASX. Investors who want to increase their allocation to large energy companies have limited choice on the ASX. Through a global-energy ETF, they can buy a portfolio of the world’s largest energy companies in one trade.

Moreover, traditional industry classifications are looking increasingly antiquated as technology disrupts and blurs sectors. Megatrends like clean energy and the nascent hydrogen industry cut across a range of sharemarket sectors.

Worldwide, more investors are buying ‘themes’ rather than stocks. This is particularly true of younger investors, judging by the latest ASX Australian Investor Study. It found 45 per cent of ‘Next Gen Investors’ (aged 18-24) plan to invest in an ETF within 12 months. Many Next Gen investors will buy an ETF before they buy a share.

Detractors of thematic ETFs argue these funds are often launched at the top of the market to cash in on a fad rather than a genuine structural megatrend. A 2021 US study, Competition for Attention in the ETF Space, found specialised (thematic) ETFs lose about 30 per cent in risk-adjusted returns over their first five years after launch, on average.

Fund labelling, stock-concentration risk and fees are other considerations with thematic ETFs. Some thematic ETFs include stocks that investors might not readily associate with the trend. Large-cap stocks are often part of a thematic index for liquidity reasons.

Like all investment products, thematic ETFs have pros and cons. Their supporters argue thematic ETFs provide exposure to global megatrends that are hard to access via the ASX. Thematic ETFs often hold far fewer stocks than ETFs over broad-based sharemarket indices, meaning they are more concentrated and less diversified. The ETFS Hydrogen ETF, for example, is based on an index of only 30 stocks. Traditional equity ETFs use indices with hundreds or thousands of global stocks.

Higher fees with thematic ETFs are another issue.

Most ASX-quoted ETFs have fees ranging from 65-69 basis points annually. That compares to single-digit Management Expense Ratios (MERs) for some of the largest ASX ETFs for Australian equities exposure.

Risks aside, there’s no doubt that ETFs have become a global investment phenomenon in the past decade – or that thematic ETFs are changing how more people buy shares.

Investors who want exposure to the resource-related megatrends, or mining sectors, have more choice via ASX-quoted ETFs. RESOURCE-SECTOR ETFS As thematic ETFs attract attention, it’s easy to overlook sector ETFs that provide exposure to parts of the mining industry. State Street Global Advisors’ SPDR S&P/ASX 200 Resources Fund (OZR) is the longest-established ETF of its kind.

OZR provides exposure to a portfolio of this market’s largest resource stocks. Almost half the ETF’s weighting is in three stocks: BHP Group, Rio Tinto and Fortescue Metals Group. OZR’s annual fee is 40 basis points.

The VanEck Australian Resources ETF (MVR) is another option for sector exposure. Unlike OZR, which weights stocks based on market capitalisation, MVR has a maximum weighting per

Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs.

Before acting on information in this article consider its appropriateness and accuracy, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at January 13, 2022.

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T H E F E AT H E R S T O N E R E P O R T

More investors are buying ‘themes’ rather than stocks.

index constituent. This means the ETF has far less exposure to the fortunes of BHP, Rio Tinto and Fortescue. MVR’s annual fee is 0.35 per cent.

The BetaShares Resource Sector ETF (QRE) has a similar approach to OZR; almost half of its weighting is in Australia’s bigthree miners. QRE costs 0.34 per cent.

For global resource exposure, the BetaShares Global Energy Companies ETF (FUEL) mostly includes US and European energy companies, such as Chevron, Exxon Mobil, BP and Royal Dutch Shell. FUEL is an interesting idea for investors who believe the focus on clean energy could lead to vast underinvestment in traditional fossil fuels in the medium-term, which would benefit oil producers.

In precious metals, the BetaShares Global Gold Miners ETF (MNRS) provides exposure to large gold stocks, such as Newmont Mining and Barrick Gold.

MNRS is a useful tool for Australian investors who want more choice in large-capitalisation gold companies that could benefit if inflation rises in the next few years.

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RESOURCE-SECTOR T H E M AT I C E T F S The ETFS Battery Tech and Lithium ETF (ACDC) provides diversified exposure to a range of global and Australian companies that provide minerals for EV batteries.

ACDC’s top stock holdings are the ASX-listed Mineral Resources and Pilbara Minerals.

After returning 62.2 per cent in calendaryear 2020, ACDC’s gains have slowed. Its six-month return to end-December 2021 was 3.9 per cent, slightly below the index it tracks. Also, ACDC provides exposure to a range of energy production and storage companies beyond mining but remains a unique tool for global exposure to batteryrelated minerals.

The ETFS Hydrogen ETF (HGEN) includes mostly global hydrogen-related companies.

About a fifth of the ETF’s underlying index holds materials companies. In addition to helping portfolio investors capture gains in hydrogen companies, HGEN is also marketed as a hedge against traditional fossil-fuel exposure. An investor who is overweight in mining stocks could use HGEN for clean-energy exposure.

COMMODITY ETFS As thematic and resource-sector ETFs attract more funds, commodity-based ETFs remain by far the largest index funds in mining. The ETFS Physical Gold ETF (GOLD) is a leading ETF on ASX with $2.3 billion in assets. It provides unhedged exposure to movements in the US-dollar gold price.

Investors who want to eliminate currency risk could favour the currencyhedged BetaShares Gold Bullion ETF. The Perth Mint Gold ETF is another option for investors seeking gold exposure in their portfolio.

Most long-term investors should have a small portfolio allocation to gold to aid diversification. With inflation set to rise in the next few years, a higher weighting to gold could appeal given the precious metal’s famed role as an inflation hedge.

Silver could be a better bet. The ETF Physical Silver ETF (ETPMAG) provides exposure to an expected strong recovery in global economic growth in 2022. Silver’s use in industrial applications makes the ETF one to watch this year.

AUSTRALIAN RESOURCES & INVESTMENT

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F E AT U R E D

— ANALYSIS — WITH REGINA MEANI Building on 2021 THERE IS NO question that 2021 was a challenging year, but it did provide some opportunities within our mining community. Reflecting on past columns from 2021, we would like to highlight some stocks and commodities to keep in our sights and to build on for 2022.

Our copper report from the August 2021 issue underlined that the metal had long been perceived as the bellwether for individual countries and for the wider global economy.

In the July/August period and further into 2021 we suggested that the price was experiencing a similar style corrective phase to 2004-2005.

As we enter 2022 the price has been preparing for another test of its previous limits in the $US4.50-$US4.70/pound area, with a push through triggering a more substantial rise for the metal.

In the same article, we analysed OZ

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Minerals trading at $21.60 and BHP when it was at $49.48.

OZ Minerals (ASX: OZL) is Australia’s third largest copper producer operating globally, with headquarters in South Australia. The share price for OZL closely mimics copper’s performance and in the July/August period it too was experiencing a corrective phase.

In December, OZL’s share price showed the potential to test its $30-40 peak zone from 2007-2008.

Momentum is becoming squeezed and suggests that while the price may approach and push into $30 and beyond, a sustainable breakthrough may be delayed by price volatility.

Looking at BHP (ASX: BHP), Australia’s largest copper producer, we find that in the months since our copper analysis in August, the company’s share price had suffered somewhat.

Iron ore prices declined during the period and the oil price sold off in November. As we move into 2022, we find that both commodities have turned and rallied throughout December with BHP in tandem.

In mid-August 2021, BHP’s price broke down from its early-2021 highs when the price fell below $45, triggering a deeper corrective phase.

From late September into midNovember, the stock experienced multiple turning points above $35 before a push in December boosted the price above $40.

In a similar fashion to OZL, BHP’s price is heading into its $45-55 barrier zone and may need to pause and consolidate its position before a maintainable rise through the area can be supported.

Once clear of the barrier zone, longerterm objectives will come into play towards $65 and potentially $85.

AUSTRALIAN RESOURCES & INVESTMENT

At the time of our lithium report in the October 2021 issue, the commodity was trading at about 92,500 yuan ($20,330) per tonne. In January 2022, the price breached 300,000 yuan per tonne, more than doubling in a few short months.

Lithium hydroxide is increasingly used in batteries for electrical vehicles and mobile phones and is used in breathing gas purification systems. Lithium hydroxide is produced from a chemical reaction between lithium carbonate and calcium hydroxide.

The largest lithium producers are Australia, Chile, Argentina and China, while the biggest lithium importers are China, Japan, South Korea and the United States.

In that article we presented three Australian lithium miners and since then they have all experienced significant gains.

When we looked at Core Lithium (ASX: CXO) in September, it was trading at $0.33. From there, the price raced towards resistance in the $0.50-0.60 area before being rebuffed in October and November, with the price pulling back to around $0.50 in December.

In early January the price made another attempt to forge through resistance, stalling briefly to consolidate before producing a surge above $0.70 towards the next objective around $1.00 where another pause action maybe required ahead of objectives in the $1.00-2.00 range.

The short-term risk would be a drop through the $0.65 support, but this will rise along with the lithium price, so a trailing stop loss is in order.

With the world’s largest independent hard-rock lithium operation, Pilbara Minerals’ (ASX: PLS) share price was $2.09 in September before it reached towards resistance around $2.50 to be deflected back to support just above $1.80.

The price bounced and then forged through the resistance to meet its $3 objective in late December 2021. When an objective is reached it is always advantageous to take part or full profits depending on the indications at the time.

The price showed the potential to move beyond the $3 objective and rallied higher, but the near-term momentum then became stretched and a pause/pullback was due as the price swept towards the $4 objective.

Current support levels are located at $3.50 and then in the $2.90-3.10 range.

Beyond this, the stock maintains the potential to push through $4 and towards $6 and possibly higher.

Another lithium stock of interest

is Lithium Power International (ASX: LPI). The company is a lithium “pureplay” with a 51 per cent interest in the highest quality pre-production lithium brine project in South America, the Maricunga project located in northern Chile’s “lithium triangle”.

In mid-January, the price tested resistance around the company’s previous peak of $0.67 reached in 2017.

The price has been moving along a strong upward path, interspersed with periods of consolidation.

As the price pushes through its previous peak a pause action may fall as it reaches towards $0.75. Further out, the stock has the potential towards $0.90-1.00 and possibly $1.50. Support at the time of writing lies in the previous peak zone in the $0.60-0.67 range.

It must also be noted that on January 12, LPI announced the demerger of its Western Australia hard rock lithium assets, enabling the company to focus its resources on developing Maricunga.

Through its wholly owned subsidiary, Lithium Power WA Holdings (DemergeCo), LPI has several prospective tenements in WA, with three tenements immediately along strike from the Greenbushes mine and three tenements in the Pilbara region of WA. LPI recognise that its WA assets deserve a dedicated team to help advance the tenements towards production.

The company will conduct a capital reduction and in-specie distribution to LPI shareholders as the WA assets are spun out to DemergeCo. DemergeCo will then apply for admission on the ASX.

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F E AT U R E D

Australia’s bold and beautiful critical minerals future

Australian Strategic Materials’ Korean metals plant in South Korea.

Having solidified its ties with one of the world’s biggest technology powerhouses, Australia’s critical minerals future is looking rosy. So what’s next?

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AUSTRALIAN RESOURCES & INVESTMENT

I

n December 2021, Australia hosted a historically significant meeting when Republic of Korea (South Korea) President Moon Jae-in met with some of Australia’s brightest critical minerals exponents.

It was the first visit to Australia by a South Korean president since 2009 – a feat considered more remarkable given the border disruptions caused by the COVID-19 pandemic in recent times.

It’s no secret that South Korea has become a technological powerhouse, with the country home to three battery heavyweights; LG Energy Solution, Samsung SDI and SK Innovation combine for approximately a third of the global electric vehicle (EV) market.

South Korea’s gross domestic product (GDP) positions it among the 10 most lucrative countries in the world; however, the country is only so effective on its own.

Battery creation can’t be made possible without the necessary resources and Australia is growing its critical minerals capability to position itself as a trusted partner to South Korea’s technological exploits.

So President Moon met with a range of Australian delegates, including representatives from Queensland Pacific Metals, Australian Strategic Materials and Cobalt Blue – three companies that can shore up South Korea’s supply of critical minerals going forward.

Liz Griffin, executive director for the Australia-Korea Business Council (AKBC) – the national body that facilitated the introduction – says the meeting provided a significant vote of confidence in Australia’s capacity as a reliable business partner.

“The visit by the Korean President sent a really strong signal that the Australia-Korea bilateral relationship is a significant one,” she says.

“Also, by co-hosting this meeting with the AKBC, specifically focussed on critical minerals, it sends the signal that, for Korea, securing a long-term, stable supply of critical minerals is a key priority to them, particularly given it is one of the world’s great technology powerhouses.”

The meeting was even more noteworthy given it was President Moon’s only business engagement during his brief stay in Australia.

The AKBC members delivered strong messages to President Moon about what they see is required to step up Australia’s engagement and cooperation with

South Korea President Moon Jae-in at the meeting.

Korea in the critical minerals space.

Environmental, social and governance (ESG) was also discussed.

“One of the other key things that was tabled was Australia’s credentials in ESG and that we can provide critical minerals in an environmentally sustainable way.

The visit by the Korean President sent a really strong signal that the AustraliaKorea bilateral relationship is a significant one.

This is really important because at COP26 (the 2021 United Nations Climate Change Conference), President Moon officially committed to Korea cutting greenhouse gas emissions by 40 per cent by 2030, and they also have a commitment for carbon neutrality by 2050.

“So in terms of the opportunities, we pitched this to President Moon as a triple helix approach, where we need to have the government, business and

academia working hand-in-hand to solve these issues.”

Queensland Pacific Metals (QPM) is represented by its TECH Project, which located south of Townsville in the Lansdown Eco-Industrial Precinct and poised to be northern Australia’s first environmentally sustainable advanced manufacturing, technology and processing hub.

A future producer of green nickel, cobalt, high-purity alumina and other by-products, the TECH Project’s ESG credentials are what set it apart.

In November 2021, QPM updated the TECH Project’s life cycle assessment, which suggested it will be the first ever batterygrade nickel manufacturing plant that’s not only carbon-neutral, but carbon-negative.

QPM will look to achieve this through a gas-sourcing strategy that will see it repurpose greenhouse-intensive waste gas from metallurgical coal mines to power its manufacturing plant.

To solidify this plan, QPM signed a memorandum of understanding (MoU) with Transition Energy Corporation and North Queensland Gas Pipeline in August 2021 in order to establish a dedicated gas supply chain from the northern Bowen Basin to the TECH Project.

The TECH Project is estimated to require 10 petajoules of gas per annum once in steady-state operation.

QPM managing director and chief executive officer Stephen Grocott says the TECH Project was built with sustainability front of mind, and while ESG credentials haven’t always been as highly valued as they should be, gaining the attention of South Korea is a significant step forward.

“Gaining recognition for our sustainability credentials is very

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F E AT U R E D

important. Just recognising that in the market is significant for producers like QPM because we are so clean and so green it’s not funny,” he says.

“In the sustainability race, we’ve finished the race and we’ve got our feet up having a cold drink while other people are still strapping on their running shoes.

“We’re negative greenhouse gas intensive, zero process liquid discharge, we’re almost no residue, no tailings dam.

We use recycled materials in our process.”

With plenty to show for his company heading into the December meeting, Grocott says establishing ties in high places enhances QPM’s prospects down the track.

“The fact that we already have offtake agreements with two of the big players, LG Energy Solution and POSCO, is being seen as a real positive and clearly, having relationships with senior government officials and the Korean Minister for Trade, Investment and Energy, the fact that we’ve got a relationship at that level, that just helps move things faster,” he says.

“As we move to complete our feasibility

Australian Strategic Materials’ Dubbo project in NSW.

– 14 –

study in the middle of this year and move towards a final investment decision, the alignment between the governments in relation to debt and equity funding, for Korean companies and debt providers to know we’ve got the government blessing is a positive in itself.”

Following the completion of the definitive feasibility study (DFS), construction on the TECH Project could begin in 2022 with first production expected to commence in late 2023.

QPM aims to process 1.5 million tonnes of ore annually from the TECH manufacturing hub, which the company will import from New Caledonia through the Port of Townsville.

In the same week that QPM met with President Moon, it also announced a $30 million capital raise and $250 million of debt funding support from Export Finance Australia (EFA).

The EFA is the second Australian government agency to get behind the project, following advice from the Northern Australia Infrastructure Facility (NAIF)

that the TECH Project had progressed through its strategic assessment phase and proceeded into the due diligence phase.

The EFA is completing due diligence on the TECH Project, in line with the agency’s requirement to provide financial expertise and solutions to support Australian businesses across a range of industries, including critical minerals.

To obtain the EFA’s financial support, QPM will need to demonstrate it is making satisfactory progress towards various objectives, such as the completion of the TECH Project’s DFS; an acceptable engineering contracting strategy for the engineering, construction and commissioning of the project; and a funding plan including the raising of equity and securing funding from other lenders.

Grocott says that despite the fact the TECH Project DFS is not yet released, the company is making other proactive inroads to ensure flexibility down the track.

“Particularly given the post-COVID logistics and the massive boom all around the world, we’re starting to work more

AUSTRALIAN RESOURCES & INVESTMENT

The roundtable meeting held in Sydney.

closely with the key equipment suppliers and we hope to start engineering early with them so we’re not at risk of schedule creep,” he says.

“Normally what happens is companies complete the feasibility study before they start on the engineering. We didn’t want to do that; it’s looking good enough that we we’re going to start on some of this detailed work early and face less risk of blowing out the schedule.”

Given the significance and rarity of President Moon’s visit, Grocott says the AKBC must be credited for not only establishing the meeting, but for its sustained commitment to enhancing the bilateral relationship between the two nations.

“The AKBC did a fantastic job helping make this happen. If it wasn’t for them, I suspect that these meetings would not have occurred,” he says.

“So that’s the private sector cooperating in both countries and that’s the sort of thing we need. The more the government can do the better, but we can’t sit there on our backsides with our hands out – all parties need to pull together.”

Australian Strategic Materials (ASM) used its time alongside high-level delegates to establish a deal with the Korean Mine Rehabilitation and Resource Corporation (KOMIR), the country’s dedicated body supporting the supply of critical minerals and metals into Korea.

The agreement will see ASM work closely together to expand the use of rare earths and critical metals in Korea and shore up import opportunities going forward. The company’s South Korean processing plant will be a centrepiece of this partnership.

ASM managing director David Woodall says the agreement shows Korea’s eagerness to consolidate its critical minerals supply chains.

“This Joint Statement of Cooperation is another firm sign of Korea’s commitment to securing its supply of critical metals and to working with ASM to deliver an outcome that is beneficial to the Korean supply chain,” Woodall says.

“ASM welcomes this opportunity to work with KOMIR to provide an alternative, secure and sustainable supply of critical metals. ASM will commence production of critical metals at ASM’s Korean metals plant in 2022.”

To complement its Korean processing plant, ASM is also developing its Dubbo project in New South Wales, a large inground polymetallic resource of rare earths, zirconium, niobium, hafnium, tantalum and yttrium.

With all major approvals and licences in place, ASM is undertaking the relevant optimisation and financing to support the Dubbo project, before it looks to commence construction soon thereafter.

Just prior to signing its agreement with KOMIR, ASM reported strong financial results from its optimisation study for the Dubbo project.

The optimisation work simplified the process flow sheet of the Dubbo project, while facilitating new strategies that will reduce operating costs and improve the ESG performance of the project.

Following the optimisation work, the Dubbo project’s pre-tax net present value (NPV) increased from $1.24 billion, found in 2018 optimisation studies to $2.36 billion.

“The optimisation work confirms we have a project that can integrate into our

metals business to create an alternate, sustainable, secure and stable long-term supply of critical metals and oxides,” Woodall says.

“This places ASM in an exceptional position in the critical metals value chain, as the vertically integrated owner of a globally significant polymetallic resource in Dubbo, and the capability to produce critical metals from this resource to the highest environmental standards.”

Cobalt Blue is represented by its Broken Hill cobalt project in New South Wales, which is still in its development phase and comprises a global mineral resource of 118 million tonnes at 859 parts per million cobalt-equivalent for 81,100 tonnes of contained cobalt.

Broken Hill’s pilot plant successfully produced cobalt sulphate samples in October 2021, and with a host of parties eager to receive samples, Cobalt Blue will transition the pilot plant to a demonstration plant in 2022.

Cobalt Blue formed a partnership with Korea through LX International, a Korean resource investment company which has been a Cobalt Blue shareholder since 2018.

While QPM, ASM and Cobalt Blue were the three companies present at the December 2021 meeting, it doesn’t mean other critical minerals companies won’t also be able to benefit from the partnership.

The meeting has laid the groundwork for future discussions and agreements to come to the fore. If Korea’s resultant interest is anything to go by, Australia has an incredible opportunity to commercialise its critical minerals affluence.

“Things are really going to escalate and heat up over the coming weeks, months and years,” Griffin says.

“Remarkably, we’ve already seen follow-up from Korea’s Ministry of Trade, Industry and Energy, and they’ve already followed up on some of the recommendations that we made in the meeting.

“Some of the recommendations we put forward to them were around inviting more Korean companies to join the AKBC critical minerals subcommittee and we’ve also extended the invitation to Korean companies to travel to Australia.

“I know there’s already quite a significant number of Korean businesses that are keen to come to Australia as soon as it safe to do so. In particular, they’ve signalled that they’re particularly keen to get to Western Australia.”

– 15 –

F E AT U R E D

Despite an early-year push, iron ore’s future remains uncertain.

Commodities in 2022: Exploring six key themes While 2021 was a year of surprises in the commodities world, with crushing lows offset by unprecedented highs, what can we expect in 2022? We take a deep dive.

T

here’s been a few notable trends to emerge in the commodities world to commence 2022.

Nickel prices rose to 10-year highs in January, while lithium jumped amid a supply squeeze.

We’ve also seen iron ore make a recovery from the lows of November 2021, a slump which forced several Australian iron ore mines to halt operations.

Copper has also started strongly in 2022, trading above $US9500 ($13,218) per tonne in January and the market is expected to remain competitive as the path to electrification continues.

But what are the experts’ predictions for

– 16 –

2022? We chatted to PricewaterhouseCoopers (PwC) and Fitch Solutions to get their commodity forecasts for the year ahead.

W H AT T O M A K E O F I R O N O R E ?

Seaborne iron ore prices reached three-month highs in January, as 62 per cent Australian iron ore fines rose to $US131.5 per dry metric tonne (dmt) at the port of Qingdao.

This had dipped to $US123.9 per dmt at the time of writing, encapsulating the iron ore market’s current tumultuousness.

Fitch Solutions senior commodities analyst Sabrin Chowdhury says given the many considerations at play, it’s difficult to put a finger on iron ore.

“Iron ore is indeed quite uncertain. Last year, prices rallied beyond $US200 per tonne.

If you went back a few years when prices were below $US80 per tonne, thinking that iron ore would go above $US200 was really unthinkable at that point,” Chowdhury says.

“This year and also going forward, we do not see a return of the mismatch between supply and demand which would lead to prices rallying beyond $US200 a tonne – definitely not this year or the coming years, ceteris paribus.”

The rise of iron ore could be put down to China announcing or beginning 3 trillion yuan’s ($654.85 billion) worth of infrastructure projects to start 2022,

AUSTRALIAN RESOURCES & INVESTMENT

The demand for critical minerals is definitely going to be very strong in the coming years. The electric vehicle sector is one of the strongest growth sectors going forward and the batteries in the EVs require a lot of metals. according to government data. Needless to say, Chowdhury does not anticipate such a sudden recovery.

“Previously we thought, ‘OK, prices have totally collapsed; the iron ore prices would not go higher anymore’, but in January they have and … it’s totally a surprise because China was supposed to experience a slowdown,” she says.

It is understood China has hastened the rollout of major infrastructure projects as the country experiences growing downward economic pressure amid supply chain disruptions and weakening demand.

Ongoing property woes and the enduring COVID-19 pandemic haven’t helped China’s cause, either, and analysts suggest expediting infrastructure development could accelerate fixed-asset investment, a major driver of economic growth.

Given the low-cost nature of their operations, Australia’s major iron ore miners should enjoy decent profit margins throughout 2022.

“Iron ore prices are probably going to average more than $US100 per tonne this year.

In that case, it’s still very good for Australia because Australia’s major producers produce at $US20 or less per tonne – their cost of production is so low,” Chowdhury says.

“So at $US100 or above a tonne, Australian producers would still be very, very profitable, but it’s still a little bit of a dent from last year.”

WILL THE APPETITE FOR C R I T I C A L M I N E R A L S R E M A I N? There’s no denying the world’s appetite for critical minerals, a reality being steered by the decarbonisation pursuit and the necessity to replace fossil fuels with batteries.

Battery metals such as lithium and nickel are experiencing high demands to begin 2022, which is pushing prices to record highs and highlighting the importance of Australia’s critical minerals capability.

With electric vehicle (EV) manufacturers on the ask more than ever before, Fitch Solutions believes Australia is well positioned to benefit.

“The demand for critical minerals is definitely going to be very strong in the coming years. The electric vehicle sector is one

of the strongest growth sectors going forward and the batteries in the EVs require a lot of metals,” Chowdhury says.

“So these are battery-grade nickel, batterygrade cobalt and lithium. These three metals are going to be very widely in demand and the good thing is that Australia is a major producer of these.

“If you look at the global dynamics of supply and demand then I would say that Australia does produce most of those critical minerals at this point. It has the most advanced infrastructure, it has the most advanced facilities and projects.”

There are a number of established Australian producers across nickel, lithium and cobalt, while the country is also replete with many emerging projects.

BHP’s Nickel West operation in Western Australia produced approximately 89,000 tonnes of nickel in the 2021 financial year.

IGO’s Nova operation, Glencore’s Murrin Murrin mine and First Quantum’s Ravensthorpe project in WA are also leading nickel producers.

The Greenbushes lithium mine in WA, owned by a three-way joint venture of IGO and Tianqi Lithium Corporation (51 per cent) and Albemarle Corporation (49 per cent), has an annual production capacity of 1.2 million tonnes per annum of spodumene concentrate.

Other current Australian lithium operations include Pilbara Minerals’ Pilgangoora project, Allkem’s Mt Cattlin project and the Mt Marion project, owned by a 50:50 joint venture of Mineral Resources and Jiangxi Ganfeng Lithium Co. Cobalt has less representation in Australia, with Glencore’s Murrin Murrin operation the country’s principal producer of the resource.

According to government data, Australia has 19 per cent of global cobalt reserves but only amounts to 4 per cent of the world’s cobalt production.

Looking to make the most of Australia’s

A cold Northern Hemisphere winter has boosted the coal demand.

– 17 –

F E AT U R E D

Uranium’s outlook does depend on Australian and global appetite to seeing uranium as part of the carbon solution.

Uranium prices reached a nine-year high in September 2021.

cobalt potential, Cobalt Blue is looking to elevate its Broken Hill project in New South Wales into production.

Broken Hill’s pilot plant successfully produced cobalt sulphate samples in October 2021, and with a host of parties eager to receive samples, Cobalt Blue will transition the pilot plant to a demonstration plant in 2022.

At the time of writing, the offer price for cobalt on the London Metal Exchange was $US70,150 per tonne.

T H E F U T U R E O F C OA L From the lowest lows to the highest highs, coal has bounced back significantly across the last 12 months.

Newcastle coal futures traded as low as $US46.18 per tonne in September 2020 before making a resurgence and reaching an unprecedented high of $US269 per tonne inOctober 2021.

This came as a cold winter in the Northern Hemisphere drove a demand for power generation, while China’s rising thirst for the resource appears to be having a material impact on the global seaborne trade market even if the country’s Australia ban continues.

According to data accessed via leading

– 18 –

Chinese financial firm Wind Information, China’s coal imports reached 26.9 million tonnes in October, up 96.2 per cent from a year before.

In January, Newcastle coal futures were trading above $US200 per tonne as Indonesia, the world’s largest exporter of thermal coal, brought exports to a halt as supplies at domestic power plants fell to critically low levels.

PwC Australia partner Marc Upcroft says undulating coal prices have had an impact on Australia coal producers, while the most established coal mines seem to be benefiting from the current surge. Despite this, Upcroft suggests the price may cool as the seasons change.

“If you look at the last two years, coal prices have been fairly low, and that’s impacted profitability of Australian coal producers,” he says.

“We do see a situation right now where there’s some good results coming in. I think it would be really interesting to see what happens throughout 2ß022.

“Most analysts expect that coal prices will come down when the overall energy demand from a cold winter starts to dissipate, but we’ll

continue to see what happens in relation to coal in 2022 and beyond.”

AWA I T I N G T H E N E X T G O L D R U S H According to the Perth Mint, in 2021 gold experienced its first calendar year decline since 2018, falling 4 per cent to end the year at $US1820 per ounce.

Gold’s price decline could be attributed to various factors such as a rising US dollar, which finished 2021 up 6 per cent, improving economic growth forecasts, the global vaccine rollout reducing investor fears, or the continued rise of digital markets such as cryptocurrencies, which experienced a 205 per cent overall market value increase in 2021.

Despite this, it must be noted that gold’s difficulties largely occurred in the first quarter of 2021. Gold ended March 2021 at below $US1700 per ounce but trended north from then onwards.

The final two months of 2021 were especially positive, as gold prices rose from about $US1750 to begin November, up to $US1850, before settling at $US1820 to close the year.

In January, gold was trading above $US1800 per ounce, as investors continued

AUSTRALIAN RESOURCES & INVESTMENT

downwards in real terms and that’s just the safety point they’ve anchored to for some time now because that’s been a bit of a trend.

“It will be interesting to see if the gold bugs are right and there will be a significant uptick in gold price.”

W I L L U R A N I U M M A K E I T S R U N? The uranium market has mimicked the escalations seen in nickel and lithium in the past few months, with prices reaching a nine-year high of $US50.08 per pound in September 2021.

The price has undulated since then but was trading high at $US46.45 per pound at the time of writing, which can be put down to deadly protests halting operations in Kazakhstan, the world’s largest producer of the commodity.

Australia exported 6166 tonnes of uranium in the 2021 financial year from two active operations – BHP’s Olympic Dam mine and Heathgate Resources’ Beverly-Four Mile mine, both in South Australia.

With other minerals being called upon in the energy transition, Upcroft is less optimistic about Australia’s uranium outlook going forward.

“Uranium’s outlook does depend on Australian and global appetite to seeing uranium as part of the carbon solution.

Intuitively it can, but when you look at it on to show faith in the commodity as an inflation hedge amid volatility in the equities market and uncertainty over Omicron’s economic impact.

Upcroft says that while there has been a somewhat bearish undertone to the gold market in recent times, all is certainly not lost.

“I guess to be clear on this one, gold hasn’t fallen away at all really … in terms of its price impact, it had a big push in 2020,” Upcroft says.

“They’ve since come down so if you just look at a discreet, shorter period it looks like gold is off, but I think the key thing for gold is there’s still lots of growth going on in relation to gold. There are still investments in mines, there’s still quite a lot of deal activity in relation to the gold sector.”

Upcroft is optimistic about gold’s outlook for the year ahead, which comes back to the commodity’s reliability as a safe haven.

“The gold price itself might get a bit of a kicker in 2022 or beyond and that will all depend on how the global economy is tracking, what is the inflation outcome and expectation going forward because there’s a direct correlation between the two,” he says.

“Analysts really see the gold price trending

balance, there’s other solutions that are seen as ahead,” he says.

“It is quite fascinating for the likes of Paladin Energy and Energy Resources of Australia (ERA), just how big the share prices and market capitalisations of those companies are when you take into account their current production.

“Therefore, it is all about, ‘maybe something will be different in the future’.

So there’s plenty of people out there that are supporting uranium as part of the energy transformation that’s to come, but it really needs to transpire to a reality rather than just a maybe at this point.”

ASX-listed companies Paladin Energy and ERA both featured in PwC’s 2021 Aussie Mine report, which takes a closer look at the MT50 – the top 50 ASX-listed mining companies positioned outside the ASX 50.

Paladin Energy is represented by its Langer Heinrich uranium mine in Namibia, which the company is moving towards restarting, and was trading at $0.87 with a market cap of $2.34 billion at the time of writing.

ERA halted processing activities at its Ranger mine in the Northern Territory in January 2021 after decades of operation at the site. ERA was trading at $0.36 with a market cap of $1.33 billion at the time of writing.

Australia has 19 per cent of the world’s cobalt reserves.

– 19 –

ESG

The importance of a circular economy

The renewable energy transition is highly reliant on raw materials.

I

Society has to consider the sustainability of all components in the green energy revolution. This is where the circular economy is going to play a critical role.

n 1987, the United Nations Brundtland Commission defined sustainability as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’.

At present, a means of achieving environmental sustainability is largely underpinned by the requirement of new technology to produce energy with as little carbon emissions as possible. However, less attention has been given to the environmental impacts caused by key minerals mined to accompany renewables.

In the context of achieving sustainability, it is important to note that the energy revolution towards renewables (solar, wind, hydro, geothermal, wave, tidal and nuclear) and newly built infrastructure for delivery are highly reliant on raw materials (e.g. cobalt and lithium), which are mainly sourced by mining.

A traditional linear economy (take, make, dispose) that fuelled the first three industrial revolutions will not enable a net-zero carbon emissions target by 2050.

Instead, the requirement to shift to a circular economy, whereby a product can retain its functionality through repair or reuse, has never been more essential.

CHALLENGES TO TRANSFORMING T H E E N E R GY I N D U S T R Y The fourth industrial revolution demands a green energy transition sourced from

– 20 –

sustainable technologies that require intensive mineral demands instead of burning fossil fuels. The UN’s Sustainable Development Goals inform why intensive mineral demand growth is expected between now and 2050.

Non-renewable raw materials can be sourced from either mines or secondary supply (reuse or recycling). Ideally, demand would be satisfied by reuse and recycling of intensive minerals; however, stocks of secondary suppliers and recycling rates are inadequate to meet demand.

According to the Recycling Rates of Metals Status Report by the International Resource Panel, few materials have a recycling rate above 50 per cent, though many are crucial to clean technologies such as batteries for hybrid cars or magnets in wind turbines.

For example, end-of-life recycling for aluminium and cobalt is up to 70 per cent, yet secondary supply only accounts for 30 per cent of their growing demand.

For lithium (Li), recycling only accounts for 1 per cent of present demand.

Substituting these intensive minerals to reduce dependency is a challenging task to achieve in a short time as alternatives, such as Li-free multivalent metal-ion batteries, are less mature in their developments and will take time to industrialise.

Therefore, in the interim, mining raw materials to fuel the demands of the green energy revolution is required for rapid

decarbonisation and to achieve a net-zero emissions target by 2050.

W H AT M I N E R A L S A R E R E Q U I R E D I N T H E S H O R TTO - ME DIUM TE RM? Without recycling, the green revolution is going to have an environmental impact on water, soil and ecology. However, in the short-to-medium term, recycling cannot meet demand and there are supply challenges for commodities such as graphite, cobalt and lithium, for which increases in demand of close to 500 per cent are projected.

According to the 2020 World Bank Report, there is an anticipated increase in the demand for 12 commodities relied upon (see table right) to deliver a green energy future.

T H E E N V I R O N M E N TA L BAL ANCING ACT The missing link in present conversation is a framework that balances the requirement to mine with the environmental and social impacts to deliver sustainable outcomes and benefits for organisations, people and the planet.

Biodiversity loss also needs to be considered in mining project evaluations and reliance needs to be reduced on problematic supply chains that don’t provide

AUSTRALIAN RESOURCES & INVESTMENT

secure sustainable sources of metals.

Furthermore, consideration needs to be given to purposefully re-engineering products with planned obsolescence. Over the past century to facilitate three industrial revolutions, electrical and electronic equipment, and the industry that produces it, have contributed to enabling welfare, economic growth and job creation around the world.

However, the environmental and climate effects of continuous production and replacement of products that have emerged correlate to product lifetimes and obsolescence.

The term “obsolescence” itself can be defined where a product is replaced due to the desire for a new item or, alternatively, if the product no longer functions due to lack of performance of material or components.

When linking environment and climate effects to obsolescence, one could argue that in order to promote sustainable consumption and production, product lifetimes are required to be increased.

However, if we turn to the amount of selected electrical and electronic equipment (small household appliances, consumer equipment and photovoltaic panels, IT and telecommunications equipment, and large household appliances) placed on the market within the EU between 2011 and 2017, there has been a 19 per cent increase overall (Eurostat, 2019h).

When observing total consumption of electrical and electronic equipment in the EU in 2017,

household expenditure was recorded at EUR 421 billion, amounting to EUR 1900 per household (Eurostat, 2019h).

Why? Among other factors, the increase in affluence over the last century, particularly in industrialised countries, has generated a linear economy and a consumer society at the expense of resource utilisation, the environment and human health.

A case study on vacuum cleaners indicated a 0.79-per-cent contribution of total EU electricity consumption and a 0.21-per-cent contribution of total EU-emitted greenhouse gasses. While energy consumption in the vacuum’s use phase has decreased over time, it still accounts for 71 per cent of a device’s total lifetime energy consumption.

If the lifetime of the vacuum declines over time, greater importance should be placed on optimising the use of raw-materials manufacturing, disposal and recycling of waste, even if energy efficiency and future electricity decarbonisation decreases over time.

In order to shift to a circular economy, whereby a product can retain its functionality through repair or reuse, two key factors must come into play: (a) products across the supply chain such as batteries must eventually be easily recycled and disassembled; (b) consumerism must decline and planned obsolescence needs to be considered when assessing the environmental impact of products and services.

COMMODITY

% DEMAND INCREASE, 2018 TO 2050

Graphite

494

Cobalt

460

Lithium

488

Indium

231

Vanadium

189

Nickel

99

Silver

56

Neodymium

37

Lead

18

Molybdenum

11

Aluminum

9

Copper

7

Alexandra Colalillo is an economist and manager at a multinational professional services firm in Western Australia. A key part of Alexandra’s role involves assisting global and mid-tier mining companies respond to risk, fluctuating economic conditions and building strategies to minimise financial and operational uncertainty.

She also hosts her own economics podcast - ‘The Shady Economist’ - designed to break down topical Australian economics and geopolitics.

Alexandra writes about the local, national, regional, and international economy as it relates to the mining and oil & gas sector.

From 2018 to 2050, graphite’s demand is set to increase by 494%.

– 21 –

ESG

Building sustainability from the ground up As one of mining’s most respected OEMs, Epiroc is always ahead of the curve when it comes to industry developments and advancements.

Now, the company takes the ESG plunge.

Epiroc is placing a particular emphasis on its ESG standards.

E

piroc is becoming an important player in mining’s decarbonisation hunt, as the original equipment manufacturer (OEM) hones its products and offerings to enable mining companies to advance their practices.

The mining industry is amid a fastpaced transition to work smarter, safer and more sustainably, and as a trusted supporter of the sector, more is being asked of Epiroc every day.

To ensure it sustains its reputation as one of mining’s leading OEMs, Epiroc is placing a particular emphasis on its environmental, social and governance (ESG) standards.

Evolving sustainability is a critical cog to ESG, and Epiroc safety, health, environment and quality (SHEQ) manager David Galbraith says renewable energy is playing a big part in the company’s green push.

Epiroc has more than 16 service centres across Australia located in capital cities, regional hubs, and key mining and drilling sites.

Deploying greater renewable energy across the company’s branches has been an expansive but united operation, as all stakeholders understand its urgency and importance.

– 22 –

“I think our renewable energy (usage) was at 14.2 per cent at the beginning of 2021.

It’s now at 55 per cent and we’re working on projects to get that to 80 per cent in the next two years,” Galbraith says.

“To get to where we are now, it was a matter of going back to our providers and saying, ‘Can you give us green energy and for a minimal cost?’. It was quite achievable so that’s the way we’re going with most of our branches.”

The renewable energy push forms part of Epiroc’s sustainability goals, whereby the company has an objective of halving its CO2 emissions by 2030 across four different areas – operations, transport, products and suppliers.

Galbraith says the embrace of renewable energy is proving important to decreasing emissions in Epiroc’s operations, while in transport the company is transitioning from air freight to sea freight where it can. Remanufacturing is also playing an important role.

“Some of the other measures we’re looking at include remanufacturing (reman). While reman is something we’ve always done, we didn’t initially think we did it that well until we took a closer look at it,” Galbraith says.

“We actually reman a lot which does reduce what comes into the country. And

it depends on the components; we will try and source them locally where we can, but in other situations we’ll have a reman hub set up and used products will go back to that particular location.”

Mining customers can sign up to Epiroc’s dedicated Reman Program, where they will have the opportunity to return used components in exchange for remanufactured components, giving parts a new lease on life.

Epiroc upgrades the used components at its purpose-built facilities, ensuring the latest OEM engineered improvements are made.

Once remanufactured, components go through a testing process to ensure no shortcuts are made on product quality or longevity.

The Reman Program offers customers a lower-cost option to purchasing new parts and reduces their footprint in the process.

As the technology becomes more readily available, battery-powered vehicles will form a quintessential part of Epiroc’s decarbonisation ambitions going forward.

A battery-driven electric fleet facilitates savings on maintenance, ventilation and cooling, as one of the biggest expenditures in many mining operations is the cost of ventilation related to the use of diesel.

With electric machinery, that cost can be cut by at least half.

In 2021, the company deployed its first Australian battery loader to a copper mine in Cobar, New South Wales. The Scooptram ST14 front-end loader is assisting the mining company to reduce its diesel emissions without losing out on productivity.

Epiroc also has battery-powered trucks and drill rigs in the pipeline in Australia, and as part of its 2030 sustainability goals, the company will continue to explore more ways of how it can increase electrification in its machines.

“One of our targets is to offer a full range of emissions-free products. That doesn’t mean that every product will be non-diesel but there

AUSTRALIAN RESOURCES & INVESTMENT

One of our targets is to offer a full range of emissions-free products. That doesn’t mean that every product will be non-diesel but there will be an alternative available as a battery pack or hybrid option. will be an alternative available as a battery pack or hybrid option,” Galbraith says. “By 2030, we want to have all of our machines available as either battery or electric.”

Battery conversion will also become more commonplace as Epiroc seeks to provide flexibility for its customers.

In Canada, Evolution Mining ordered the conversion of two diesel-powered Epiroc

Epiroc’s Reman Program reduces the company’s carbon footprint.

Scooptram ST1030 machines for use at its Red Lake gold mine.

Conversion kits for other machines will follow, including for the ST14 loader which is already being tested as a converted version.

Epiroc will offer a quick turnaround time for the conversion, which is included in a midlife rebuild and puts machines back on site ready for heightened performance without unnecessary disruptions to production.

Health and safety is another important consideration for Epiroc’s ESG ambitions, and the company is constantly honing its technologies in this regard.

Galbraith says the ability to create operator-free environments is becoming more sought-after in today’s increasingly dangerous mining landscape.

“This is where automation comes in. That takes the operator out of the line of fire,” Galbraith says. “There is always the chance the machines will fall over or a roof fall will happen, so if there’s no operator there, there’s no risk for human injury.”

“Autonomous or remote control are both big factors here. Our production drill rigs are known to go into those high-risk areas, and for a long time we’ve had them remotely operated

Cylinders used in the remanufacturing process.

so an operator could stand 200 metres back from the machine and operate it remotely.

“Now with automation, they can be on the surface and reviewing the operation from there.”

As Epiroc evolves its ESG standards, the company is also becoming more accountable, with regular work in progress (WIP) meetings taking place – something that was less of a focus in years gone by.

“We have a quarterly review meeting with our president – we had four of those last year. That’s how serious we’re taking it globally; I’ve got to report back to our president who is based in Sweden every quarter with where we’re up to, what we’re doing, and they’re happy with how we’re progressing,” Galbraith says.

This forms part of Epiroc’s commitment to its code of conduct, where the company sets out principles for how its stakeholders engage with one another, including employees, customers, shareholders, business partners and society more broadly.

Epiroc is striving to increase the presence of females across its workplace, with the goal to double the number of women in operational roles by 2030.

The Epiroc workplace is a hub for growth, with the company offering a range of individual development opportunities for its staff.

Whether it’s research and development (R&D), manufacturing, purchasing or sourcing, or sales and services, Epiroc strives for a dynamic workplace, where employees can specialise in different areas.

With a proud history dating back to 1873, Epiroc has created a proven business model based on innovation, commitment and collaboration.

In 2022, as Epiroc continues to advance and create new and uncharted mining solutions, the company’s ESG scope will ensure it is doing so more intelligently than ever.

– 23 –

GOLD

Chasing the next Fosterville Chalice Mining recently spun-out its gold assets into new company Falcon Metals, which will oversee the fancied Pyramid Hill project near Bendigo in Victoria.

C

halice Mining has been in the spotlight a lot lately, and it’s not just because of the company’s recent history-defining resource at the Julimar project in Western Australia.

Chalice has been active in the boardroom, fine-tuning its business model to ensure Julimar has the best opportunity to become the Tier-1 project it’s poised to be.

In December 2021, Chalice completed a demerger of its gold assets into new company, Falcon Metals, which listed on the ASX in the same month.

Falcon will be the new face of Chalice’s

Pyramid Hill, Viking and Mt Jackson gold projects in Victoria and Western Australia, with the former project a particular focus for Falcon in the early going.

Located near Bendigo in the same region as Kirkland Lake’s Tier-1 Fosterville gold mine, Pyramid Hill spans more than 5000 square kilometres of licences and will see Falcon hold the largest exploration holding of any company in this prospective region.

Falcon managing director Tim Markwell says prior to making the discovery at Julimar, Pyramid Hill was Chalice’s main priority.

Pyramid Hill spans more than 5000 square kilometres of licences.

– 24 –

“Pyramid Hill was applied for by Chalice in 2017, just when noises were being made about Kirkland Lake’s discovery at Fosterville, and Chalice started picking up ground around the northern Bendigo, Fosterville region because the company realised there was going to be a bit more interest here,” he says.

“So Chalice picked up ground and Pyramid Hill became quite a valuable asset – this is pre-Julimar – and then in 2020 the world changed when Chalice drilled a hole at Julimar and made a world-class discovery of nickel, copper and platinum group elements

AUSTRALIAN RESOURCES & INVESTMENT

Falcon Metals managing director Tim Markwell.

We’re taking it each day as it comes but each drill season, you think this is the one that’s going to turn a prospect into a deposit, and I think we’ve certainly got the right ground and the right people, the right time in the cycle to make this work and make a discovery.

(PGE) 70 kilometres from Perth.”

With COVID-19 stringing out company resources and redirecting priorities, Chalice had to revise its gold game plan.

“As you can imagine, the Julimar discovery changed Chalice completely and not only was the board focussed on this project, COVID-19 limited travel around Australia. So it was very hard at that point in time for the Chalice team to put their minds to Pyramid Hill, given they had a world-class asset at Julimar that needed feasibility work and drill-outs, etc,” Markwell says.

With competitor interest in the Fosterville gold mining region increasing and a sustained desire to elevate Pyramid Hill into the project it has the potential to be, it was time for a reshuffle.

This is where the foundations of Falcon Metals were established, resulting in a new entity to represent a burgeoning gold portfolio.

“So Chalice decided that the best thing that they could do was spin-out Pyramid Hill, give it a life of its own, give it a dedicated Victorian-based management team and raise an initial amount of money to properly continue the work,” Markwell says.

Falcon would raise $30 million as part of an initial public offering (IPO), before listing on the ASX shortly after.

Launched in December, the IPO was oversubscribed and saw Falcon issue 60 million shares at $0.50 per share alongside the 117 million shares distributed in specie to Chalice shareholders upon the demerger.

This gave Falcon an indicative market capitalisation of $88.5 million upon listing, which at the time of writing

had increased to $115.93 million.

Markwell says the IPO was an important step to ensure Falcon was able grab the Pyramid Hill opportunity by the horns.

“I think the IPO is what was needed. The tenement spans over 5000 square kilometres in Victoria and I think the traditional IPO you get in the mining space – where companies raise $5-6 million – I think that would’ve probably been insufficient to do this properly,” he says.

“I think for a large ground position you need to hit it hard; you’re looking for a very high-value prize if you can find another Fosterville – these are extremely valuable assets if you find them – so the IPO really gives Falcon the capacity to do

this properly, to drill aggressively and seize the moment here.”

So what’s the situation at Pyramid Hill as it stands?

Leading up to the demerger, Chalice had already completed foundational exploration work at the project, leaving Falcon with a good head start to realise its potential.

“In the two-and-a-half to three years that it was working at Pyramid Hill, Chalice did all the first principles regional scale exploration, soil sampling, original aircore (AC) and gravity anomalies and they managed to find four prospects,” he says.

Chalice would identify the Ironbark, Karri, Banksia and Wandoo prospects within the Pyramid Hill tenure, with the first

A drill rig at the Pyramid Hill gold project.

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GOLD

Ironbark and Karri are the most advanced prospects at Pyramid Hill.

two considered the most advanced.

“Ironbark and Karri have had a lot of AC drilling and some diamond drilling, especially at Karri. Karri’s already got a couple of nice intercepts that need to be drilled around, we need to vector in on where the high-grade goes and try to turn it into an orebody that can be drilled out to a resource level,” Markwell says.

“So there will be quite a lot of diamond drilling to be done at Karri. Ironbark is a little bit earlier stage but there has been a couple of diamond holes done to take a look at the rocks, and in the meantime some AC drilling at Ironbark East turned up some very nice air-core hits.”

Falcon will complete follow-up AC drilling around Ironbark East as it looks to elevate the prospect to a diamond drill level in time for the 2022 drill season.

Ensuing diamond drilling will then take

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place with Falcon hoping to convert Ironbark East to a resource level when possible.

Falcon is also looking to further realise Banksia and Wandoo, while further regional exploration will occur in the background as the company looks to identify more prospects at Pyramid Hill.

“The earlier-stage prospects are Banksia and Wandoo and the objective of those is to complete more AC drilling,. There are some nice hits but there’s not much context to those hits, so we need to do more AC drilling around those to find out where’s the best place to put the diamond rig next year,” Markwell says.

“In the background, there will be a bit more regional scale work. The idea would be that next drill season we’ll have another one or two prospects that we can put on the map. All in all, it’s important to keep things moving, to keep working

hard until we get something that hopefully leads to an infill drill program.”

Chalice’s Viking and Mt Jackson gold projects in Western Australia were also passed onto Falcon in the demerger, with both to become the focus of drilling at some stage.

“The Viking project is more advanced; that’s got four prospects that have already had quite a bit of AC drilling done on them, and they’ve returned high-grade hits – clear anomalies there,” Markwell says.

“So we’ll be sending in a reverse circulation (RC) rig to Viking sometime in 2022 to do some targeted drilling and test what’s under those oxide anomalies that were drilled quite a few years ago now.

“Viking is a fairly simple, walk-up target to do the unfinished business that wasn’t done a few years ago. Hopefully by the time the RC rig arrives there, the borders will have changed which would allow us to go over to WA and do the work ourselves.”

Falcon is involved in an earn-in agreement with ASX-listed Metal Hawk at Viking, whereby it can spend a minimum of $200,000 over two years as part of a $1 million earn-in and acquire an initial 51 per cent interest in the project.

If it achieves the 51 per cent stake, Falcon has the option to earn a further 19 per cent (70 per cent total) in Viking by investing an extra $1.75 million into exploration over 30 months.

Falcon’s wholly owned Mt Jackson project is at an earlier stage than Viking, and Markwell sees the company also completing some exploration work there in 2022.

Markwell is joined by the likes of Alex Dorsch as non-executive director, who has been instrumental in elevating Chalice Mining to the ASX 200 company it is today, while highly experienced geologist and mining executive Mark Bennett has been appointed non-executive chair of Falcon.

Andrea Betti serves as Falcon’s chief financial officer and company secretary.

With an esteemed panel, fancied assets and an unwavering motivation to explore the size of the treasure chest, Falcon could be onto the next Fosterville in the years to come. Markwell is optimistic of what’s ahead.

“We’re taking it each day as it comes but each drill season, you think this is the one that’s going to turn a prospect into a deposit, and I think we’ve certainly got the right ground and the right people, the right time in the cycle to make this work and make a discovery,” he says.

, D E E N U .

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GOLD

Australia’s growing treasure chest Australia’s gold industry is tipped for continued growth, propelled by new gold mines and existing expansions. Soon enough, output is expected to top 374 tonnes, writes Anthony Fensom.

Drilling at Superior Resources’ Greenvale project in QLD.

I

n 2021, Australia claimed the mantle of the world’s largest gold producer, with rising investment and exploration activity boosting the outlook. Will the strong momentum continue in 2022?

Having been the world’s second-largest producer for around a decade, Australia overtook China in the first half of 2021, with production of 157 tonnes compared to China’s 153 tonnes amid reduced output in the Asian giant, according to analysts Surbiton Associates.

This followed strong production levels, with 321 tonnes produced in Australia in the 2021 financial year (FY21), according to the Office of the Chief Economist.

The government forecaster sees output rising to 362 tonnes in the 2022 financial year, with a further climb to 374 tonnes predicted in the 2023 financial year (FY23) following the opening of new mines and existing-mine expansions.

Australia’s gold export earnings are expected to reach $28.4 billion in FY23, up

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marginally from the previous fiscal year’s $28.3 billion, on the back of higher export volumes. Australia’s biggest export markets in FY21 comprised the United Kingdom, the United States, Singapore, China and Switzerland.

Boosting the production outlook, gold exploration expenditure increased by 21 per cent year-on-year to reach nearly $430 million in the September quarter 2021, amid high US and Australian dollar gold prices.

Western Australia remained Australia’s “golden state”, accounting for 72 per cent of total gold exploration expenditure.

Among the WA projects, Red 5’s King of the Hills gold project is expected to start production in the June quarter 2022, while Ramelius Resources’ Tampia mine in WA is seen adding further output.

In addition, Newcrest is extending the mine life of its Telfer mine, with other additions including Resources and Energy Group’s Granny Venn mine and Calidus Resources’ Warrawoona mine.

Other emerging WA gold miners include Sayona Mining, which is eyeing Hemi-like targets near De Grey Mining’s 6.8-millionounce discovery. Pending approvals, drilling is planned for 2022 at Sayona’s Mount Dove and Deep Well projects.

“The Hemi discovery has highlighted the Pilbara’s potential for major new gold finds. We’re excited by the opportunity to advance our projects, adding to the value of our lithium assets in Canada and Australia,” Sayona managing director Brett Lynch says.

Another WA-focused miner, Platina Resources, is planning an air core drilling program at its Challa gold project following encouraging gold assay results, with new drilling also eyed for its Xanadu gold project in the Ashburton Basin.

“Western Australia is Australia’s premier gold state and we’re confident we are in the right place at the right time,” Platina managing director Corey Nolan says.

On the east coast, Queensland-focused Superior Resources sees potential for

AUSTRALIAN RESOURCES & INVESTMENT

Sayona managing director Brett Lynch.

significant resource growth at its Steam Engine gold project, located around 210 kilometres west of Townsville.

The company has reported “spectacular” drilling results, including up to 115.2 grams per tonne of gold, with recent drilling adding to its confidence in the resource.

Superior plans to develop a low capex mining operation at Steam Engine. An April 2021 scoping study showed its ability to deliver post-tax, life-of-mine cash flow of around $24 million per annum, based on a $2200 per ounce gold price.

“Steam Engine continues to pick up speed and we look forward to announcing a new mineral resource estimate and maiden ore reserve,” Superior managing director Peter Hwang says.

“With gold prices remaining high in Australian dollar terms, we see a bright outlook for Steam Engine in delivering nearterm cash flow.”

Further afield, Melbourne-based Nova Minerals’ vision of becoming a major North American gold producer has become clearer.

The company has increased the total gold resource estimate at its Estelle project in Alaska to 9.6 million ounces from 3.3 million ounces over the past 12 months.

“Our confidence that it could be the world’s next major gold trend has been boosted by some exceptional drilling results [in 2021], highlighted by one of the largest gold intercepts of the last decade,” Nova chief executive officer Christopher Gerteisen says.

BRIGHT OUTLOOK Although the gold price finished 2021 around 4 per cent lower, at $US1806 ($2525) per ounce, analysts see a range of factors affecting the precious metal’s outlook.

“From the end of March through to end of December, gold trended higher,

supported by rising inflation rates and a renewed decline in real bond yields,” the Perth Mint’s Jordan Eliseo says.

Competing factors include the headwinds of rising inflation and higher interest rates, offset by the impact of the Omicron variant of the COVID-19 pandemic and a potential US stock market correction, which could see demand for gold rise as a safe haven asset.

The Australian government forecaster sees prices easing to $US1700 by 2023, while J.P. Morgan analysts project tightening US monetary policy could push gold prices to as low as $US1520 per ounce in 2022.

In contrast, ANZ Research expects the gold price to average $US1725 per ounce in

2022. It points to stronger physical demand, “driven by a rebound in consumer demand in China and India”, supported by “strong buying” by central banks.

Other analysts are even more bullish.

In January, Canaccord Genuity analysts lifted their 2022 gold price forecast to $US1830 an ounce and its long-term price to $US1927, describing Australian listed gold miners as “undervalued”.

The World Gold Council sees the headwinds of higher interest rates and a stronger US dollar being potentially offset by high inflation, market volatility and robust demand from other sectors, such as central banks and jewellery.

“Against this backdrop, gold’s performance during 2022 will ultimately be determined by which factors tip the scale.

Yet, gold’s relevance as a risk hedge will be particularly relevant for investors this year,” the council said in its ‘Gold Outlook 2022’.

With the gold price in Australian dollar terms likely to remain historically high, Australian miners remain bullish.

“Gold continues to be valued as a hedge against inflation and this will come into its own in 2022,” Superior’s Hwang says.

“For Australian miners, the conditions are excellent for more new discoveries that will propel production and investment and further cement our nation’s position as a leading global producer.”

Gold from Platina Resources’ Challa project in WA.

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GOLD

The gold outlook for 2022 After 2021’s ups and downs, what can we expect of gold in 2022? Andrew Naylor, regional CEO APAC (ex China) of the World Gold Council, details the year ahead and the various factors that could impact the commodity’s performance. the Australian inflation story hasn’t been as pronounced, it’s still a concern and is one of the factors driving interest in gold.

Gold has long been considered a hedge against inflation and the data confirms this. The average annual return of 11 per cent in US dollars over the past 50 years has outpaced the Australian and world consumer price indices (CPI).

World Gold Council research demonstrates that gold also protects investors against high and extreme inflation. In years when inflation was higher than 3 per cent, gold’s price increased 20 per cent per year on average.

Over the long term, therefore, gold has not just preserved capital but helped it grow.

Gold is likely to face similar dynamics in 2022 to those of 2021.

2

021 was a mixed year for gold – although consumer demand started to recover, weaker investment demand saw the price soften from the record highs of 2020.

Gold finished the year approximately 4 per cent lower, closing at $US1806 ($2515) per ounce. The gold price rallied into the yearend on the heels of the rapidly spreading Omicron variant, likely prompting flightto-quality flows, but it was not enough to offset first-half weakness.

SOURCES OF DEMAND To understand the outlook for gold, it’s important to appreciate the sources of demand. Gold is a unique asset in that its demand profile is unlike any other.

Economic expansion tends to support consumer demand (bars, coins and gold jewellery). It also supports industrial demand, which on average accounts for approximately 7 per cent of annual demand.

Conversely, economic uncertainty is a big

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driver of investment demand. Other factors, including the interest rate environment and tactical positioning, also influence investment interest in gold.

But it’s this unique demand profile – it has both pro- and counter-cyclical demand – and its use as an industrial asset as well as a financial asset, that makes gold so interesting.

In short, it can perform differently to other assets. This is reflected in its lack of strong correlation to many other assets, particularly in downturns. And there results one of its key uses in a portfolio – as a diversifier.

I N F L AT I O N A major theme on the economic horizon is inflation. In the final quarter of last year global inflation continued to rise, especially in the United States where it rose to 7 per cent in December. This is the highest since 1982.

Germany and the United Kingdom are also impacted, with both recently posting the highest inflation figures in 20 years. Although

OUTLOOK FOR GOLD Gold is likely to face similar dynamics in 2022 to those of 2021. Competing forces will both support and curtail its performance.

Consumer demand will likely be supported by the continuing economic recovery, particularly in the major goldconsuming markets of Asia. Near term, gold’s performance will likely be impacted by real rates in response to the speed at which global central banks tighten monetary policy. Their effectiveness at controlling inflation will also have an impact.

As we start 2022, the US Federal Reserve is signalling a more hawkish stance.

Its projections suggest the Fed will hike interest rates approximately 3 times over the course of the year.

This is quicker than expected, but World Gold Council analysis of previous cycles of monetary tightening shows that the Fed has tended not to tighten as aggressively as members of the committee previously indicated.

Our research also suggests that gold typically underperforms in the run up to a Federal Reserve tightening cycle only to rebound in the period following the first rate hike.

AUSTRALIAN RESOURCES & INVESTMENT

A second point of consideration is that gold is a global market. Approximately 74 per cent of annual demand for physical gold comes from emerging markets.

Not all central banks will be as hawkish as the Fed. The European Central Bank (ECB), for example, has suggested that it is “very unlikely” interest rates will rise in 2022. The Bank of England increased rates at the end of last year, but it seemed to indicate only modest future hikes.

In India – the world’s second largest gold market – the Reserve Bank of India (RBI) has suggested it will maintain an accommodative policy, and the People’s Bank of China (PBOC) cut one of its policy rates in December. The global picture – at least as far as interest rates are concerned – is certainly mixed.

Although increase in interest rates can create headwinds for gold, our research suggests that historically their effect may be limited. Coupled with this is the inflation picture – elevated inflation and market pullbacks will likely sustain demand for gold as a hedge, particularly from institutional investors.

Gold will face both head- and tail-winds in 2022.

Potential headwinds include higher nominal interest rates and a stronger US dollar. Supporting factors include high and persistent inflation, continued market volatility, and robust demand from other sectors including consumer demand, industrial demand and central banks.

To help navigate the complex dynamics that impact gold’s performance, the World Gold Council has developed a valuation tool called Qaurum. This can be used to analyse how some of these drivers can impact gold’s performance.

THE NEW ECONOMY Two other trends are likely to have an impact.

The increasing focus on sustainability is guiding investment decisions. Reports suggest that over 55 per cent of assets in Australia are now managed with a sustainability lens.

The gold industry has led the way explaining its environmental, social and governance (ESG) credentials. The Responsible Gold Mining Principles is one example. Launched in 2019, the Responsible Gold Mining Principles is a framework that sets out clear expectations for consumers, investors, and the industry as to what constitutes responsible mining.

The industry has also taken a lead in decarbonisation, with work undertaken to quantify the sector’s greenhouse gas emissions, and major steps taken to reduce its carbon footprint.

Finally, the digitisation of finance will also have an impact. Gold is sometimes compared to cryptocurrencies. For the reasons explained above, they are fundamentally different asset classes and whilst interest in crypto might grow, it should not come at the expense of gold demand.

Gold has a unique role to play – as a physical asset with limited supply and diverse sources of demand, it behaves differently to other assets and is often considered an effective risk mitigator. It is also a highly liquid asset (over $145 billion is traded every day) and it does not exhibit strong correlations with other major asset classes, making it a potential portfolio diversifier. The same cannot be said of crypto-assets.

Andrew Naylor joined the World Gold Council in 2016 and since 2020 has led our regional office in Singapore. Originally part of the central banks and public policy team, Andrew was responsible for our Islamic finance initiative, culminating in the launch of the AAOIFI Shari’ah Standard on Gold.

Andrew started his career at international consultancy firm Cicero Group advising financial institutions on foreign investment and trade policy in Asia, and the global regulatory reform agenda. In this role, he provided economic and political commentary for global broadcasters including the BBC, Bloomberg, CNBC and China Central TV.

Gold is considered a potential portfolio diversifier.

– 31 –

MINERAL SANDS

Sands shining brighter Mineral sands are a hot topic in the Australian mining industry, with several mining companies advancing projects amid a growing demand for the commodities, writes Anthony Fensom.

Cyclone holds an estimated 6 per cent of global zircon supply.

C

onstrained supply and the world’s post-pandemic recovery have boosted the outlook for Australia’s mineral sands miners. With “critical minerals” such as zircon in demand, the industry is ramping up expansion plans, despite some regulatory roadblocks.

On November 24, the Victorian Government shocked the industry with its announcement blocking Kalbar Operations’ proposed Fingerboards mineral sands mine in East Gippsland.

Amid organised community opposition, Victorian Planning Minister Richard Wynne ruled against the project, describing it as posing a “significant risk to the environment and valuable horticulture industry”.

However, on January 11, ABC News reported that the federal agriculture department was reviewing the rejected

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application under Commonwealth law, with Kalbar stating it was “already addressing the recommendations for the next phase of approvals”.

The potential blocking of the project has highlighted the obstacles to further supply growth, not only in Australia but also internationally.

In a November 10 presentation, major producer Iluka Resources noted the challenges facing the industry, including the COVID-19 pandemic, logistics, climate change, escalating sovereign risks, declining grades at existing mines and the delay of new projects.

The company’s presentation to a TZMI conference also noted the “decreasing supply of low uranium and thorium zircon”, with China’s strict enforcement of radiation limits also impacting supply.

While more than 95 per cent of current zircon supply contains less than 500 parts per million (ppm) uranium and thorium, less than half of potential new projects meet this criteria.

“Absent a processing solution to remove these impurities, the zircon is ineligible for sale into the ceramics market,” Iluka’s Matthew Blackwell, speaking at the TZMI conference, says.

However, Iluka reported increased zircon prices in the third quarter of 2021, with a weighted average received price of $US1487 ($2079) per tonne. This compared to the $US1311 per tonne received during the prior year’s corresponding quarter.

“Overall, the ceramics industry is experiencing sustained growth in sales. However, profitability is being challenged by increasing costs throughout

AUSTRALIAN RESOURCES & INVESTMENT

Diatreme chief executive officer Neil McIntyre.

the supply chain,” Blackwell says.

However, he noted “ongoing supply-side tightness” with the company’s fourth-quarter sales volumes “fully committed”.

Titanium is also seeing a recovery, with the third-quarter rutile price reaching $US1242 per tonne, in line with its last high seen in 2020, following the temporary shutdown of Rio Tinto’s Richards Bay mine in South Africa and the continued suspension of Iluka’s Sierra Leone mine.

Blackwell pointed to “unprecedented” logistics costs associated with container shortages in China, with North American and European pigment producers also facing chlorine shortages.

Similar to zircon, Iluka sees a constrained supply outlook for rutile, with declining high-grade feedstock from existing producers and limited new supply due to high capital costs, increasing jurisdictional risks and low rutile assemblage of new projects.

The company also pointed to its project pipeline, including its Atacama deposit in South Australia’s Eucla Basin, the Balranald project in the Murray Basin, and phase 2 of the Eneabba project in Western Australia, with a decision on the resumption of its Sierra Leone rutile mine still “pending”.

a significant supplier, accounting for an estimated 6 per cent of global zircon supply,” Diatreme chief executive officer Neil McIntyre says.

“Shovel-ready with all necessary approvals and permitting, the Cyclone project is set for development amid an environment of shrinking supply of highgrade zircon.”

A 2018 definitive feasibility study showed a post-tax net present value of $113 million, an internal rate of return of 27 per cent and capital payback within three years.

With the strategic rare metal, hafnium, also identified within the zircon component of Cyclone’s heavy mineral concentrate, the project could be even more valuable.

“We’re seeking a development partner to take Cyclone forward into production, at a time when projects of this quality are hard to find,” McIntyre says.

“With no shortage of demand for highgrade zircon and constrained supply, Cyclone is in an excellent position to advance into development.”

Other WA mineral sands miners are also moving to increase production, including through merger and acquisition activity.

In November 2021, Image Resources announced the $24 million acquisition of mineral sands tenements in WA’s historic Eneabba mining district from Sheffield Resources.

Image said the tenements contained 211 million tonnes of 3 per cent heavy minerals, with the company seeking to “identify and secure potential development projects outside of its current portfolio”.

The Perth-based company has a portfolio of 12 zircon and titanium projects in WA,

led by its operating Boonanarring mine, with its second and third projects expected to be developed following the depletion of Boonanarring’s ore reserves.

Sheffield Resources has continued to advance its Thunderbird mineral sands project, with the company aiming to complete a definitive feasibility study and secure project financing ahead of a final investment decision, expected in early 2022.

Another aspiring producer, Strandline Resources, announced on January 17 that construction was 50 per cent complete at its Coburn mineral sands project in WA. The company is targeting first production of heavy mineral concentrate during the December quarter 2022, with current market spot prices for zircon and titanium feedstocks “at least 25 per cent” above its original assumptions.

In south-west WA, Astro Resources aims to launch a pre-feasibility study at its Governor Broome heavy mineral sands project, with the company also acquiring some tenements from Iluka Resources.

Meanwhile on the east coast, Astron Corporation has flagged the potential start of construction in 2024 at its Donald mineral sands project in Victoria.

With analysts pointing to a widening global supply deficit, Australia’s mineral sands miners appear set to capitalise.

“Australia is in the right place at the right time, with the opportunity to supply growing global markets with high-grade mineral sand resources in an environmentally sustainable manner,” Diatreme’s McIntyre says.

“Demand for our products continues to rise and Australian miners are well placed to benefit.”

Drilling at Diatreme’s Cyclone zircon project in WA.

N E W P R OJ E C T S Boasting the world’s largest mineral sands deposits, Australia’s mineral sands industry sees potential for growth, particularly amid global supply constraints.

Among the next wave of projects is Diatreme Resources’ Cyclone zircon project, located in the zircon-rich Eucla Basin of Western Australia.

“Cyclone has the potential to become

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HALLOYSITE-KAOLIN

Halloysite-kaolin: Australia’s untapped commodity

Halloysite-kaolin is a difficult product to commercialise.

Before a company can commercialise halloysite-kaolin, it must understand the complex marketplace of the high-value commodity. One company is proving just that.

H

alloysite-kaolin is an intriguing commodity growing in stature in Australia as mining companies and explorers come to understand its high value.

It’s considered the most researched clay mineral in the world, yet there are no active producers of the resource in Australia to this point.

However, there are a handful of emerging companies looking to change that, the most advanced of which is Andromeda Metals.

Andromeda is in the process of developing its Great White kaolin project on the Eyre Peninsula in South Australia and has a halloysite-kaolin specialist to call its managing director.

James Marsh’s family has been keenly

– 34 –

involved in kaolin over the years, and after working in Cornwall in the United Kingdom, where kaolin was first mined in the 1700s, Marsh moved Down Under in 2002 and steadily began lifting the commodity’s profile.

Halloysite-kaolin is valuable because of its unique tubular microstructure, made up of hollow nanotubes that can only be observed and understood through the most powerful microscopes.

It’s an incredibly rare resource, but it has a lot of applications, something being proved by Andromeda.

In our conversation, Marsh demonstrated upward of seven different commercial avenues for the resource, and while Andromeda has yet to produce commercial

amounts of halloysite-kaolin, it’s already putting in the corporate groundwork.

Andromeda has executed an agreement with Japanese porcelain manufacturer Plantan Yamada for its Great White CRM product, which will see the company purchase 5000 tonnes per annum of halloysite-kaolin at $700 per tonne for use in ceramics.

Marsh says his relationships in the field gave Andromeda an advantage in inking this deal.

“We chose ceramics first because we knew it had the halloysite which is where it’s highly valued and luckily with my background – I’ve been selling this stuff for 30-odd years – I’ve got a list of customers that I’ve been involved

AUSTRALIAN RESOURCES & INVESTMENT

with over the years,” he says.

“So that gave us a huge head start. Plus I knew exactly why these buyers would value it and how much it was worth for them, because they would never tell you that themselves.”

Marsh says much of halloysite-kaolin’s complexity comes down to selling the product, and the fastidious analysis and decision process buyers go through before signing off on any offtake deals.

“It’s a very hard material to market because there’s no index pricing for this stuff. In China alone, there’s over 10,000 users of this material and they’ve all got their own different formulations, their own processes, their own people who work different ways,” Marsh says.

“You also don’t talk to the buyers, you talk to the technical people and say, ‘here’s our product, this is its chemistry, this is its particle size, this is how it’s going to perform, this is how to use it in your application’ and convince them how they can use it.”

In its quarterly report for January to March 2021, Andromeda highlighted the meticulous analysis Plantan Yamada completed before signing off on the deal.

“Yamada analysed and tested a broad series of samples at laboratory and pilot scale over two years prior to running approximately 40 tonnes of material through its processing plant,” the report states.

“This was used to manufacture a large batch of high-quality porcelain items to give it a sufficiently high level of confidence to sign a legally binding agreement. Gaining customer approvals and offtake agreements for industrial minerals products such as halloysite-kaolin is an extremely intensive and lengthy process.

“It also involves a significant investment of resources by the target customers, so they must be fully convinced of a project’s viability

and ability to supply very consistent product over a long period before they are willing to run sufficient tests for a binding agreement.”

Andromeda has also established an offtake partnership with Jiangsu Mineral Sources International Trading Co. for its Great White PRM product.

This will see the Chinese commodity trading house purchase 70,000 tonnes per annum of Andromeda’s kaolin product for more than $700 per tonne to be used in the coatings and polymers market. This is distinct from the halloysite-kaolin product to be sold to Plantan Yamada.

Andromeda also sees a potential to commercialise halloysite-kaolin in industries such as construction, agriculture, healthcare, cosmetics and nanotechnology.

With Great White’s potential, which Andromeda says is at 40 per cent halloysite purity and growing, the recent approval of the project’s mining lease, the established offtake partnerships and other commercial ventures in the works, Andromeda is well placed to elevate the site into production.

Marsh says Andromeda still has a few hoops to jump through before Great White construction can commence. Getting its Program for Environment Protection and Rehabilitation (PEPR) approved is an important step.

The PEPR “sets the regulatory requirements for the environmental management of impacts of a mining operation”. As part of this, Andromeda will need to outline its strategies to limit the environmental impacts of Great White across all stages of the mine’s life.

If all goes to plan, the PEPR will be signed off by June 2022, before Andromeda can then break ground at Great White.

The Great White definitive feasibility study

Halloysite-kaolin is valuable because of its unique tubular microstructure, made up of hollow nanotubes that can only be observed and understood through the most powerful microscopes.

Halloysite-kaolin is a highvalue derivative of kaolin.

(DFS) and bankable feasibility study (BFS) are also priorities for early 2022.

“The DFS will come out and that will be followed quickly by the BFS because we want to get as much debt funding as we can,” Marsh says.

“Then we’re looking very closely at starting initially with some direct shipping ore (DSO) to acquire some early cash flow.”

Marsh says the DSO avenue, which involves the sale of unprocessed ore, could be particularly fruitful as Andromeda develops its processing capacity at Great White.

“To build and commission a plant was looking at six months, but now it is looking more like nine months with the shipping delays around the world and delays in equipment, so we’re looking at factoring in the DSO business,” Marsh says.

“Because our material is worth double the average kaolin, the actual ore itself is worth double as well. So we could actually make some nice money out of sending the ore to the right people.”

Andromeda aims for first halloysite-kaolin production in mid-2022, which will solidify decades of hard work from the nascent mining company.

Other explorers in the Australian halloysite-kaolin space include Latin Resources, Oar Resources and Suvo Strategic Minerals, all of which are in less-advanced phases of development than Andromeda.

There’s also iTech Minerals, a company also focussed on developing battery and critical minerals such as graphite and rare earths. iTech has its Franklyn and Eyre

– 35 –

HALLOYSITE-KAOLIN

Andromeda aims for first halloysite-kaolin production in mid-2022.

Peninsula halloysite-kaolin projects in South Australia, the former of which is more developed given the company inherited exploration assets from Archer Materials in 2021.

“Both of them (Franklyn and Eyre Peninsula) are relatively early stage. We do have a head start at the Franklyn project … in that we’ve inherited about 10 years of historical exploration from Archer,” iTech managing director Michael Schwarz says.

Archer defined an exploration target of between 45 and 91 million tonnes of halloysite-kaolin at Franklyn prior to iTech taking over, and Schwarz says the predecessor found some of its Franklyn drill holes to be particularly halloysite-rich.

After iTech completes preliminary testing to identify further halloysite-kaolin prospects at Franklyn, the company will look to resume drilling at the project in 2022. iTech then plans to move its drill rig over to the Eyre Peninsula project where it has various exploration priorities, including the Ethiopia and Salt Creek prospects, both boasting the potential for rare earths.

In January, iTech received the final batch of analytical results from the resampling of historical drilling at Ethiopia, with beneficiated samples indicating the presence of rare earth elements (REEs) at the prospect.

Ethiopia’s ETH-029 drill hole has shown particular potential.

“The rare earths in ETH-029 continue to display enrichment of neodymium and praseodymium, which are critical in the production of permanent magnets for electric vehicles and renewable energy. Significantly, this drill hole also shows a greater enrichment of high-value heavy rare earths,” the company states in an ASX announcement. iTech has sent samples from the Ethiopia and Salt Creek prospects to the Australian Nuclear Science and Technology Organisation (ANSTO), who will complete

– 36 –

It’s a very hard material to market because there’s no index pricing for this stuff. In China alone, there’s over 10,000 users of this material and they’ve all got their own different formulations, their own processes, their own people who work different ways. scoping test work and investigate the leachability of rare earths.

“With continued good grades and thick intervals of REEs in the kaolin-rich clay at Ethiopia, it is now important to determine how cost effectively the REEs can be recovered. The REE leaching test work being undertaken at ANSTO will be a good first step in determining the extent to which the REEs can be ionically leached,” Schwarz says.

While the early signs look strong, as

the company continues to understand the capability of its assets, iTech still has a road ahead of it before the Franklyn and Eyre Peninsula projects can be commercialised.

As demonstrated by Andromeda, understanding the market and establishing the quality of the product is critical in making a run at this intricate commodity.

Once a company has certified that, it has every chance of capitalising on the expansive buyer base halloysite-kaolin can offer.

Andromeda’s Great White project is located in South Australia.

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VA N A D I U M

The rise of vanadium With the recent industry focus on sustainability and electrification, critical minerals such as vanadium have increased in prominence.

V

anadium is currently used in high-strength, low-alloy steel and is emerging as a critical battery storage commodity for its use in vanadium redox flow batteries, ideally suited to large, grid-scale storage solutions.

In July last year, the Australian Government announced it is supporting the resources and critical minerals sector with almost $50 million in funding for projects to help grow businesses and create new jobs.

The matched funding from the $1.3 billion Modern Manufacturing Initiative will support eight companies to scale up local downstream processing of critical minerals and add value to the battery and clean technology supply chains.

This will include onshore production of battery storage systems and adoption of battery technology across the mining sector.

At the time, then-Minister for Industry, Science and Technology Christian Porter said Australia was well placed to capitalise on growing global demand for battery systems and the critical minerals associated

Multicom Resources’ St Elmo site is the first vanadium mine in Queensland to receive licence approval.

– 38 –

with their production, with the energystorage market expected to be worth almost $US20 billion ($27 billion) by 2027.

“Australia’s resource sector is worldclass. Through our $1.3 billion Modern Manufacturing Initiative, we are helping to unlock this enormous potential by providing targeted support for projects that will deliver big rewards for our local economy in terms of export earnings and new job opportunities,” Porter said.

“It is also critical that we build our sovereign capability in this sector, with China currently the world leader in critical minerals processing, including battery production.”

“Whether it’s building large-scale battery systems, adding value to critical minerals exports through new refining techniques, or driving the adoption of battery power in mining vehicles, these projects will increase Australia’s international competitiveness and help position us as a future leader in this crucial sector.”

One of the companies that was

successful in this initiative was Australian Vanadium, which is using its $3.9 million grant to fast-track manufacturing of largescale vanadium redox flow battery systems that can be used to support residential power grids.

In November, the Queensland Government recognised the importance of vanadium as a new economy mineral with plans for a processing plant in Townsville.

Queensland Treasurer and Minister for Trade and Investment Cameron Dick says vanadium will play a significant part in the state’s transition to clean energy.

“We want regional Queensland to be a global leader when it comes to everything that’s part of the renewable energy revolution,” he says.

“Australia has the world’s third largest deposits of vanadium resources, but right now we don’t produce a single kilogram of processed vanadium.

“The mining companies looking to process vanadium at an industrial scale don’t have the capital necessary to make that jump. That’s where

AUSTRALIAN RESOURCES & INVESTMENT

our government can step in.”

The government will put at least $10 million towards the common-user facility, sourced from the $520 million Invested in Queensland program.

Dick says the government is still in the process of tendering for construction contracts and selecting the location.

“Once producers can see for themselves how processing occurs, they will have the confidence to invest in more manufacturing infrastructure and more jobs,” he says.

“Mining companies will be able to transport ore from their mine site to Townsville, enabling them to begin producing mineral samples at scale.”

Multicom Resources’ $250 million St Elmo vanadium mine in North West Queensland has been given the go-ahead, with construction to begin next year.

Multicom Resources chief executive officer Shaun McCarthy says mine construction is planned to start in 2022, with first production forecast for late 2023.

“The granting of the mining leases associated with the St Elmo project is the most significant milestone achieved

by Multicom to date and reflects the tremendous effort from the team over the past four years, with the support of our key partners,” he says.

“The process was smooth and efficient, made possible by the collaborative approach adopted by the company along

Australian Vanadium is extracting the mineral from magnetite.

with the Queensland State Government.”

In Western Australia’s Mid West region, Australian Vanadium’s operations are progressing smoothly near the town of Meekatharra.

Australian Vanadium managing director Vincent Algar says his company’s site has a 25-year mine life, with the aim to produce about 5 per cent of the vanadium’s world market.

The global vanadium market is about 110,000 tonnes of metal equivalent every year, and of that around 60 per cent is produced and consumed in China in the steel industry.

However, both McCarthy and Algar say they are excited at the prospect of the resource being identified as part of the critical minerals sector.

“We got into vanadium before the critical minerals tagline really came to

prominence,” McCarthy says.

“We are seeing that critical mineral space heat up both from the demand side, where there is a genuine requirement for more of these products to come to market, but also from a general interest point of view, which includes the Australian Government and other regions around the world in trying to secure the supply chain for various end uses.”

Vanadium redox flow batteries (VRFB) are part of a suite of batteries suited to stationary energy storage applications.

They are non-flammable compared with lithium batteries and have a longer service life of around 20 years — compared with 10 years for lithium batteries — and can discharge 100 per cent of their stored energy. However, they are much heavier per unit, making them more suitable for stationary storage applications.

– 39 –

VA N A D I U M

Mine construction at St Elmo is planned to start this year.

Two Australian companies are currently assessing VRFB production in Australia.

Australian Vanadium subsidiary VSUN Energy has undertaken a successful test of an electric vehicle battery charge using renewable energy, provided via a VRFB, with the potential of installing the system at mining sites.

The project opens the door for vanadium battery-based standalone electric vehicle (EV) charging

Vanadium is a hard, silver-grey metallic element.

– 40 –

stations anywhere in Australia.

VSUN Energy partnered with EV charging hardware and software provider Gemtek Group for the test.

Gemtek Group commercial manager Florian Popp says the company has tested a wide variety of power systems with their EV charging technologies.

“Developing expertise in integrated renewable energy EV charging solutions to suit Australian requirements for mining,

agricultural and regional applications has been a key focus for Gemtek,” he says.

“The VSUN Energy storage system’s unique capabilities and operating life provide a substantial advantage in hightemperature and remote environments.”

VSUN Energy is currently installing VRFBs into agricultural, commercial, mining and rural residential sites, and is working to develop an urban residential battery for construction in Australia.

According to the company, VRFBs have the capacity to be scaled up to suit a wide range of projects, from residential energy storage through to large grid-scale industrial, mining and agricultural needs.

Algar says this EV charging initiative is part of the company’s strategy to further develop the market for VRFB energy-storage technology in Australia.

“The intent is for Australian Vanadium to not just sell vanadium into the metals sector internationally, but to be fully vertically integrated onshore here in Australia,” he says.

“In doing so, we are able to reduce the cost of these batteries while adding local value, content and job creation.”

The mining and processing project will enter its development phase this year, while a vanadium electrolyte manufacturing facility will be built in parallel near Kwinana in WA.

AUSTRALIAN RESOURCES & INVESTMENT

The electrolyte plant is expected to be in production by mid-2022, with an annual vanadium electrolyte production capacity of 33 megawatt hours (MWh).

In November last year, IGO took another step towards decarbonising its Nova nickel operation in WA, signing an agreement with Australian Vanadium to trial its VRFB standalone power system (SPS).

An SPS typically comprises a combination of solar, wind, battery and backup generation from diesel or gas, and supplies power independently to the electricity grid.

Based on a 300 kilowatt-hour (kWh) VRFB, SPS is designed to provide a 100 per cent renewable energy supply for much of the year, with a diesel genset offsetting any long periods of cloud cover.

The SPS aims to not only significantly reduce the carbon emissions of dieselgenerator-powered bore fields, but also offer substantial reductions in operating hours for service personnel.

IGO chief operating officer Matt Dusci says the trial of the SPS forms part of the major miner’s broader net-zero strategy.

“IGO’s strategic focus is on those products that are critical to enabling clean energy solutions, to create a better planet,” he says.

“As part of our strategy to deliver those products, we aspire to be carbon-neutral across our business and to do this, in part, by leveraging renewable energy solutions and innovation to reduce emissions at our remote exploration and mining operations.”

Algar says it is an exciting time for Australian Vanadium, with the company planning to minimise operational costs by overtaking crushing, milling and beneficiation of vanadium-bearing magnetite ore at its mine site, before then transporting the resulting concentrate to its processing plant for final refinement.

“If the demand for vanadium continues on in the steel market and then continues to grow heavily in the battery market, then you have more demand than there can be supply, which should keep prices at a relatively high level,” he says.

“This then means the guys in Queensland can get up, we can get up, and Australia can easily become one of the largest suppliers of vanadium to the world market outside of China.”

“A global market of 110,000 tones is still very small, but it carries a massive weight in terms of its use and what its impact can be.”

Australia’s resource sector is world-class. Through our $1.3 billion Modern Manufacturing Initiative, we are helping to unlock this enormous potential by providing targeted support for projects that will deliver big rewards for our local economy in terms of export earnings and new job opportunities.

– 41 –

IRON ORE

Iron ore miners bouncing back

Iron ore prices reached a three-month high in January.

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After the iron ore price rode the highest of highs and lowest of lows in 2021, a first quarter recovery has allowed some emerging producers to restart mining operations in 2022.

s if issues of labour shortages and border restrictions weren’t enough of a burden on the Australian mining industry in 2021, the iron ore price decided to have its fun with iron ore miners big and small.

And while record prices above the $US230 ($294) per tonne mark were seen in May – before diving to $US180 and rising above $US200 again from June through July – it was a case of too good to be true.

Chinese restrictions on steel production wreaked havoc on Australia-China relations, but analysts assured investors and miners alike that the tides would turn and iron ore prices would settle back to usual proceedings.

But a mountainous dive was to come, as

– 42 –

iron ore prices caught up with the curb in steel production and more than halved in the space of two months.

From July to September, more than $US130 per tonne was slashed from the going rate and several of Australia’s burgeoning iron ore producers were brought to unfeasible standstills.

By mid-November 2021, a secondary dive saw the iron ore price bottom out in the low $80s per tonne and the likes of GWR Group, CuFe, Venture Minerals, Indus Mining and Mount Gibson had all halted mining operations citing iron ore prices.

But it wasn’t all doom and gloom for some, as GWR chairman Gary Lyons foreshadowed in September his company was well prepared to outlast the pricing

lull in Australia’s top export.

“Whilst it is disappointing that mining operations have temporarily ceased at the C4 iron ore mine, it is important to note GWR remains in a strong position to resume operation as the mine will be left in a production-ready state in order to take advantage of a recovery in iron ore prices,” Lyons said at the time.

And outlast they did. By the turn of the new year, the iron ore price had been above $US100 per tonne for more than three weeks and showed few signs of slowing down.

Come the week of January 10, GWR was able to recommence mining operations at C4 citing more feasible iron ore prices, while haulage and sales had continued over the holiday period.

AUSTRALIAN RESOURCES & INVESTMENT

By the turn of the new year, the iron ore price had been above $US100 per tonne for more than three weeks and showed few signs of slowing down.

While Lyons says he was optimistic in September about seeing this result, he admits to being thankful it turned out for the best.

“There was certainly no expectation on my part, so you’d have to say the feeling is more so one of relief that we were able to start operations again,” Lyons tells Australian Resources & Investment.

“However, although we’d ceased mining activities, we hadn’t stopped moving product. We had a stockpile and we’ve continued to make some sales and haul some product to the port.”

At time of writing, GWR’s publicly announced sales include one March shipment for $US110 per tonne, while previous shipments in January and February sold for $US100 and $US95 per tonne, respectively.

Additionally, Lyons confirms he is more than happy with prices he also secured for shipments in the second quarter of 2022 at $US111.

“I can’t predict beyond the first half the year, but what I can say is I’ve presold most of our product to the end of June,” he says.

“That was at a fixed price and on an FOB (free on board) basis simply because of the fluctuations in shipping costs and I didn’t want to be exposed to that volatility.

“The volatility is not only in iron ore price and shipping but also in currency exchanges. I just hedged our bets wherever I possibly could to know exactly what we’re going to be banking.”

This underpins the strategy Lyons believes anyone should be taking in his position, in a time where the next quarter is largely unpredictable.

Humbly, of course, he says it’s all for the people on the ground that he feels responsible to turn respectable profits.

“I’m not sure I’ve done anything too clever or smart, but when we’re considering our shareholders and the many mums and dads out there, security is key and it’s critical we’re able to continue mining operations

while delivering product with some sort of margin,” Lyons says.

In the case of GWR’s C4 iron ore mine, with a 750 kilometre drive to the Port of Geraldton for stockpiling, the operation is far more susceptible than most to falls in iron ore price.

For this reason, Lyons says his primary objective is safety and security.

“We’re always going to be the last to commence mining and the first to stop, simply because of costs associated particularly with

logistics from mine to port,” he says.

“We’re very sensitive to any price movement and I always say, ‘a sparrow in the hand is better than the eagle sitting on the roof,’ so I’m always very focussed on protecting margins.”

This aligns with forecasts from Wood Mackenzie senior analyst Kim Christie, who remains optimistic for miners like GWR. “Small mines tend to be highercost operations, so these operators will remain cautious in regard to their outlook for prices, particularly as 2022 progresses,” Christie says.

“Having said that, even at $US90 per tonne most will be making decent margins so we think that 2022 will still be a positive year for most Australian iron ore producers.”

Lyons says he plans to take this forecast and run with it – at a responsible pace, of course.

“We still have more iron ore to sell, I haven’t locked everything away. But if we see another rise in iron ore price then I’ll be looking to take advantage of that and hedge out even further,” Lyons concludes.

GWR Group’s C4 iron ore mine in WA.

C4 operations have recommenced as iron ore prices stabilise.

– 43 –

EVENTS

AU S T R A L I A N M I N I N G P R O S P E C T AWA R D S | B R I S B A N E | M A RCH 17

The most esteemed and prestigious awards for the Australian mining and minerals processing industry, the Australian Mining Prospect Awards, return in March 2022.

Mining has always been a part of Australia’s landscape, playing a major part in the development of this nation from its early days.

The sector remains vibrant and innovative, and for more than a decade the Australian Mining Prospect Awards have been the only national awards program to stop, take a look at what the mining industry is doing, and reward those who are excelling and going above and beyond, recognising and rewarding innovation.

The Australian Mining Prospect Awards were established in 2004 to recognise and reward excellence and innovation across the Australian mining industry.

• prospectawards.com.au I N T E R N AT I O N A L M I N I N G G E O L O G Y C O N F E R E N C E 2 02 2| B R I S B A N E , S Y D N E Y, M E L B O U R N E , A D E L A I D E A N D P E R T H | M A R C H 2 2 -2 3

AusIMM’s International Mining Geology Conference will focus on maximising orebody value and increasing productivity through mining geology.

Hosted both in-person and online, the event will bring geologists, consultants, decision-makers, metallurgists, engineers, professionals and students together to explore new techniques and emerging technologies to enhance operations.

The conference will feature keynotes, a high-quality technical program, exhibition, virtual booths, interactive workshops and mine-site tours.

Attendees can also network in-person and virtually through a networking function, conference dinner, discussion groups and ondemand content.

This includes Geologize chief executive officer and founder Haydon Mort, who last year launched an on-demand training course, Practical Geocommunication, which teaches geoscientists how to connect with the public to encourage positive perceptions of the field.

• ausimm.com/conferences-and-events/mining-geology T H E AU S T R A L I A N G O L D C O N F E R E N C E | S Y D N E Y | J U N E 14-1 5

Australia’s largest precious metals conference and exhibition comes to Crown Sydney in June.

The two-day Australian Gold Conference brings together every aspect of the precious metals investment industry to promote and assist everyday Australians alongside those already-interested investors.

Keynote speakers will share their investment insights and look at ways one can grow and preserve their wealth going forward.

– 44 –

ASX-listed mining companies will be present as they provide updates on their mining investment opportunities. Bullion dealers will also be on hand for those keen to know more about how and when to purchase physical metal.

At the time of writing, representatives from the likes of De Grey Mining, Evolution Mining, Calidus Resources and Kin Mining were locked in to present at the conference.

• goldindustrygroup.com.au AU S T R A L I A N B U L K H A N D L I N G AWA R D S | M E L B O U R N E | AU G U S T 2 5

The Australian Bulk Handling Awards return in 2022, welcoming the sector’s esteemed and emerging to come together and celebrate the outstanding achievements from across the last two years.

With prior events postponed, finalists from both 2020 and 2021 will be recognised at the 2022 event.

Awards to be announced include Supplier of the Year, Bulk Handling Facility of the Year, Best Practice in Safety, and Dust Control Technology, Application or Practice.

Taking place on August 25, the gala dinner will coincide with the Australian Bulk Handling Expo in Melbourne – a three-day event that encompasses the entire bulk solids handling industry.

The Australian Bulk Handling Expo is supported by the Australian Society for Bulk Solids Handling (ASBSH), which will host an industry conference, while the trade expo will showcase the latest in bulk materials handling equipment and technologies.

• bulkhandlingawards.com.au I N T E R N AT I O N A L M I N I N G A N D R E S O U R C E S C O N F E R E N C E ( I M A R C) | M E L B O U R N E | T B A

The eighth IMARC, which was due to be held from January 31 to February 2, has been postponed to later in 2022.

Beacon Events, the organisers of IMARC, announced that due to the significant rise of COVID-19 cases being experienced at the time of writing, the event will be rescheduled.

“The health, safety and wellbeing of our attendees and employees remains our number one priority, rescheduling the event originally planned for January 31 to February 2 is the responsible action to take in the current circumstances,” IMARC managing director Anita Richards says.

Australia’s leading industry body for the mining equipment, technology and services (METS) sector, Austmine, said it was the right decision to make.

“We know how important this event is to our members who are exhibiting and attending, as well as the METS sector overall, and we encourage everyone to consider this as an opportunity to refocus your efforts and support the event,” Austmine chief executive officer Christine Gibbs Stewart says.

The dates for the rescheduled IMARC are yet to be announced.

• imarcglobal.com

AUSTRALIAN RESOURCES & INVESTMENT

FOLLOW THE LEADERS

THE LATEST EXECUTIVE APPOINTMENTS Keep up to date with the latest executive movements across the mining sector, featuring appointments at New Hope, OZ Minerals and Andromeda Metals.

New Hope has farewelled chief executive officer Reinhold Schmidt, who resigned effective immediately following a period of personal leave.

The company’s chief financial officer Rob Bishop has stood in as acting CEO. New Hope chairman Robert Millner acknowledged Schmidt’s efforts over his tenure.

“Mr Schmidt led the company during a challenging period for both the business and the industry and delivered organisational changes that positioned the business to withstand the downturn in commodity prices experienced early in FY21 (2021 financial year) and achieve outstanding returns as markets have improved,” Millner said.

OZ Minerals has recruited several new additions to its executive leadership team as it approaches a new phase of growth.

Matt Reed, who joined the company in September, will now become OZ Minerals’ operations executive and will oversee the operational performance of OZ Minerals, including at its Prominent Hill, Carrapateena and Carajás mines, plus West Musgrave once up and running.

Claire Parkinson joined OZ Minerals in October and will move into a role as integration executive to guide enterprise-wide changes.

Bryan Quinn will join OZ Minerals in April 2022 as strategy and growth executive after a long career with BHP as asset president for manganese Australia and as global head of technology, geoscience, engineering, projects and business improvement.

In March 2022, Michelle Ash will fill the newly created role of technology executive and will oversee ICT, mining technology and transformation.

complimenting Waters’ credentials.

“The Perth Mint plays an important role in cementing Western Australia’s position as one of the world’s most important and valued gold provinces, and is a key government employer,” Buti says.

“Mr Waters has proven to be a successful CEO, with strong commercial and financial acumen, and extensive experience in government and stakeholder management.”

Andromeda Metals has announced that Rhoderick Grivas has resigned as chair and non-executive director of the company for family reasons.

Since being appointed in 2017, Grivas has been influential in elevating Andromeda from a company with less than $1 million in the kitty to the leading industrial metals explorer it is today.

Current independent non-executive director Melissa Holzberger will assume the role of chair in Grivas’ place until a suitable replacement is identified.

Kalium Lakes has appointed Len Jubber as chief executive officer, bringing with him a track record of successfully developing and operating mining assets and businesses.

He most recently served as managing director and chief executive officer of uranium development company Bannerman Energy, worked in the same roles at Perilya, and has also previously been chief operating officer at OceanaGold.

Jubber is also currently a nonexecutive director of muriate of potash development company South Harz Potash.

His appointment comes as Kalium Lakes co-founder and current chief executive officer Rudolph van Nierkerk moves into the role of project director at the company.

The Perth Mint has announced Jason Waters will become chief executive officer as of April 26.

Waters is well endorsed by the Western Australian Government, with Acting Mines and Petroleum Minister Tony Buti

– 45 –

MINING SERVICES

Mining’s most intelligent bull bar With a focus on customer collaboration and consultation, SmartBar is always striving to further its product – and the mining industry is better for it.

The SmartBar complies with the most stringent safety standards.

T

he SmartBar vehicle protection systems are some of mining’s most evolving assets.

With the health and safety of workers at a premium and the necessity to protect machinery at the core of any mining operation, having trusted protection systems in place is quintessential to the modern-day mining practice.

Manufactured and designed in Australia, the SmartBar bull bar complies with the most stringent safety standards and comes with the verification of the Australasian New Car Assessment Program (ANCAP).

SmartBar Australia general manager Kevin Baker says having the ANCAP stamp of approval solidifies the safety of the bull bar – an inherent attribute in no uncertain terms.

“We’ve crash-tested three vehicles through ANCAP themselves and all three passed,” Baker says.

“When ANCAP do an impact test, they

– 46 –

record the data of the forces throughout the cabin of the vehicle and the pressures placed upon the driver and passenger, and the results that we got were actually better than the front of the vehicle that was on the previous Hilux.”

Baker says SmartBar engineers its bull bars in reverse order – analysing and roadtesting the safety considerations first before arriving at the right recipe.

“All of our bars are designed in line with the ANCAP requirements; they’re tested to that standard and the design of the product is based on the data and information that we’ve received from the actual physical crash test that we’ve conducted,” Baker says.

While heavy machinery takes much of the limelight on mine sites, light vehicles serve an equally important purpose when it comes to incidental transport and getting around quickly and easily.

SmartBar vehicle protection systems are

currently in use all across the Australian mining industry, including by many of the major miners.

“The SmartBar is used heavily in the mining sector for a number of reasons.

One is the close proximity of the vehicles and pedestrians in both above-ground and underground mining,” Baker says.

“Secondly, the salinity level in a lot of underground mining areas is 11 per cent saltier than sea water, so what they’ve found is their vehicles rust really quickly.

“I’ve been to mine sites with vehicles that have been there less than three months and you can already see the degradation caused through rust, so our bars being made of plastic give the vehicles that longevity.”

As opposed to a traditional steel bull bar, SmartBar’s product is a copolymer, made of a special blend of rust-resistant polymers.

This not only means the bull bars are more durable, but they’re also more

AUSTRALIAN RESOURCES & INVESTMENT

SmartBar Australia general manager Kevin Baker.

than half the weight of a typical steel bull bar, which offers its own benefits to fuel efficiency, rider comfort and a light vehicle’s payload.

In a narrow underground environment where abrasion is a common risk, copolymer offers an additional safety net for mining companies.

“Another key point for miners is the possibility of gases that are underground. Because they’re driving in tight spaces they’ve got to be mindful of friction, where metal on rock can cause sparks,” Baker says.

Baker adds that given the SmartBar can compress to up to 85 per cent of its depth, in direct collisions it better protects the vehicle, occupants and whatever the bull bar collides with. This is particularly important in the tight confines of an underground mine.

While the SmartBar is simplified and logical in its purpose, it doesn’t mean there isn’t room for customisation or adaptation.

SmartBar prides itself on its customer collaboration – an approach that puts the client in the driver seat to pursue an outcome specific to their unique working environment.

“What we like to do is work with the organisation to come up with solutions for them; because they know the problems, it’s about trying to find the solutions,” Baker says.

“That’s our key value proposition – the capacity to be able to work on a one-on-one

basis with all of our clients to find solutions for them.”

Baker uses the example of custom recovery points – a critical bull bar safety consideration – to highlight SmartBar’s client-first focus.

“We’ve built custom solutions regarding recovery points with some of our customers.

They’ve found the recovery points they had been using were so far back up against the vehicle that they were really hard to access when they were in compromised situations underground or above ground even,” he says.

“We’ve worked with them to design recovery points that were easily accessible from a winch frame. It’s that ability to be able to work one-on-one and work between our engineers and their engineers to come up with the best solution,

and we’re really open to that.”

To further extend SmartBar’s service capability, the company offers rear protection bars and under-vehicle armour, and has the ability to make modifications to already-installed bars to make them more suitable to the client.

The SmartBar is also available in different colours and can be made hi-vis.

Fundamentally, there are two different variants of the SmartBar: the SpartanBar (the original SmartBar) and the StealthBar, which is 30 per cent lighter and comprises just the lower section of the bull bar frame.

The versatility and adaptability of the SmartBar is a result of decades of work and improvement on the product.

However, while the company has come a long way, SmartBar never rests on its laurels – a restlessness that drives the constant evolution of its bull bars.

“We have a really strong focus on continuous improvement on our products and associated products. If we can make it more absorbent or more relevant for the customer to then use for what they want it for, then we’ll make updates,” Baker says.

“As I said, that’s where the one-onone focus is really beneficial because we learn things and they learn things at the same time.”

The SmartBar evolution has seen the company start developing polymer under-vehicle protection to respond to issues of salinity and hot water coming up underneath and degrading the base of vehicles.

With only three models available at this stage, the company acknowledges under-vehicle protection is still in its infancy. However, from initial performances, there’s enough to suggest SmartBar could be adding another reliable string to its bow.

The SmartBar rear protection bar.

– 47 –

MINING SERVICES

Repairing damage caused by abandoned, contaminated mines

Latest approaches to mine-remediation planning and implementation are helping the environment and communities.

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lex Watson’s interest in abandoned mines and contaminated land began with the UK Government in the 1990s. Watson, a geochemist, completed investigations of Royal Air Force stations including Second World War bomber stations and an old nerve-gas plant in Cornwall in southwest England.

The Cornwall site represented a range of problems. It had been constructed in an area subject to intense historical lead and zinc mining, with some of the old shafts used for the disposal of wastes from the nerve-gas plant when it was decommissioned and demolished.

Watson became interested in abandoned sites, contaminated land and mining, and began a professional journey that would later take him to South Africa and then Sydney, Australia.

In 2008, Watson joined SRK Consulting as an environmental consultant. Today, he is a principal environmental scientist at SRK, specialising in environmental management, site assessment and remedial design. Watson also has extensive experience in geochemical characterisation, mine closure, water quality and water-balance modelling.

“Identification and remediation of abandoned, contaminated mines are incredibly important,” Watson says. “An abandoned mine could range from a shaft in a field from centuries ago that nobody knows about to a large, well-known project.

“Governments worldwide are paying more attention to the risks of old abandoned mines. Population growth and urban sprawl in cities are exposing more people to the risks of abandoned mines. Environmental expectations are also much higher and communities are better informed, allowing them to become more involved when old mines present risks.”

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A slag-lined drain at an abandoned mine.

Abandoned mines are a timely topic. More than 600 historic and abandoned mine sites in New South Wales (NSW) are listed on the Legacy Mines Program (LMP). The LMP is a NSW Government initiative that focuses on public safety and improving the environment through remediation of abandoned mines.

The NSW Government is investing more than $100 million over the next 10 years to remediate abandoned mines that represent the greatest risk to public health and safety, and the environment. Remediation works include detailed site assessments, preparation of remediation action plans and engineering design works.

Other Australian states and territories are increasing their focus on historic abandoned mines.

“This issue is steadily gaining momentum,” Watson says. “There’s a lot of

open dialogue between governments and industry on abandoned mines and liaison with communities. It’s an issue that mining stakeholders are passionate about fixing.”

RISKS FROM HISTORIC MINES Abandoned mines can have significant risks.

From a public-safety perspective, an old mine shaft covered by corroded corrugated iron could lurk in a field, unknown to the public.

Some people have been badly injured after falling down unmarked mine shafts in recent years.

Environmentally, some abandoned mines have leached toxic materials into surface water and groundwater on-site, and into nearby waterways. That can kill aquatic life and affect downstream communities that rely on the waterways for work or recreation. Dust blown off abandoned mine sites is another risk.

AUSTRALIAN RESOURCES & INVESTMENT

Financial liabilities from remediation of abandoned mines can be large and persist for years or decades. Often, governments must fund the clean-up because the person or company with direct responsibility for the mine’s rehabilitation can no longer be traced.

Watson says the new remediation plan for the old Rum Jungle mine in the Northern Territory highlights increasing government focus and collaboration on this issue.

The Rum Jungle mine operated from 1953 to 1971, producing a reported 3530 tonnes of uranium oxide and 20,000 tonnes of copper concentrate. The mine created legacy landform, groundwater and surface water contamination problems.

The Australian Government rehabilitated the site from 1983 to 1986, but recent studies found gradual deterioration from the original works. The Australian and Northern Territory governments are partnering on the stage-three implementation of a rehabilitation plan for Rum Jungle that is expected to be a 15-year project.

Watson has presented on Rum Jungle at industry conferences.

“There’s a lot of interest in this project,” he says. “Rum Jungle highlights the complexities and environmental risks of large historical mines – and why stakeholders need to continue working together and share learnings on complex mine remediation as it is happening.”

N S W C A S E S T U DY Watson’s works on an abandoned copper mine in the Central West region of NSW reinforces the benefits of latest approaches to mineremediation planning and implementation.

Covering approximately 15 hectares, the mine operated between 1875 and 1905.

Copper was the primary resource, and silver and gold were also recovered. Lead and zinc were present at the site but discarded during its operation. The base metals were present as sulfides such as chalcopyrite, galena and sphalerite.

Site infrastructure included underground shafts (up to 65 metres deep), four smelting furnaces, spoil dumps and three sediment dams. Waste rock/overburden (from developing the mine shafts) and smelter slag were disposed of on site.

Some remediation works were completed around 1990, but the remaining waste rock and slag remained as contamination sources.

“The mine required a lot of work to understand the extent of the problem and develop a remediation plan,” Watson says.

SRK’s work on the project so far includes a

Old mine shafts pose significant risks to public safety.

“This issue is steadily gaining momentum. There’s a lot of open dialogue between governments and industry on abandoned mines and liaison with communities. It’s an issue that mining stakeholders are passionate about fixing. desktop review of site information to develop a sampling and analysis plan. There has also been a visual inspection of the site, mapping of element concentration using X-ray fluorescence (XRF), and collection and analysis of surface water samples.

Watson says the XRF mapping

identified high concentrations of zinc, sulfur, lead and copper in some areas around the mine’s main shaft, and smaller concentrations north of the site.

“Concentrations of arsenic were also high,” Watson says. “It’s possible that the arsenic was associated with ore material from the mine.”

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MINING SERVICES

Moreover, sampling found the water was mildly acidic (pH 4) and contained elevated compositions of heavy metals, such as cadmium, copper and lead. Water samples collected upstream and downstream of the site suggested the transportation of contaminants offsite, but concentrations were low and within stock-water guideline values.

Watson says the project’s next steps involve investigating the amount of mining waste remaining on the surface, collecting samples of mineralised wastes to assess their contamination potential, and assessing the volume of material that may be obtained from borrow pits for use in rehabilitation activities.

“This information will be used to characterise the site and assess the risks it poses,” says Watson. “This data can then be used to identify possible remedial options for the site, which may range from doing nothing to carrying out onsite engineering works or removal of contamination for off-site disposal.”

SRK Consulting is a leading, independent international consultancy that advises clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure. SRK experts are leaders in fields such as due diligence, technical studies, mine waste and water management, permitting, and mine rehabilitation. To learn more about SRK Consulting, visit www.srk.com Mine remediation is critical to environmental conservation.

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EIGHT IDEAS FOR BEST PRACTICE IN THE REHABILITATION OF ABANDONED MINES 1. Site histor y: Conduct a desktop study of the historical mine site. Identify what was mined and any heavy metals of concern. The presence of sulfides, for example, poses a risk of acid and metalliferous drainage that could leach into nearby waterways.

2. Environmental screening: Understand the geography of the site and its surrounding area. Identify any natural or physical features of an area that could be affected by the mine – and any nearby communities.

3. Sampling and analysis plan: Using the information from the desktop study and environmental screening, develop a sampling and analysis plan to inform a site investigation. The plan should identify areas of potential concern at the historical mine, which could include waste-dump sites, slag heaps, tailings dams, quarries or areas of other possible contaminants. It should also identify the type of sample to collect, such as soil, rock or water, as well as the location from which to collect it.

4. Site investigation: Having identified areas of potential concern, complete a site walkover prior to collecting samples. The samples may range from solids collected from trial pits and drill

holes to water from creeks and ponds.

The site investigation provides an opportunity to confirm learnings from the desktop review, modify the sampling locations based on ground conditions and gain visual insight into the extent of potential contamination.

5. Laborator y sampling: Send samples collected during the site investigation to a laboratory for a range of analytical tests to understand the composition and reactivity of the materials.

6. Risk assessment: Use information from the desktop study, site investigation and laboratory analysis to develop a detailed risk assessment of the mine.

Document key environmental risks, their magnitude and potential longevity. This could include leaching of contaminants into groundwater or surface water from the mine or dust blown off the site.

7. Site-remediation plan: Having identified and quantified site environmental risks, determine if remedial action is required. If so, develop a remediation plan to address the problems.

8. Share learnings: Where possible, document learnings from a mine rehabilitation project and share the results with industry and governments through case studies, papers and/or industry presentations.

2021

AUSTRALIAN MINING PROSPECT AWARDS

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