Northern Territory iron ore miners are making a comeback as Chinese demand for steel soars and prices sit at a seven-year high.
Two mothballed mines have restarted operations in the past few months and are expected to be in full production in 2021.
The revival of the NT’s iron ore sector comes as trade tensions rise between Beijing and Canberra and Chinese demand drives prices above $US135 a tonne.
“We need to be very careful, and I think there’s reason to be concerned, but the fundamental reality is that China’s reliance on imported iron ore is very high and rising,” Iron ore market analyst Philip Kirchlechner said.
Mothballed mines reopen
The Roper Bar mine, about 600 kilometres south-east of Darwin, and Frances Creek mine, 200 kilometres south of Darwin, both shut down after the iron ore price crashed below $US90 a tonne in 2014.
Nathan River Resources — a subsidiary of private company, British Marine Group — purchased Roper Bar mine in 2017 and has restarted mining in the last six weeks.
Nathan River Resources CEO Stefan Murphy said the mine was ramping up to 1.5–2 million tonnes of production each year, and operations would create 250 jobs.
The company’s maiden export to China left its load-out facility at the port of Bing Bong on the Gulf of Carpentaria last month, and a second shipment is currently being prepared.
The initial plan is to mine 6 million tonnes in the next three years while finding further deposits and downstream processing opportunities that may push the life-of-mine out to 20 years.
Mr Murphy said a $250 million investment in infrastructure and assets meant the mine could withstand future price volatility.
“We’ve approached the project in that we want to be able to deliver into China for $US60 a tonne,” he said.
Darwin-based NT Bullion now owns the Frances Creek mine and is making its first export shipment of stockpiled ore, left by previous owned, Territory Iron, by the end of the year.
The company recently made a deal with global mining giant, Anglo American, to market iron ore from Frances Creek mine to international customers.
NT Bullion plans to recommence mining at Frances Creek early next year once the stockpiled ore has been sold.
China’s reliance on Aussie iron ore
The restart of these mines comes at a precarious time when Australia’s relations with China, the world’s biggest buyer of iron ore, is seemingly souring.
Commodities, such as barley, wine, and meat, have been casualties of the trade tensions.
However, Mr Kirchlechner, director of Iron Ore Research and a member of the Australia China Business Council, said the iron ore trade would most likely be unaffected because China was increasingly reliant on imported iron ore.
“For the calendar year we’re looking at another year of record [Chinese] steel production exceeding 1 billion tonnes, and that is why the iron ore price has continued to strengthen,” he said.
Xi Jinping has ordered an “inward turn” and focus on the domestic economy in China to soften the blow of the US trade war and, more recently, the COVID-19 pandemic, according to Mr Kirchlechner.
Mr Kirchlechner said that policy had fuelled new construction and infrastructure investment, and it needed Australia, the world’s biggest producer of iron ore, to satiate that new demand.
“China now has to import 70 per cent of its iron ore requirement, so China is now not only the biggest user of iron ore in the world but the biggest importer of iron ore in the world,” he said.
If iron ore is pulled into the fray of trade tensions, Mr Murphy is optimistic an alternative market can be found for the iron ore at Roper Bar mine.