Mothballed NT iron ore mines reopen amid soaring demand for steel in China

As Chinese demand for steel soars and prices sit at…

As Chinese demand for steel soars and prices sit at a seven-year peak, Northern Territory iron ore mines are making a comeback.

In the last few months, two mothballed mines have restarted operations and are projected to be in maximum supply in 2021.

As trade tensions between Beijing and Canberra improve, the resurgence of the NT’s iron ore market comes as Chinese demand pushes prices over $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,” said Philip Kirchlechner, an iron ore market analyst.

Reopening Mothballed Mines

Mothballed mines

The Roper Bar mine, situated approximately 600 kilometers southeast of Darwin, and the Frances Creek mine, located 200 kilometers south of Darwin, both shut down after the price of iron ore plummeted below US$90 a ton in 2014.

In 2017, Nathan River Resources, a private sector affiliate of the British Maritime Group, bought the Roper Bar mine and has restarted mining in the last six weeks.

Stefan Murphy, CEO of Nathan River Resources, said the mine will boost production by up to 2 million tonnes per year and operations would generate 250 jobs.

Last month, the company’s maiden export to China left its load-out facility at the port of Bing Bong on the Gulf of Carpentaria and is currently arranging a second shipment.

In the next three years, the original aim is to mine 6 million tonnes while seeking new reserves and downstream processing prospects that will push the existence of the mine to 20 years.

A $250 million investment in facilities and properties, Mr Murphy said, indicated that the mine could survive potential market fluctuations.

We also approached the project because we want to be willing to supply US$60 a tonne to China,”We’ve approached the project in that we want to be able to deliver into China for $US60 a tonne,”

The Frances Creek mine is now operated by Darwin-based NT Bullion and is making its first export shipment of stockpiled ore left by Territory Iron, previously owned, by the end of the year.

The firm recently entered into an arrangement with Anglo American, the multinational mining corporation, to sell iron ore from the Frances Creek mine to foreign customers.

Until the stockpiled gold has been sold, NT Bullion plans to resume mining at Frances Creek early next year.

The restart of these mines arrives at a delicate period when the partnership between Australia and China, the world’s largest purchaser of iron ore, is evidently souring.Commodities were the victims of trade wars, such as barley, wine, and beef.

Mr Kirchlechner, the director of Iron Ore Research and a member of the Australia China Business Council, said, however that the trade in iron ore would most likely be unaffected since China was increasingly relying 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 added.

According to Mr. Kirchlechner, Xi Jinping has ordered a “inward turn” and an emphasis on China’s domestic economy to ease the blow of the US trade war and more recently, the COVID-19 pandemic.

Mr. Kirchlechner said that the strategy had sparked fresh expenditure in building and infrastructure and that Australia, the largest supplier of iron ore in the world, wanted to meet the 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 added.

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