Karara Iron Ore Mine, Australia

The Karara mine is located in Western Australia, approximately 225km east of the Geraldton Port. The mine is one of the few magnetite projects currently under development in Australia. It forms part of the development of a Mungada haematite project located approximately 15km from the Karara magnetite deposit. The project is jointly owned by Gindalbie Metals and AnSteel, a major Chinese steel and iron ore company.

Economic and technical viability of the mine was established in a bankable feasibility study conducted in September 2007. The final environmental approval by the state was granted in September 2009. Construction at the mine commenced in March 2010.

The project will involve haematite mining on a small scale and magnetite mining on a large scale. The project cost, as of March 2011, amounts to A$855.1m. In March 2011, the company approved the start of scoping studies on a new expansion that will increase production from 10Mtpa to 16Mtpa.

Reserves

The Karara mine contains approximately 1.4 billion metric tons of recoverable and over two billion tons of estimated reserves.

Indicated reserves in the magnetite phase of the project total 1,417Mt at 35.5% of Fe, 43.2% SiO2, 1.25% Al2O3, 0.09% P and -0.58% LOI. Inferred reserves total 437Mt at 35.1% of Fe, 43.9% SiO2, 1.44% Al2O3, 0.09% P and -0.71% LOI.

Geology

The Karara mine is hosted within the Yalgoo-Singleton Archaean greenstone belt. The belt is characterised by a huge magnetite banded ironstone formation (BIF) unit that extends over a strike length of more than 3km.

The western branch of the unit is over 400m wide and more than 350m deep. The eastern limb is comparatively narrower and outcrops as a chain of 100m-wide haematite-enriched hills along an adjacent north-south trending fault.

The BIFs create a series of isolated peaks and ridges in an otherwise plain landscape. Iron is hosted within the Windanning Formation as a sequence of several jasperlitic BIF and grey-white chert units that lay above the Gabanintha Formation. The deposit is up to 150m thick and is substantially dominated by interbedded layers of shales and BIF. Dolerite and kaolinite clays are also found in irregular areas within the deposit.

Production

The mine has an estimated 60-year lifespan at an initial production rate of 8Mtpa. It can expand production in excess of 30Mtpa of iron products for more than 30 years.

Production will be carried out in a phased manner. Phase I will produce 3Mtpa of haematite and 8Mtpa of magnetite concentrate. The entire produce will be purchased by AnSteel for its new 6.5Mtpa Bayuquan steel mill in China.

Mining

The mine will be mined through conventional open-pit methods including drilling, blasting, loading and haulage. The open-cast pit will be nearly 3,400m long, 1,300m wide and 300m deep. The pit will be gradually stripped of topsoil and overburden to get access to the ore. Drilling will be carried out using hydraulic hammer drills. Mixed explosives will be supplied directly to the drill holes via purpose-built trucks.

Blasting will be carried out using ammonium nitrate-based explosives. To support a mining rate of nearly 45Mt/y, explosives in the order of 12kt/y will be used. Excavated ore and waste will be loaded using hydraulic excavators into rear dump off-highway haul trucks. Loading will be carried out on 4m benches. Haul trucks will transport the loaded ore along the pit ramp directly to the processing plant.

The first year of mining will largely oversee removal of overburden and mineralised waste rock with minimum ore excavation. Following this, magnetite ore will be excavated simultaneously from different depths within the pit. The pit will be gradually extended northwards. To optimise the development of the pit and ensure that ores of consistent grade are sent to the processing plant, mining will take place at several levels and in assorted ore grades.

Once operational, mining will take place throughout the day. The mine will have a 0.38:1 waste to ore stripping ratio. A trial mining project was carried out in December 2010 based on the Karara South and Karara East DSO deposits. The Karara East was bought into production in the same month.

Processing

The ore will be processed in an on-site facility. Processing will include crushing, grinding, magnetic separation, reverse flotation and thickening to produce 12Mt/y of magnetite concentrate. Approximately 85% of ore will be delivered to the crusher. The remaining 15% will be stockpiled in a ROM pad for subsequent crushing. The magnetite concentrator is expected to be commissioned by the fourth quarter of 2011.

Around 18Mt of tailings produced from the processing will be stored in an on-site dry-stack tailings storage facility. Waste rock will be stored in a waste rock dump adjacent to the pit.

Construction progress

As of March 2011, detailed engineering design of the project site and concentrator was 88% complete. It is expected to be fully completed by June 2011. Around 23,000m³ or 46% of the concrete laying has been completed. Installation of four ball mills is under way, with two already installed. All major components of the processing equipment are ready for installation. Work on the power transmission line is progressing on schedule with 86 towers erected by March 2011. Approximately 55km of the 130km-long water pipeline from the Parmelia aquifer has also been installed.

Contractors

The project management, procurement and construction management contract has been awarded to WorleyParsons. An A$70m contract for the design, supply and installation of the permanent accommodation camp was given to Doric Group in December 2009. Doric Group has engaged Vekta to assist in the project.

Metso is supplying the project mining equipment under a €3.8m contract. Rail services will be provided by QR Freight under a 10-year agreement signed in April 2010. Other contractors involved in the project are Outotec for the design, supply and installation of the flotation circuit together with all the filtration technology.

Financ

In April 2011, the project received a $336m loan from a Chinese banking syndicate led by China Development Bank and Bank of China. The syndicate had earlier provided a A$1.2bn loan facility for the project. The project was also awarded A$300m in bank guarantees from the China Development Bank.