Gindalbie Metals says its 50 per cent owned pellet plant in China will not be made redundant if its project partner, AnSteel, goes ahead with plans to build the state's first steel mill in Oakajee.
Gindalbie Metals says its 50 per cent owned pellet plant in China will not be made redundant if its project partner, AnSteel, goes ahead with plans to build the state's first steel mill in Oakajee.
Over the weekend, Premier Colin Barnett and AnSteel president Zhang Xiaoqiang signed a memorandum of understanding to conduct a feasibility study of steel plants and rolling mills in WA.
AnSteel will work with the Department of State Development to conduct the study. The MoU is valid until December 2010.
AnSteel is a 50 per cent stake holder in Gindalbie's $1.8 billion Karara iron ore project in the Mid West, which is expected to underpin the multi-billion dollar Oakajee port and associated rail development.
Gindalbie spokesperson Michael Weir told WA Business News the company welcomes the agreement, which highlights AnSteel's commitment to WA and the Karara project.
"It highlights the potential of the Karara project as a long term source of iron ore and also highlights the ability for Karara to expand very quickly beyond the 8 million tonne per annum start-up capacity to its full potential of plus 30 million tonnes over thirty years," he said.
Mr Weir added that should the WA steel mill go ahead, it will not affect Gindalbie's steel mill in China, held jointly with AnSteel.
The Chinese steel mill has a capacity to produce 4 million tonnes of iron ore pellets each year.
Under the terms of the joint venture with AnSteel, Gindalbie is to export the Karara ore to China for processing.
Mr Weir said that if the WA steel mill is developed, it will be no different.
"It's a bit early to look at the details but presumably it would be no different than what we're currently doing because at an expanded capacity we will be sending ore to Oakajee by rail then some of that ore will be exported to China and some may be used directly on site at Oakajee by the new steel facilities."
Gindalbie's announcement is below:
Gindalbie Metals Limited (ASX: GBG - "Gindalbie") notes today's report on the front page of The West Australian and is pleased to announce that it supports the feasibility study surrounding a steel mill proposal for Western Australia's Mid-West region.
During last week's visit to China, WA Premier Mr Colin Barnett, signed an agreement with Gindalbie's joint venture partner, Ansteel, to conduct a feasibility study into an integrated iron and steel plant and rolling mill at the Oakajee industrial estate near Geraldton.
Mr Barnett's visit to China, during which he met directly with AnSteel President Zhang Xiaogang highlighted the support of both the WA Government and Ansteel for the development of the Karara Iron Ore Project. Mr Barnett also inspected AnSteel's new Bayuquan Steel Mill at the Port of Yingkou in north-eastern China, which has been designed to use Karara products as a key feed source.
Gindalbie also notes the ongoing support shown by Mr Barnett during the China tour for the development of Oakajee Port. The successful development of the new deepwater port, 30km north of Geraldton, will underpin the ability of Karara to expand from its planned 8Mtpa start-up to fulfill its long term potential of producing more than 30Mtpa for a mine life of more than 30 years.
Gindalbie Managing Director and Chief Executive Officer Mr Garret Dixon said Ansteel's commitment to a feasibility study was an extremely exciting development for the Karara Project, which has offtake arrangements to supply Ansteel's vast Chinese operations.
Ansteel, China's second-biggest steel producer has invested $573 million into Gindalbie and the Karara Project.
Following last week's successful environmental appeal outcome, construction on-site at Karara is expected to start in the December Quarter, with first production of hematite scheduled for the end of next year, and magnetite concentrate by mid-2011.
Mr Dixon said the multi-billion tonne Karara orebody could comfortably underpin annual production of 30Mtpa for a mine life of more than 30 years, giving it ample scope to become a major exporter of iron ore concentrate while also supplying feedstock for a WA-based steel mill.
"Änsteel has recognised the high quality of the Karara iron ore with its decision to invest heavily in the Project," Mr Dixon said.
"Now, this agreement with the WA Government highlights the benefits for Gindalbie of having a large strategic shareholder and partner with whom we can pursue further opportunities for iron ore processing and value-adding. Gindalbie is delighted that Ansteel is now proceeding with a feasibility study into a steel mill at Oakajee."
"This project could provide another major market for Karara's iron ore, in the process underpinning further expansions and production increases. Gindalbie wishes Ansteel and the WA Government every success with this study and offers its full assistance to the Project, which stands to generate substantial benefits for Ansteel, Gindalbie and the overall WA economy."
