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Gindalbie shrugs off iron ore gloom
Gindalbie shrugs off iron ore gloom

Gindalbie Metals has shrugged off the gloom surrounding the iron ore industry following the opening of its new iron ore berth in Geraldton.

The Chinese-backed magnetite miner has spent more than $200 million on the facility which is capable of handling up to 16 million tonnes a year from its Karara mine, although it will initially only take half that amount.

It comes ahead of the first production of magnetite concentrate from the $2.6 billion Mid West project, which is expected to occur in October.

Gindalbie's managing director Tim Netscher said the new export terminal set new standards for efficiency, safety and the highest possible environmental standards in the Port of Geraldton.

"This is a sophisticated iron ore terminal which has a number of significant advantages and which includes the only rotary car dumper currently in the port," he said.

"These facilities reflect an investment of more than $200 million in the Port of Geraldton by the Karara project.

"Combined with our investment in the new 85km spur line connecting Karara to the existing Mid West rail network, the new 330kV power line servicing the project and the new water pipeline, we have invested over $1 billion in infrastructure development and enhancement in the region .

"This provides huge impetus to the development of the region, creating a fully integrated logistics pathway that will help to unlock the region's resources, creating employment, opportunities and numerous positive economic benefits for communities across the Mid West," he said.

It was opened by Transport Minister Troy Buswell.

Ginadalbie says it has overcome local concerns of dust from stockpiles, saying that the entire terminal was fitted with dust suppression and extraction at each transfer point.

The company is supported by its equity, project and sales alliance with Ansteel - the Chinese steelmaker owns 36 per cent of Gindalbie and half of Karara, and is contracted to take all of the mine's magnetite - but the stock is still languishing, closing yesterday at 33.5 cents.

Today, shares rose 7.5 per cent, 2.5 cents, to 36 cents in early trade before closing at 35 cents, up 1.5 cents or 4.5 per cent.

Karara is not only eagerly anticipated in the Mid West where it stands to make a major economic contribution to a region that has suffered in recent times with agriculture's tough years, but closely watched as a potential jump start for the troubled Oakajee port.

The mine is in the vanguard of a growing WA magnetite movement which stretches from Citic Pacific's $6 billion Sino Iron project under development in the Pilbara, through the Mid West where Asia Iron is aiming to join Gindalbie in production in late-2014 with its Extension Hill project to the Great Southern, where Australia's only dedicated magnetite producer in Grange Resources wants to be on stream at Southdown near Albany in 2015 at a cost of $2.9 billion.

The recent slump in iron ore prices however, has thrown many of these projects into doubt.

Karara's magnetite will be upgraded from an initial iron content of 36 per cent to a premium concentrate grading 68.2 per cent, via a treatment process which, while more complex than the processing of hematite, is common outside of Australia where magnetite accounts for half of all iron ore produced.

The result will be a product able to command perhaps a 20 per cent premium for its high iron content and low impurities, offsetting Gindalbie's higher production costs of $65 to $68 a tonne, compared with current prices of about $100/t.

It represents the first secondary processing of iron ore since BHP Billiton pulled the pin on the disastrous $4 billion hot briquetted iron plant at Port Hedland in 2004.

Karara will produce at an initial eight million tonnes a year, doubling under a proposed stage-two expansion which would lower costs by as much as 15 per cent.

That expansion can be handled within Gindalbie's current 16mtpa capacity at Geraldton. However, the next step to 30mtpa, with an attendant fall in costs, is dependent on the development of Oakajee, which is delayed until 2017, and has been further undermined by recent market developments.

Gindalbie admits its development has been a hard slog, dogged like other WA infrastructure projects by cost blowouts which have increased the final bill to $2.6 billion from $1.65 billion, albeit with a varied scope.