Grange progress Southdown
Grange Resources is still pushing ahead with the proposed $2.89 billion Southdown magnetite project in Wellstead, with the company launching a review into ways to reduce the price tag.
An internal review last year by Grange — 70 per cent partners in the project — was “not promising”, so the company, with Japanese equity partners Sojitz and Kobe, begun a larger external review last month to examine ways to cut capital costs.
Southdown had long been touted as having the potential to be a major economic boost for Albany, with a projected injection of about $60 million a year, until it was in effect put on ice in 2012.
Grange Resources chairwoman Michelle Li said results of the internal review, presented to the board in September, “didn’t clearly give anything promising”.
“We would still like to see the project moving forward … it’s still a great project,” she said.
“(Southdown) has a 30-year mine life and at the moment our Tasmanian mine is getting older.
“All the partners decided to carry out an optimisation study.”
Ms Li said as part of the study, the partners would examine three or four options and decide on their next move.
“This could be a staged project, we could start up with a smaller project and put the infrastructure in place,” she said. “It could help us reduce the initial capital and maybe fund the project.”
Ms Li said they were still searching for one or two equity partners to sell part of Grange’s share.
“If all the partners gave funding and if everything was in place, we could start up some time this year, but really that’s a bit idealistic,” she said.
Southern Ports Authority Port of Albany chief operating officer Brad Williamson said the port was examining ways to reduce port costs for Southdown.
“We’re still talking with them, doing research and considering options for the project,” he said.
“(However) the mining sector is much quieter than it was and interest from mining companies is much quieter due to market conditions.”
Grange Resources’ shares were at 11.5c yesterday, down from a peak more than $2 in 2007.
Share prices went below 25c during the global financial crisis and back up to 75c at the beginning of 2011, with prices gradually reducing since then.
Albany Mayor Dennis Wellington said while the project would have enormous benefits for Albany, it would be a “bonus” rather than something to be relied on.
“Economists are telling us our future is agriculture, tourism and education,” he said.
“A lot of people were looking forward to it being the be all and end all, but we need to control our own destiny and not rely on it.”
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