Australian Financial Review
JULY 16, 2024
Reporter – Brad Thompson
Gina Rinehart’s Hancock Prospecting has moved a step closer to developing a $5 billion magnetite project in Western Australia capitalising on support from the Indian government.
However, based on work done so far, there is no guarantee the 51 per cent-Hancock-owned Mt Bevan project will move forward, the iron ore giant says, citing the Albanese government’s policies and bloated approval regimes as posing threats to its success.
The new mine would build on Mrs Rinehart’s close ties with re-elected Indian Prime Minister Narendra Modi, and any magnetite produced is likely to be destined for Indian steel mills.
On Tuesday, Hancock’s share in the magnetite joint venture increased from 30 per cent to 51 per cent following the completion of an initial study into producing an iron ore product considered particularly suitable to make green steel.
ASX-listed Legacy Iron Ore, which is controlled by the Indian government’s National Mineral Development Corporation, owns 29.4 per cent of the venture and Hawthorn Resources owns 19.6 per cent.
The Mt Bevan project sits in the Yilgarn region of WA, where Chris Ellison’s Mineral Resources has moved to shut down iron ore mines that employ about 1000 workers.
Hancock said the work to date supported pushing ahead with the project but hit out at what it viewed as a complex and time-consuming approvals process.
Positive technical outcomes
“The technical outcomes from the work done are positive and further work is being undertaken to optimise the design and costs for supply of power, transport of iron ore product from mine site to a port,” a Hancock spokesman said.
“However, Australian government tape and the approvals process in Australia add uncertainty to the project, despite its technical merit.”
The capital cost of the project – slated to produce 12 million tonnes a year of product containing 70 per cent iron – is estimated at just over $5 billion.
By comparison, Fortescue’s misfiring Iron Bridge magnetite project had cost $US3.9 billion ($5.78 billion) to build. Iron Bridge was built to produce up to 22 million tonnes a year but has operated at a fraction of that rate so far, and Fortescue guidance suggests it will produce a maximum of 4 million tonnes in 2023-24.
Chinese conglomerate CITIC, via subsidiary Sino Iron, reported a profit of $US539.9 million on its WA magnetite operations for the year ending December 31, but has since warned that it will scale back production by a third to 14 million tonnes this year amid a bitter dispute with the tenement owner Clive Palmer and his private company Mineralogy.
The Mt Bevan project is on tenements that cover 165 square kilometres in part of WA that has been dubbed the “lithium corridor of power”. It is just more than a year since Hancock signed a deal with Legacy and Hawthorn in Hyderabad whereby Mrs Rinehart’s private company could also emerge with a 51 per cent stake in a lithium joint venture.
On the magnetite front, Hancock is also keen to press ahead with its wholly owned Ridley project in WA, which could eventually produce 16.5 million tonnes of magnetite a year.
Speaking at The Australian Financial Review Mining Summit in Perth in May, top Hancock executive Sanjiv Manchanda said regulatory and policy shortcomings could hamper magnetite projects and consequently any global transition to greener steel making.
Magnetite projects require energy-intensive processing but yield a high iron content from the finished product.
Mr Manchanda had pointed to the Albanese government’s flagship carbon emissions reduction policy, known as the safeguard mechanism, as a big barrier.