Business: Iron sand exports to surge in expansion

By Staff Reporter

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A greater shipping capacity and new exploration is set to boost iron sand exports.  Photo/Bevan Conley
A greater shipping capacity and new exploration is set to boost iron sand exports. Photo/Bevan Conley

New Zealand's iron sand exports could soar to almost 10 million tonnes a year by 2016, as Australia's BlueScope Steel adds shipping capacity at its Taharoa site and Trans-Tasman Resources remains hopeful of approval for its offshore mining venture.

ASX-listed BlueScope said last week it would introduce a 175,000 tonne slurry loading vessel at Taharoa, south of Kawhia, in 2016 and spend A$50 million ($54.38 million) through 2018 on mining, processing and ship loading equipment.

The third ship will add 1.3 million tonnes a year of export capacity at Taharoa, which is expected to rise to about 4 million tonnes annually in 2016, the Melbourne-based company said. It estimates the resource at Taharoa is sufficient to produce 4 million tonnes a year for 15 years.

Trans-Tasman plans to extract between 4 million and 5 million tonnes a year starting in 2016 from a 65.76sq km area off the North Island coast, west of Patea. Its application suffered a setback this month when the Environmental Protection Authority extended the submission period until January 28 and pushed back the start date for public hearings after administrative problems.

The company has said it plans to raise as much as US$500 million ($615 million) in debt and equity from a combination of existing and new shareholders, and prospective Chinese customers in mid-2014, assuming it wins regulatory approvals.

BlueScope's shares have soared about 66 per cent on the ASX this year as it acquired businesses, made progress in Asia and stabilised its Australian business. BlueScope's New Zealand operations accounted for just 8 per cent of revenue last year at A$681 million.

Sales and earnings both fell as an increase in iron sand volumes wasn't enough to offset weaker iron ore prices on which iron sand is benchmarked.

"With a low cost of extraction, our iron sands operations are a valuable part of BlueScope's business portfolio - making an excellent contribution to earnings from exports and providing low cost iron unit feed to New Zealand steelmaking," said chief executive Paul O'Malley.

A BlueScope spokesman said the company is likely to hire more workers at Taharoa following the expansion.

The mine site is leased from local Maori landowners and has been in production since 1972. It is one of two sites where BlueScope extracts iron sand in New Zealand, along with the Waikato North Head mine. BusinessDesk

- Wanganui Chronicle

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