Miner eyes NZ for $750m magnesium plant

By PAULA OLIVER

An Australian mining company says it is looking at three potential sites in New Zealand on which to build a $750 million magnesium processing plant.

Sydney-based Pima Mining, an explorer listed in the top 300 companies on the ASX, is looking at sites in Taranaki, Southland and Hawke's Bay. If it goes ahead with the plant, it would employ between 300 and 350 staff.

Pima Mining chairman Patrick Elliott told the Business Herald yesterday that electricity prices, construction prices and labour costs made New Zealand an attractive place to build a plant.

Magnesium is at present riding a wave of popularity as a lightweight alternative to other materials used in the automotive industry. It is also used in mobile phone casings, laptop computers, and bicycle frames.

Pima mines magnesite - a magnesium carbonate - from a South Australian location. It is about to build a new processing plant nearby, and has secured a deal to sell all of that plant's product to the automotive division of German company ThyssenKrupp.

Magnesium is produced by an electrolytic process - similar to that used to produce aluminium. A plant would, therefore, be a major power user.

"I'd like to reckon the chances are a whole lot more than 50:50, but it's going to take us two or three years to get through all the feasibility study work," Mr Elliott said. "For us, the major issues are energy costs, labour availability, and construction costs."

Pima's expansion plans are entirely dependent upon how the world market for magnesium pans out. Mr Elliott said the company expected automotive demand to continue to grow rapidly, but it would need to investigate further down the track.

To minimise the cost of power transmission and any losses associated with it, it makes sense to build the magnesium plant near a major power output facility - which all three potential sites have.

The company is not looking at sites in any other country yet. Its present model would be to ship the material to New Zealand for processing, because it has not yet identified a suitable source of magnesite in the country.

"That's not to say it's not there though," Mr Elliott said.

Representatives of Pima have been in New Zealand in recent weeks to discuss the potential plant with Ministry of Economic Development staff.

Mr Elliott said the trip was purely to understand how local processes work.

"They've been very helpful, but we're saying the economics have to stand up on their own two feet. Governments set the rules, and it's up to industrial people like ourselves to say how we will work within the rules."

Mr Elliott said labour rates and other things relevant to the facility were significantly lower in New Zealand.