Mineral Sands Boom Hinges On Infrastructure Upgrade
The Age
Monday August 7, 2000
Poor infrastructure is threatening a potential multi-billion-dollar mineral sands industry in Victoria and hundreds of jobs, a study has found.
Several mines are likely to come on stream over the next few years but, unless infrastructure is upgraded, the projects may not be economically viable in the face of the growing threat of mineral sands producers in Kenya, Mozambique, South Africa, India or Sri Lanka.
The infrastructure includes roads, bridges, electricity and gas connections, water supplies, telecommunications and rail links to ports.
The study emphasised that once infrastructure was upgraded to cater for mineral sands, it would also be a catalyst for development of other industries.
Victoria's Minister for Energy, Resources and Ports, Candy Broad, said that unless infrastructure was in place by 2005 at the outside, other countries could fill the opportunity for mineral sands.
``It could be five or 10 years before the opportunities are there again," she said. ``We want to get the processes happening sooner rather than later."
Sinclair, Knight, Merz conducted the study for a management committee comprising representatives from government and industry.
Ms Broad and the Federal Minister for Industry, Science and Resources, Nick Minchin, released it at an industry briefing in Mildura last week.
The mineral sands are in the Murray Basin, an area 600 kilometres across that includes portions of Victoria, New South Wales and South Australia.
The market value of the Murray Basin's deposits is about $13billion.
Mineral sands - titanium and zirconium and the resulting processed tradeable products rutile, ilmenite and zircon - have many applications, from paint and paper to plastics, ceramics and jet planes.
The basin resource is big enough to support a mining and processing industry for more than 30 years, creating 450 direct full-time jobs and 1100 indirect jobs.
Management committee chairman John Reynolds said an economic analysis of the Western Australian mineral sands industry had shown 59 per cent of turnover was spent in rural areas and 28 per cent in metropolitan.
This meant Murray Basin mineral sands would generate spending of $11billion, with $6.5billion spent in rural Victoria, SA and NSW.
It is estimated the five main opportunity zones have a potential quantity of about 60 million tonnes of coarse-grained mineral sands.
In Victoria, the zones are centred on Mildura, Swan Hill, Robinvale and Horsham.
``Extensive deposits of fine-grained mineral sands could become a significant additional component of Murray Basin production in the longer term," the study said.
``Indications are that the basin could achieve a production rate of more than 700,000 tonnes per annum of rutile, zircon and ilmenite products within 10 years, with the potential to double that output in the long term."
Australia's mineral sands exports are worth $1.2billion annually, but Murray Basin supplies could push this to $1.7billion and restore Australia's world leadership.
``This can be achieved only if there is an adequate infrastructure to enable the Murray Basin to be developed to its full potential," the study said.
The infrastructure needs of the five zones vary, but the study said the inland location of the Murray Basin meant that efficient and economic transport was crucial to the success of the industry.
Key links in the transport chain are the mine/primary processing plant to the mineral separation plant, and from the mineral separation plant to the port. Prime candidates for mineral separation plants are Mildura, Horsham, Portland, Broken Hill and Murray Bridge/Tailem Bend in South Australia.
Creating a standard-gauge rail link between Mildura and the Port of Portland is a key recommendation of the report. This would involve upgrading and standardising the Mildura line north of Lascelles, with a new rail connection to the Hopetoun grain line.
The study recommended other infrastructure options:
* Upgrading the existing broad-gauge lines into Melbourne and Geelong, with focus on product flow from Mildura.
* Construction of container port handling facilities at Portland and Geelong where feasible.
* Connection of Geelong Port to the standard gauge rail network.
* Upgrade of rail access to the Port of Melbourne.
* Upgrading and standardisation of the Mildura-Ouyen-Pinnaroo line sections to provide direct connection to Port Adelaide.
* Completion of the Robinvale bridge replacement over the Murray River (expected in 2002).
At the briefing, various businesses cited examples of the infrastructure problems facing their projects. Pat McManus, development manager at Murray Basin Titanium, said production at the basin's first mine at Wemen, 20 kilometres south-west of Robinvale, would begin in the first quarter of next year.
This small mine was well served by roads and power, was close to the Murray River, and its separation plant was just south of Mildura.
However, other potential mines further north at Birthday Gift and Cylinder, which had potential annual revenues of $100 million, were very isolated and a long way from roads, power and water.
``A decision on where their separation plants will go will be driven by a decision on the export port," Mr McManus said.
The company was studying the pros and cons, and all ports from Whyalla to Portland, Geelong and Melbourne were in the running. Rail transport would involve large loads of 60,000 tonnes deadweight, and 40,000-45,000 tonnes storage on the wharf.
``This will drive decisions on the separation plants, which will be located somewhere between the ports and the railhead," he said.
The study said the Federal Government and three State Governments should develop an implementation program to help develop the industry. Coordinating planning and regulatory issues was essential.
``The governments should consult with the mineral sands industry when allocating funds to achieve the required infrastructure upgradings in a timely manner," the study said.
Ms Broad said the government had made clear its desire to standardise parts of the rail system. The government, however, could not do it on its own, and was looking for partnerships with the private sector. ``We are also looking to the Commonwealth Government to make a contribution," she said.
However, Senator Minchin said transport infrastructure needs were by and large the responsibility of the states. They would be in a better financial position with the proceeds from the GST.
Senator Minchin said this did not rule out discussions with the states on any proposals put to the Commonwealth. Canberra concentrated on rail projects of major national significance, such as the Darwin-Alice Springs rail line or the Speedrail high speed train project; individual projects would be judged on their own merits. ``Standardisation is a significant priority and I would love to see it achieved," he said.
Senator Minchin said proceeds from the sale of National Rail were unlikely to be dedicated to rail projects. Generally, proceeds from privatisation were used on debt reduction. The exception was proceeds from the sale of Telstra, which were used on the environment, he said.
Mr Reynolds said the water needs of the basin mineral sands industry were not as big a problem as had been expected. Less than 1 per cent of the water needed would be of ``irrigation quality", with the remaining 99 per cent high-salt-content water that was unsuitable for irrigation.
The industry's fresh water demand in 10 to 15 years' time would be the equivalent of 0.004 per cent of the present diversion from the Murray Darling river systems, he said.
© 2000 The Age