China boom revives old Australian mine projects
Date: 19-Oct-04
Country: HONG KONG
Author: Nao Nakanishi
Abra Mining Ltd. is developing one such deposit. The junior Australian explorer plans to open a rare lead-only mine to supply a Chinese automotive sector set to match Japan's in size by 2010.
"The importance of stand-alone lead mining is now coming into its own," David Blight, Abra's managing director, said at a conference in Hong Kong earlier this month.
Lead, used mostly in car batteries, is more often produced as a by-product of zinc mining or recycled from scrap metal.
Investment in new lead mines was seen as a thing of the past until recently - so much so that the Western Australian ore body being developed by Abra was left almost untouched until June after being discovered nearly 30 years ago.
But the emergence of China's growing auto sector has changed the picture. The country's annual car output is forecast to more than double to 10 million units by 2010 from 4.4 million this year.
"There is unquestionably a virgin automotive industry in the Asian region," Blight said. "New lead is going to be required."
Abra plans to list on the Australian Stock Exchange before Christmas and hopes to begin mining in four to five years.
Strong lead demand from China, once the world's top exporter of the metal, helped elevate the metal earlier this month to a record three-month contract high of $982.50 a tonne (MPB3: Quote, Profile, Research) on the London Metal Exchange.
It fell back to around $860 by Yesterday after fund selling provoked a crash on the LME complex, but this was still above the levels of between $450 and $550 where the metal has languished in recent years.
CHINA LOOKS OVERSEAS
China has embarked on a quest to secure raw materials from overseas, not least the recent $5 billion bid by state-owned Minmetals Corp. for Canadian miner Noranda Inc. (NRD.TO: Quote, Profile, Research) .
"We've been contacted by a number of Chinese commodities houses and smelters, asking us to try and identify companies for investment," said Michael Atkins, executive chairman of stockbroker Montagu.
In nickel, used to add strength and sheen to stainless steel, China has been particularly aggressive in seeking raw materials. Demand for the metal is expected to reach 160,000 tonnes by 2006 from about 120,000 tonnes forecast this year.
Mining officials and analysts said a deal struck last year that will see China's top nickel producer, Jinchuan Group, take the entire output from Australian miner Sally Malay Mining Ltd.'s (SMY.AX: Quote, Profile, Research) new Kimberley mine was a landmark for the industry.
But older deposits are also being revisited to feed the China boom.
Another Australian prospector, Sherlock Bay Nickel Corp. Ltd. (SHN.AX: Quote, Profile, Research) , said it was discussing an off-take agreement in exchange for an investment of about A$5 million ($3.62 million) with various companies from Europe and China, including Jinchuan.
Managing director Albert Gerick said he hoped to conclude a deal by end-October to start shipping nickel hydroxide, containing 30 percent nickel, as early as June 2005 from a body of low-grade ore discovered in the 1970s in Western Australia.
It plans to produce about 8,500 tonnes a year of nickel, 1,600 tonnes of copper and a small amount of cobalt, he said, using a new technology known as bioheap leaching.
LME nickel prices (MNI3: Quote, Profile, Research) have doubled in the past two years, as dwindling global supply at a time of growing Chinese demand has pushed inventories to record lows.
In copper, Hillgrove Resources Ltd (HGO.AX: Quote, Profile, Research) said it planned to reopen the Kanmantoo open-pit copper-gold mine near Adelaide in South Australia, which has been closed since 1976.
Though they once considered using the pit as a rubbish dump, Hillgrove now plans to start producing copper concentrate there in the first quarter of 2007.
"There are a lot of copper projects out there at early stages. It is a race," sai
