No concessions for new ore

The emerging magnetite iron ore sector is disappointed by a State Government decision to reclassify the mineral and impose a set royalty rate.

Although the royalty rate for magnetite concentrates is not new, Mines and Petroleum Minister Norman Moore last week announced a set royalty rate of 5 per cent for magnetite concentrates after a decision to change the classification of magnetite iron ore from other minerals to beneficiated ore.

The State is expected to receive about $60 million from the change, with anticipated increases to more than $160 million a year by 2014-15.

WA’s first magnetite project is expected to be CITIC Pacific’s Sino Iron project south of Karratha, with production scheduled to start next year.

Magnetite Network executive director Megan Anwyl said it was disappointing the emerging sector would not receive royalty concessions.

The network represents five mining companies, including two based in the Pilbara – CITIC Pacific Mining and Atlas Iron.

“Magnetite ore when you dig it out of the ground has a very low value, it’s not really sold at all, unlike the traditional Pilbara direct shipping ore that Rio Tinto and BHP have which has got pretty big value as it is dug out of the ground,” she said.

She said there was a good argument for concessional rates for the new sector.

“This is about attracting investment for all of these other projects that are out there,” she said.

“We think that there is a good argument because it is a start-up industry that you should give a concessional rate, for example the first five years for any producer as an encouragement to get more investment into this sector and we will continue with that argument.”

Association of Mining and Exploration Companies chief executive Simon Bennison was disappointed with last week’s announcement

“AMEC has been consulting with the government on various options for the future treatment of royalty rates as it relates in particular to the magnetite sector,” he said.

“There is a desperate need to make sure infrastructure is in place as these projects come on stream.

“In spite of this announcement we propose to continue discussions with the government on the future application of royalties on this emerging industry with a view to assisting it come on stream in the most cost-effective way as possible, whilst also optimising its long-term sustainability.”

Chamber of Minerals and Energy director Damian Callachor welcomed the decision on the royalty rates, saying it would provide stability for the sector.

“This new, value-added product will provide a significant boost to the WA economy and again, create more jobs in the Mid West and Pilbara,” he said.