By Jennifer Perry
Centrex Metal’s chief operating officer Kevin Malaxos told Rail Express that the lack of suitable infrastructure, or the inability to access private infrastructure, particularly on the Eyre Peninsula where Wilgerup is located, has caused delays to several iron ore projects.
“The need for infrastructure capable of supporting the bulk commodity resources sector in South Australia was certainly missed, or miss-timed to the point where burgeoning producers are not able to access suitable rail or port facilities to export material," he said.
“Producers of bulk commodities know the tyranny of distance kills many good projects and having to transport iron ore 2000 kilometres is extraordinary."
He explained that rail infrastructure on Eyre Peninsula is narrow gauge with light axle loadings and while this is not ideal for bulk commodity transport, it is acceptable provided it is well maintained, though the network is run-down and the extremities are in extremely poor condition. Malaxos said that mining operations located at the extremities of the line are required to invest significant capital to improve the line to acceptable standards.
“However a small company cannot incur significant additional operating costs to upgrade the rail network unless they have significant tonnages to distribute these charges,” he said.
Centrex has been discussing the Eyre Peninsula rail network with the owner/operator for several months in an effort to convince them to take a “holistic view” of the rail network and realise the “strategic advantage” they will gain by upgrading the track in preparation for many advanced exploration plays on Eyre Peninsula, Malaxos said.
“Negotiations with the rail owner/operator are ongoing, but a capital component is being discussed to further upgrade sections of the existing track to improve safety and potentially increase train speed in areas where speed restrictions currently exist.”
The company’s infrastructure plans include the upgrade and sealing of a 20 kilometre section of public road from its Wilgerup mine to a new rail siding adjacent to the Lock to Port Lincoln rail line.
The new rail siding will be made available to other potential miners in the region (subject to land owner approval) and will have capacity to provide storage and rail loading facilities for local grain producers in the future.
A new fleet of wagons suitable for carrying iron ore will be delivered for the project including new or refurbished locos and the rail unloading facility at Port Lincoln is planned to be modified to handle iron ore (it currently handles grain).
The company’s biggest planned infrastructure advancement is the upgrade of Port Lincoln where it plans to export its iron ore a Development Application is currently being assessed for approval.
Malaxos said that while the South Australian Government is “very supportive” of the State’s minerals sector, offering support “where appropriate,” a $200-300 million investment in a deep water port requires significant tonnage to justify this expenditure.
“The majority of exploration companies in South Australia do not have massive reserves at this stage.
“The challenge is to rapidly increase reserves to justify the large expenditure on infrastructure in a timely manner, whilst protecting shareholder value and security.
“This is the classic chicken and egg scenario,” he said
Centrex have completed JV negotiations with Wuhan Iron and Steel (Group) Corporation of China for the development of the company’s first magnetite operation on Eyre Peninsula with documents currently being reviewed for FIRB and NDRC approval. Commercial mining at Wilgerup is expected to begin in 2010, subject to DA approvals at Port Lincoln. The first shipment is scheduled for June 2010.
 
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