1300 jobs coming in expansion of Cairn Hill iron ore mine in SA’s Far North

EXCLUSIVE: Up to 1300 jobs will be created in SA through an $800 million investment leading to the significant expansion of a Far North iron ore mine and development of other projects in the area.

• CU River passes one million tonne mark at Cairn Hill
• $20m to restart Cairn Hill mine in 2016
• $600m expansion at Olympic Dam

UP to 1300 jobs will be created in South Australia through an $800 million investment that will lead to the significant expansion of a privately-owned Far North iron ore mine, as well as the development of other projects in the area.

CU River Mining Australia, which purchased the mothballed Cairn Hill mine 55km southeast of Coober Pedy in 2014, says its investment will also result in a more than fifteen-fold production increase by 2021.

An agreement between CU River and Jiujiang Mining Australia — the local subsidiary of a Chinese steel producer that assisted in the securing of an $800 million finance facility — will mean all of the mined ore is exported for use in Jiujiang’s facilities.

Documents were signed on Wednesday night at an event at Adelaide Convention Centre.

CU River managing director and sole shareholder Yong Gang Shan estimated that 1300 new jobs would be created through the already-approved expansion of mining pits, as well as other developments, although he would not specify how many jobs would be ongoing after construction.

The Cairn Hill mine in the Far North of South Australia.

Other planned works include infrastructure projects to enable increased output, an exploratory drilling program with an initial approved scope of 13,000m, and the development of its Snaefell and Tomahawk magnetite targets, both nearby Cairn Hill.

“Part of the funding will also be needed for associated infrastructure work including road and rail upgrades and extensions,” Mr Shan said.

“Our proposed developments will create an estimated 1300 jobs in SA, many of them in the regions. In addition, we will be using SA suppliers for goods and services wherever possible, so there is a flow-on effect in terms of secondary job creation and stabilisation.

“We now have offices in Adelaide and Coober Pedy and we are going through a process of recruitment for key positions. It is company policy to employ our own people for exploration and mining work, rather than outsource to subcontractors.”

Following a slump in iron ore prices, CU River bought the Cairn Hill mine, which has an expected life of more than 30 years, from the liquidator of Termite Resources.

It has since invested $20 million to get the site operating again — creating 60 jobs in the process — with mining currently on hold to allow for the construction of a wet processing plant. Production is expected to return mid next year, with an ongoing extensive exploration drilling program.

Work at Cairn Hill mine before it stopped.

Having restarted production in June 2016, it took CU River little more than a year to pass the one million tonne production milestone — almost all of this was exported to China via Flinders Ports’ Outer Harbour terminal.

In August this year, Mr Shan — who has more than two decades of mining experience in South East Asia, according to the company’s website — said he planned to “settle into ongoing production around 900,000 to 950,000 tonnes per annum”.

However, he is now targeting 15 million tonnes a year by 2021, although that is subject to approvals. Such an outcome would significantly boost royalties paid to the State Government.

“In the past year or so we have produced and exported one million tonnes of feedstock to Jiujiang Australia’s parent company in China,” he said.

“Our immediate target starting late 2018 is three million tonnes per annum, rising to 15 million tonnes a year when projects that we already have in the pipeline go into production.

“We have received approval for the expansion of pits three and four at Cairn Hill, which are the keys for the immediate increase in our production.”

Jiujiang Mining Australia — which has CU River director Xiaobing Lu as a shareholder — was registered on September 5 this year, according to Australian Securities and Investments Commission documents.

CU River’s iron ore mine at Cairn Hill.

Its Chinese parent company, founded in 2002, is understood to employ 23,000 people. Its business interests include steel and rolling mills, ironworks, and power plants.

Its agreement with CU River is its first Australian foray.

“This will help us access diversified business opportunities and is a strategic investment which will strengthen our trading operations”, Jiujiang’s managing director Yujiang Zhao said.

Jiujiang will provide technical expertise to assist CU River’s construction of a mine to port logistics solution capable of export of 15 million tonnes per annum.

CU River’s announcement follows other positive news for the state’s mining sector, with BHP currently undertaking a $600 million expansion at Olympic Dam — the most significant outlay the company has ever made in SA.

OZ Minerals is also pushing ahead with the development of its $916 million Carrapateena copper mine.