Embattled MinRes adds pipeline to troubled haul road repair job
Chris Ellison-led Mineral Resources is building a water pipeline and seeking water licences linked to its troubled Onslow Iron project
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Iron ore miner Mineral Resources is building a water pipeline and seeking new water licences, stoking speculation that it is trying to improve the quality of ore shipped to its customers.
It has conceded more work is required patching up a critical mine-to-port haul road that failed to stand up to the annual cyclone season in Western Australia’s Pilbara, but plans for adding a pipeline are only just coming to light.
The company is building a water pipeline to its Ken’s Bore mine where it has been stockpiling clay-heavy material while trying to hit its target of producing 35 million tonnes of iron ore a year.
Other miners, including Rio Tinto, wash ore contaminated with adhesive clay in deposits similar to Ken’s Bore, but the process adds to water usage, power consumption and operating costs.
MinRes denied the pipeline under construction was needed to fast-track wet processing of iron ore, but confirmed building a wet processing plant was part of its longer-term strategy.
Wet processing removes impurities such as clay and improves the grade of the iron ore.
The pipeline will draw water from existing bore fields about 30km from Ken’s Bore.
MinRes has sought additional water licences over big areas northwest of the mine.
The company, which is under heavy scrutiny over its governance in the fallout from a series of scandals involving managing director Chris Ellison, said the pipeline would become part of a network that supplied water to the Ken’s Bore camp and for dust suppression, dry processing and construction.
“Multiple groundwater licences are held across different aquifers to provide water for construction and operations,” a MinRes spokesman said.
“In line with the project’s primary environmental approvals, MinRes has applied to increase its groundwater allocation to ensure a long-term, sustainable supply for operations.”
MinRes has, meanwhile, already started work on a road to connect existing operations to the Upper Cane deposit about 8km from Ken’s Bore. The company appears to be counting on Upper Cane to deliver higher-quality ore and is believed to be in negotiations with traditional owners the Robe River Kuruma about access.
The Upper Cane deposit includes sites of high significance to the Robe River Kuruma, who have the strongest form of native title over parts of the wider Onslow Iron project.
The MinRes share price has plummeted 32 per cent since it unveiled a first half loss of $807m and admitted it would need to spend $230m on repairing and upgrading the 150km-long haul road that connects the Onslow Iron mining operations to port.
Ellison said on a results call on February 19 that the haul road had been damaged by a one-in-40-year weather event but the claim is not supported by rainfall and river height data collected by the Bureau of Meteorology or cattle station operators in the area. Asked about the discrepancy, MinRes said it did not maintain rain gauges along the haul road and that regional weather stations did not capture the localised, intense downpours that hit its operations in January and February.
“By way of example, operations were paused at Ken’s Bore on March 4 due to severe wind, rain and lightning, but on the same day no rainfall was recorded at Red Hill Station according to the BOM,” a spokesman said.
The MinRes share price was at $22 on Thursday, down about 67 per cent since this time last year. MinRes was hit with a credit rating downgrade from Fitch this week.
Doubts about the company’s ability to pay off a mountain of debt have led to a slump in MinRes bonds and fuelled speculation about the need for an equity raise, or MinRes being thrown a lifeline by Hancock Prospecting boss Gina Rinehart.
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Originally published as Embattled MinRes adds pipeline to troubled haul road repair job
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