CORRECTION: Hancock Prospecting confident of Roy Hill expansion next year
(Clarifies government approvals for expansion, Hancock’s partnerships)
18 May 2018
Platts SBB Steel Markets Daily
Diana Kinch
The flagship Roy Hill iron ore mine of Australia’s Hancock Prospecting is likely to obtain government approval to expand capacity by the end of this year, Hancock Chairman Gina Rinehart said in an interview during Platts Global Metals Awards event in London Thursday night.
This could allow the mine to produce 60 million mt/year as soon as next year, with the addition of an extra 5 million mt/year capacity, Rinehart said.
Roy Hill reached output at its current capacity rate of 55 million mt/year in late 2017, becoming Australia’s biggest iron ore mine. The project is majority owned by Hancock Prospecting (70%); minority partners are Marubeni Corp. (15%), POSCO (12.5%) and China Steel Corp. (2.5%).
“We need to get government approval: this is in the hands of government,” Rinehart said. It “won’t be delayed by change of government.”
The project is expected to go through even if there is a change of government in Australia in the coming months, the executive said. Federal parliamentary elections are due to take place in Australia later this year or early next. However, in the case of Roy Hill it is the state government rather than the federal government that will review this matter: Roy Hill has made application to the relevant departments of the West Australian State Government for approvals to increase production.
Rinehart was recently cited in the Australian press as saying that government red tape had hampered the development of mega-projects in Australia, such as the $10 billion Roy Hill project.
Rinehart added that global iron ore prices have recently been higher than had been forecast and that she is “confident that the market will support an increase [in production] in Australia”. Hancock’s partners in Japan, Korea and Taiwan shield the company from having full exposure to the Chinese market: the company is not solely dependent on sales to Chinese steel mills. More than 50% of Roy Hill’s cargoes go to the Japanese, Korean and Taiwanese markets.
Roy Hill, an integrated high-grade iron ore mine, has a 344 km heavy-haul railway system and purpose-built port facilities. It made its first shipment of iron ore from Port Hedland in December 2015 and has since made shipments to key markets in Japan, Korea, China and Taiwan.
An informed source, however, noted that an expansion at Roy Hill may be constrained by a current port capacity limit of 55 million mt/year.
