Coobina chromite mine set to re-open

Ukrainian billionaire Gennadiy Bogolyubov is poised to reopen the Coobina chromite mine in the Pilbara, creating 120 jobs for an operation that could generate about 2.5 per cent of the world’s supply of the stainless steel ingredient.

The billionaire, who picked up Coobina as part of his $1.2 billion takeover of Consolidated Minerals in late 2007, expects the resumption of mining at Coobina will cost about $6 million.

Coobina, east of Newman, is Australia’s only chromite mine.

Chromite is a key ingredient in ferrochrome and sought after in stainless steel for its corrosion-resistant characteristics.

The Coobina open pit mine has been on care and maintenance since 2008 when the global financial crisis triggered a collapse in stainless steel production. About 20 people have remained on site to work on the crushing and beneficiation plant, with another 100 needed to support the reopening of the mine by October.

Mr Bogolyubov expects Coobina to produce up to 450,000 tonnes of chromite a year, equivalent to about 2.5 per cent of an annual world supply estimated at 18 million tonnes.

The chromite products – lump, chips and fines ore – will be trucked to Port Hedland for shipping to markets in Asia and Europe.

Coobina’s reopening comes as ConsMin’s main undertaking, the high-grade Woodie Woodie manganese mine about 400km south-east of Port Hedland, prepares for a 25 per cent boost to annual production levels to 1.2 million tonnes.

Chevron signs KOGAS

as new Wheatstone customer

The Korea Gas Corporation has signed a 20-year agreement worth billions of dollars to purchase liquefied natural gas from the $25 billion Wheatstone gas project off the North-West coast.

US oil giant Chevron Corporation, the operator of the project in Ashburton North, said its Australian subsidiaries had signed a Heads of Agreement with KOGAS.

The new agreement will boost the likelihood of the Wheatstone project getting final approval, slated for next year.

KOGAS, the largest LNG buyer in the world, will purchase 1.5 million tonnes per annum of LNG from Wheatstone for 20 years.

The company also signed an agreement to acquire a five per cent stake in Chevron’s Wheatstone field licenses and in the Wheatstone project LNG and domestic gas processing facilities.

KOGAS’ LNG purchase together with its equity participation will see KOGAS take delivery of about 1.95mtpa of Wheatstone LNG.

State One Stockbroking energy analyst Peter Kopetz estimated the deal with KOGAS would be worth about $20 billion over its 20 year life, based on previous deals announced.

He said such a move would boost the chances of the gas project getting final approval.

“I think Wheatstone now has contracted about 80 per cent of its LNG,” Mr Kopetz said.

Tokyo Electric Power Company last year signed Australia’s biggest energy deal, with a deal worth an estimated $90 billion to take 4.1mtpa of Wheatstone gas during the next 20 years.

KOGAS has previously signed a deal with Chevron for 1.5 million tonnes per annum of LNG from the Gorgon gas project offshore from WA.

Chevron has not disclosed the value of the latest deal.

Chinese likely to be circling

Aussie targets

A sinking Australian dollar, global equity jitters and a surge in Chinese foreign reserves have put Australian acquisitions back on China’s agenda, analysts say.

Paladin Energy, PanAust and Aquarius Platinum top the list of takeover targets, according to Citigroup analysts. They say miners with offshore assets will be sought after because those with local projects could be hurt by the resource super profits tax and or adverse Foreign Investment Review Board rulings.

“Just as the GFC gave China an opportunity to bid for mining assets with little competition, we expect the global risk reduction sell-off and collapse in the Australian dollar to once again provide an opportunity,” Citi analysts said in a note to clients.

The Citi report echoes industry speculation that the proposed tax could hand Chinese interests a greater slice of Australian resources as other sources of funding dry up.

Chinese foreign exchange reserves surged to $US2.4 trillion in March, up 25 per cent year-on-year. On Citi’s numbers, it is estimated about 70 per cent of that is in US dollars, with the balance mostly in euros and Japanese yen.

The Australian dollar has fallen more than 9 per cent from this year’s high of US93.51¢. It closed yesterday at US84.78¢, down from Friday’s close of US85.09¢.

Paladin, PanAust and Aquarius were named at Citi’s top targets because they all own overseas assets, have no major potential blocking shareholder and are mining commodities that China is expected to be seeking: uranium, copper and platinum respectively.

Conquest makes offer

for North Queensland Metals