MinRes and the ART of building new mines

Staff reporter

‘This 12-month period is going to set us up for the next 50-plus years’

Diversified Australian mining and mining services group Mineral Resources (MinRes) says the A$3 billion Onslow iron ore project in Western Australia is on track to deliver first ore to ship in June this year, and to truck ore using the world’s first autonomous heavy haulage vehicle by the end of 2024.

The project that will “unlock six billion tonnes of stranded iron ore in the West Pilbara region”, according to MinRes, is ferrying people directly in and out of Queensland to resort-style accommodation at Ken’s Bore via “MinRes Air” and ramping up mining.

“Drill, blast and load and haul operations teams are operating at full capacity, with 9.4 million tonnes of total material moved during the [March] quarter,” MinRes said this week.

“Ken’s Bore airport is fully operational with seven scheduled flights in and out of the site each week, including a weekly direct charter flight between Brisbane and the mine.”

The project construction camp was at “full capacity and 480 of the 500 resort rooms have been delivered”.

MinRes said the first convoy of Kenworth C509 prime movers fitted with Hexagon autonomous technology had been delivered to Onslow.

The ASX-listed company, which has a current market value of about $13.4 billion, is working with Sweden’s Hexagon Mining to deliver an Autonomous Road Train (ART) fleet of 120 “operational assets” hauling up to 330t per unit on a 150km dedicated haul road between mines and MinRes’ port facilities at Onslow.

The Australian company says the automation tech and modular, peer-to-peer communication capability can enable safe and economical road haulage – without the capex of rail nor the high recurrent labour costs of road transport – to unlock the billions of tonnes of 56-58% iron ore in the West Pilbara and help it build a scalable, attractive and exportable road haulage service offering.

“Road train operators are becoming scarce,” MinRes said in February this year, citing more than 20,900 vacant truck-driver job positions nationally.

The sector’s average worker age was above 45 years and “aging 2.2-times faster than all other industries”.

Onslow road trains will run in a dedicated autonomous operating zone “only accessible to trained personnel” with Hexagon’s technology enabling “detection and protection of non-autonomous assets”.

MinRes founder and CEO Chris Ellison said in February: “We’re running over 250 on-highway quad road trains. Right now we’ve got about 75 of the big 330t jumbos. And we get out to 176 by December … Similar costs to running medium-gauge rail but just a fraction of the capital costs to put a haul road in and bring these things online.

“We’re one of, if not the biggest in the world, on running these on and off-highway road trains.

“We’re going to be autonomous within the next 12 months.

“That means no drivers.

“So we pull the drivers out of those trucks on Onslow iron at [the start-up] 35 million tonne run rate [and] it’s about $100 million a year saving.

“That goes into our Mining Services [division] pocket.

“In the next two-to-three years, we want those trucks to be all battery operated. So zero emissions.

“That’ll make them really highly sought after.”

MinRes is aiming for stage-one production of 35 million wet tonnes pa at A$45/wmt free-on-board from Onslow, with most of that bound for Baowu in China, which owns 18.7% of the project. MinRes has 60.3%, South Korea’s POSCO 10.3% and US-based AMCI 10.7%.

Onslow is the flagship project in a slate of iron ore, lithium and mining services investments by one of Australia’s most successful companies of the past five years. In this period its shares are up more than 400%.

“This 12-month period is going to set us up for the next 50-plus years,” Ellison said.

“Where we’re setting up in Onslow, in 50 years from now we’re probably going to be spitting out somewhere around 80 million tonnes a year.

“By December of ’25 we’re going to be at 40 million tonnes.

“And then by December of ’26 we’re going to be at 50 million tonnes run rate.

“On day one the earnings are around $2.5 billion a year for MinRes.

“The CFR costs to China landed in China at US$47 a tonne in China, and that includes about $9 for shipping, and about $9 for royalties. And they’re all in US tonnes. At today’s market at $128 a tonne, we will be receiving a sale price of about $107 [rate adjusted after circa-8% moisture removed].

“In round numbers, about US$60 a tonne goes in our pocket – so about $1.9-to-2 billion hits the MinRes bank account.

“We’ve got life-of-mine Mining Services contracts. They produce about $280 million a year EBITDA. And then the toll road has got about $8-and-a-bit a tonne, times 35; about $280 million a year income.

“We get out to 50 million tonnes [and] we’re about $400 million a year that thing will be producing.

“So when we’re running at 50 million tonnes, on today’s numbers, about $3.3 billion a year comes into the MinRes coffers.

“So if anyone’s concerned I might be stretching the balance sheet a little bit, that’s the prize.

“And I mean, that thing will be going for more than 50 years.

“So no matter what happens, it’s just a brilliant project.”


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