Predicting the Future of Politics & the Magnetite Industry

26 November 2013

Members

Economic Benefits

WA Magnetite Projects

Magnetite Concentrate vs DSO Production Process

Value-adding in Australia

Magnetite Concentrate Production Process - Fe3O4

Mine → Crush → Grind → Separate → Concentrate → Stockpile → Ship

6

Australian DSO Quality Steadily Declining

56.0%

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

% F

e

Magnetite Conc.

Brazilian Fines

Pilbara Fines

FMG Fines

Magnetite Concentrate is a premium product consistently > 68% Fe

Disclaimer – Politics Hard to Predict

Senate

Lower House ALP Coalition Others Greens

Old Parliament 73 71 (incl Slipper) 5 1

New Parliament 55 (-18) 90 (+18) 4

Katter Wilkie Palmer

McGowan

1

Bandt

Senate Party Continuing New as at 1 July Total

Liberal/National Party 16 17 33

Australian Labor Party 13 13 25

Australian Greens 6 4 10

Democratic Labour

Party 1 0 1

Others 0 7 7

Global Carbon Savings

Life-cycle analysis of magnetite shows that even though it is about seven times more

energy intensive in Australia than hematite production, it has an overall global emissions reduction benefit when used in steelmaking.

0

500

1000

1500

2000

2500

3000

3500

Total CO2 saving in downstream processing by using magnetite ore in steelmaking Mine to ship (CO2 emission differences between Magnetite versus hematite in Australia)

kg C

O2

e/ t

on

ne

of

mag

net

ite

pro

du

ct

CO2 saving in

steelmaking in

China

CO2 penalty due to

beneficiation in

Australia

Net

reduction

of 108kg

per tonne

CO2

emissions

from mine

to steel

Based on Sino Iron project emissions

Where to on Carbon ? • December 2011 – Former Minister Combet announces

moderately emissions intensive assistance – free permits

• Baselines set on 4Mtpa production in total – Arrium and

Grange Resources – different emissions to WA projects

• Inequity created as no WA projects were yet in production

so not factored in to allocative baseline used for free permit

grants

• Two WA projects start this year with 40Mtpa combined

Stage One production- higher intensity emissions

• Other comparable industries were granted additional

special assistance such as LNG, steel.

Where to on Carbon ?

• Emissions Reduction Fund Submission

• MagNet supports global mandated emissions

reduction scheme

• Light touch baselines

• “Compliance make good provisions”

• Government to review global progress of

emissions reduction schemes in 2015

Federal Parliament

Release of Green Paper December 2013

Release of White Paper and Draft legislation Early 2014

Commencement of Emissions Reduction Fund 1 July 2014

New Senate starts 1 July 2014

• Current Senate hostile

• Greens and ALP don’t agree on strategy

• Carbon Repeal to start 1 July 2014

Karara Opening 9 April, 2013

Karara Iron Ore Project

• Gindalbie Metals Limited – AnSteel Joint Venture known as Karara

Mining sent its first shipment of magnetite concentrate from the Karara

Project to China on 1 January 2013.

• Commissioning of the Karara Concentrator continues to progress well

but some challenges.

• The Project is on track to be cash flow positive in March quarter 2014 –

target to reach Phase One production capability of 8Mtpa.

• Significant new power, port and rail infrastructure built - $3billion plus in

the Mid West region.

• A royalty rebate of 50% will occur for one year from the date of reaching

nameplate production.

• For technical update see www.gindalbie.com.au

Extension Hill Magnetite Project Configuration

• Greenfields development

– >$110 M spent to date

• 280 km SE of Geraldton

– High biodiversity value

• Multi-billion tonne resource

– 1.6 Bt JORC Inferred

– > 8 Bt potential

– Highest grade in WA

• GPA then Oakajee to +/- 50 Mtpa

Extension Hill Magnetite Project Configuration

• Approved Stage 1 project plan

• $2.9 billion Capex

– 10 Mtpa

• Open Pit Mine

• Ore Processing Plant, Concentrator, Site Infrastructure and Services

• Slurry, Gas and Water Supply Pipelines;

• Filter plant, Product storage and Shiploading at Geraldton

• 330 kV Power Transmission Line

The Sino Iron project

17

Ownership

CITIC Pacific Mining (CPM) is owned by CITIC Pacific in Hong Kong:

• CITIC Pacific – listed on HKSE - business focus is special steel, iron

ore mining and real estate

• CITIC Pacific is 58% owned by CITIC Group (Beijing)

• CITIC Pacific Mining recently announced that Production Line 1 of its

planned 6 Production Lines has moved from Commissioning into a

Production Phase, with Production Line 2 currently in Load

Commissioning. See www.citicpacific.com

• First shipment in 2014.

• The Sino Iron project is China’s biggest mining investment in Australia.

Australia - China Business Council

• Premier trade & investment group

• More than 200 WA members

• National AGM held 6 November

• New Perth based National President Duncan

Calder (KPMG)

• WA President Adam Handley (Minter Ellison)

http://www.acbc.com.au/

With a collaborative approach , the Magnetite Network and its member

companies have the potential to generate massive infrastructure,

employment and regional development opportunities, while delivering

a net global carbon reduction per tonne of steel produced

The Future