September 10, 2007
Australia’s Bauxite Boom Gathers Pace
By Our Man In Oz
www.minesite.com/aus.html
[Free Registration]
Bauxite, the mineral which eventually becomes aluminium, continues its remarkable revival as an exploration target in Australia. Hot on the heels of a search by United Minerals and its big Norwegian partner, Norsk Hydro, comes what is believed to be the first pure bauxite float on the Australian Securities Exchange. The aptly-named Bauxite Resources Ltd is looking to raise a miniscule A$5 million, hardly enough to scratch the surface of the targets it has lined up. Highest on the list is an area around the west coast settlement of Muchea which, for old readers, instantly brings back memories of an earlier, and unhappy time, in the Australian bauxite/alumina/aluminium industry – not to mention a couple of once great names who tried for more than a decade to mine the bauxite near Muchea.
Lang Hancock, a legend in the iron ore industry, and his partner, the late Peter Wright, once formed a joint venture with the sugar-producer, CSR (Colonial Sugar Refineries) known as Pacminex. The project, which chewed up A$2 million (A$60 million in today’s money) from the mid-1960s to the mid-70s, was designed to rival the mines and refineries build by Alcoa and Western Mining Corporation further to the south along a geological structure known as the Darling Scarp. Low prices, environmental protests, and internal bickering, eventually saw the Pacminex name disappear. But the bauxite remained.
Enter a small team of eager young explorationists led by lawyer, Luke Atkins. They have acquired three areas for their float of Bauxite Resources, two in the Darling Range (Muchea and South Darling) and one in the Mitchell Plateau, 3000 kilometres to the north, and not far from the tenements being explored by United and Norsk, and also close to a big swag of country held by Rio Tinto and Alcoa. It is at this point that a light bulb should be flickering in the brain of the average investor, tapping out a signal along the lines of “what’s happened, why has bauxite suddenly become so sexy”.
The answer, somewhat curiously, lies in the price of oil. As it rises, all other power sources rise in sympathy. And, as the cost of power rises so does everyone look for ways to cut their power bills, with one of the best ways, especially for aviation and road transport, to move even more heavily into lightweight metals. Rio Tinto’s merger with Canada’s Alcan (to become Rio Tinto Alcan) is the best illustration of the extremely bright long-term outlook for aluminum, and its precursor mineral, bauxite. If BHP Billiton should do what some observers believe, and launch a takeover bid for Alcoa, or Rio Tinto Alcan, then interest in bauxite will go through the roof. If there is to be a bauxite stampede, and these are very early days, then the best place to find the stuff is in Australia, or countries close to the equator where the tropical sun and heavy rain, has leached the soil to form layers of alumina rich cap-rock.
United’s plan, which Minesite reported several weeks ago, is to explore on its own tenements which encircle those of Rio Tinto and Alcoa on the Mitchell Plateau, and perhaps go as far as building a multi-billion dollar alumina refinery. At some stage United and Norsk might even suggest that since neither Rio Tinto nor Alcoa has done much to mine their bauxite then the “use it, or lose it” principal of Australian mining law ought to be applied. Bauxite Resources is being a little less aggressive, so far. It proposes to explore its tenements on its own at this stage, and look more towards a “direct shipping” proposal which would see bauxite, grading around 34%, exported direct to markets such as China and/or the Middle East.
Atkins told Minesite that exports could be comfortably handled through a number of ports, with the start-up target being a relatively lowly one million tonnes a year. Given that bauxite is currently fetching around US$45 a tonne, that represents a potential start-up annual cash flow of US$45 million – and all from a mining process which genuine hard-rock men call “gardening” because all that has to be done is blast the cap rock, scoop it up, separate out residual vegetation, perhaps upgrade modestly by removing any silica, and then off to market.
Said quickly and it sounds easy, and it remains to be seen whether Australian investors are yet ready to embrace bauxite as the next hot commodity in the five-year mining boom. Atkins thinks they are, obviously. He says Bauxite Resources will be the only “junior entry” with its foot in the world-class Darling Range area. “We’re planning to review historic data, including mountains of documents, and then look to establish a JORC resource,” he said. “Expanding world demand for bauxite means there is real potential to ship directly to China.”
He’s right. But launching a new bauxite mine in the Darling Range will be tough. Pacminex failed, perhaps for internal reasons. Alcoa continues to battle environmental protests over its mining in the Range which is also a prime water source for much of south-west Western Australia. There is also the potential for Alcoa, and the Worsley joint venture, which is run by BHP Billiton, to object to Bauxite Resources exploring in some areas, a point Atkins acknowledges, but is confident that negotiations will lead to his company gaining access.
Whether Atkins succeeds, or not, is probably irrelevant for investors, unless they want a slice of the action . The key consideration is that this is the latest example of bauxite forcing its way onto the investment stage, and it will probably not be the last. It might be time to brush up on a mineral which appears to have a found a fresh life.
Australia’s Bauxite Boom Gathers Pace
By Our Man In Oz
www.minesite.com/aus.html
[Free Registration]
Bauxite, the mineral which eventually becomes aluminium, continues its remarkable revival as an exploration target in Australia. Hot on the heels of a search by United Minerals and its big Norwegian partner, Norsk Hydro, comes what is believed to be the first pure bauxite float on the Australian Securities Exchange. The aptly-named Bauxite Resources Ltd is looking to raise a miniscule A$5 million, hardly enough to scratch the surface of the targets it has lined up. Highest on the list is an area around the west coast settlement of Muchea which, for old readers, instantly brings back memories of an earlier, and unhappy time, in the Australian bauxite/alumina/aluminium industry – not to mention a couple of once great names who tried for more than a decade to mine the bauxite near Muchea.
Lang Hancock, a legend in the iron ore industry, and his partner, the late Peter Wright, once formed a joint venture with the sugar-producer, CSR (Colonial Sugar Refineries) known as Pacminex. The project, which chewed up A$2 million (A$60 million in today’s money) from the mid-1960s to the mid-70s, was designed to rival the mines and refineries build by Alcoa and Western Mining Corporation further to the south along a geological structure known as the Darling Scarp. Low prices, environmental protests, and internal bickering, eventually saw the Pacminex name disappear. But the bauxite remained.
Enter a small team of eager young explorationists led by lawyer, Luke Atkins. They have acquired three areas for their float of Bauxite Resources, two in the Darling Range (Muchea and South Darling) and one in the Mitchell Plateau, 3000 kilometres to the north, and not far from the tenements being explored by United and Norsk, and also close to a big swag of country held by Rio Tinto and Alcoa. It is at this point that a light bulb should be flickering in the brain of the average investor, tapping out a signal along the lines of “what’s happened, why has bauxite suddenly become so sexy”.
The answer, somewhat curiously, lies in the price of oil. As it rises, all other power sources rise in sympathy. And, as the cost of power rises so does everyone look for ways to cut their power bills, with one of the best ways, especially for aviation and road transport, to move even more heavily into lightweight metals. Rio Tinto’s merger with Canada’s Alcan (to become Rio Tinto Alcan) is the best illustration of the extremely bright long-term outlook for aluminum, and its precursor mineral, bauxite. If BHP Billiton should do what some observers believe, and launch a takeover bid for Alcoa, or Rio Tinto Alcan, then interest in bauxite will go through the roof. If there is to be a bauxite stampede, and these are very early days, then the best place to find the stuff is in Australia, or countries close to the equator where the tropical sun and heavy rain, has leached the soil to form layers of alumina rich cap-rock.
United’s plan, which Minesite reported several weeks ago, is to explore on its own tenements which encircle those of Rio Tinto and Alcoa on the Mitchell Plateau, and perhaps go as far as building a multi-billion dollar alumina refinery. At some stage United and Norsk might even suggest that since neither Rio Tinto nor Alcoa has done much to mine their bauxite then the “use it, or lose it” principal of Australian mining law ought to be applied. Bauxite Resources is being a little less aggressive, so far. It proposes to explore its tenements on its own at this stage, and look more towards a “direct shipping” proposal which would see bauxite, grading around 34%, exported direct to markets such as China and/or the Middle East.
Atkins told Minesite that exports could be comfortably handled through a number of ports, with the start-up target being a relatively lowly one million tonnes a year. Given that bauxite is currently fetching around US$45 a tonne, that represents a potential start-up annual cash flow of US$45 million – and all from a mining process which genuine hard-rock men call “gardening” because all that has to be done is blast the cap rock, scoop it up, separate out residual vegetation, perhaps upgrade modestly by removing any silica, and then off to market.
Said quickly and it sounds easy, and it remains to be seen whether Australian investors are yet ready to embrace bauxite as the next hot commodity in the five-year mining boom. Atkins thinks they are, obviously. He says Bauxite Resources will be the only “junior entry” with its foot in the world-class Darling Range area. “We’re planning to review historic data, including mountains of documents, and then look to establish a JORC resource,” he said. “Expanding world demand for bauxite means there is real potential to ship directly to China.”
He’s right. But launching a new bauxite mine in the Darling Range will be tough. Pacminex failed, perhaps for internal reasons. Alcoa continues to battle environmental protests over its mining in the Range which is also a prime water source for much of south-west Western Australia. There is also the potential for Alcoa, and the Worsley joint venture, which is run by BHP Billiton, to object to Bauxite Resources exploring in some areas, a point Atkins acknowledges, but is confident that negotiations will lead to his company gaining access.
Whether Atkins succeeds, or not, is probably irrelevant for investors, unless they want a slice of the action . The key consideration is that this is the latest example of bauxite forcing its way onto the investment stage, and it will probably not be the last. It might be time to brush up on a mineral which appears to have a found a fresh life.
