A whole infrastructure build and operation for an iron- production facility could be on the cards in Western Australia, after BC Iron recently signed an agreement with the Fortescue Metals Group (FMG).
According to Creamer Media’s Mining Weekly, the deal with iron-ore producer FMG would put BC Iron on track to become the Pilbara’s region’s next iron-ore producer.
Upon the completion of a feasibility study, the companies would establish a joint venture (JV) to develop BC Iron’s Nullagine iron-ore project in Western Australia.
An incremental demand for oxygen could be expected over the coming years if successful, as both iron and steel production continues to increase and the oxygen steelmaking process prospers as a result.
Iron is the world’s most commonly used metal, a huge majority of which is used as the basic constituent of steel production. China is currently thought to be the largest consumer of iron ore, as the world’s largest steel producing country.
Iron ores consists of oxygen and iron atoms bonded together into molecules - to convert this to the metallic iron we’re perhaps more familiar with, it must be smelted to remove the oxygen. This can be achieved by introducing carbon or chemically stripping the oxygen from the iron, which often requires carbon monoxide.
More often than not ending up as steel, a considerable degree of oxygen is then required again in the steel making process - renowned as a strong growth driver for industrial gases.
Wide ranging operations
It’s not just the iron production processes that could drive industrial gas demand however, with the Western Australian project set to encompass a wide range of infrastructure operations.
Under the terms of the Nullagine JV, BC Iron and Chichester Metals, a wholly owned subsidiary of FMG, would each contribute equity up to A$10mn to the project.
BC Iron would manage the Nullagine JV, including responsibility for all operations, road haulage, marketing and ore sales. TPI meanwhile, would manage all rail and port operations.
The agreement ensures that, subject to completion of the feasibility study and securing all relevant statutory approvals, BC Iron could start production at Nullagine in early 2010.
Feasibility is based on an initial yearly production rate of 1.5 million tons, while output is expected to rise to a minimum of three million tons per year once a dedicated heavy haul road from the mine site is built and commissioned.
Furthermore, when TPI’s rail is extended to Christmas Creek and port capacity is increased, production could be increased to five million tons per year.