Q&A - Tim Crossley, New Zealand iron sand harvesting
Melanie Rutherford speaks to Tim Crossley, CEO of TransTasman Resources Ltd, a company that is working to develop the iron sand deposits off the coast of New Zealand’s North Island
Tell me about your background in mining.
I came to Trans-Tasman Resources (TTR) from Gloucester Coal, an ASX-listed diversified coal company with open cut and underground mining operations in New South Wales (NSW) and Queensland, Australia. Its NSW assets currently produce 5Mtpa of coal. Before that I was a senior executive with Hancock Prospecting, and President and Chief Operating Officer with BHP Billiton’s West Australian iron ore business, which shipped around 125Mt of high grade ore in 2008. Before working in the iron ore business, I held senior positions in BHP Billiton’s manganese and metallurgical coal divisions.
What have been your major career achievements?
One thing that stands out is when I was General Manager of Groote Eylandt Mining Company. My team initiated and executed a very successful step change cost-reduction programme while increasing productivity (50% improvement), and substantially improved employee relations (reduced days lost due to industrial activity and more flexible work arrangements). We also re-based the company and set it up for growth. I believe it will be looked back on as a very successful turnaround for that company.
Since its establishment in 2007, what projects has TTR been working on and how have these developed?
We have been focused on the west coast of the North Island of New Zealand, more specifically in the South Taranaki Bight. TTR is a single-project venture at the moment and is looking to develop an iron ore harvesting operation by 2015.
When did interest in New Zealand as an iron ore province first come about?
As early as 1849, European settlers showed interest in the iron-rich black sands off the west coast of New Zealand’s North Island. However, the metallurgical iron mineral in the sand is vanadium-titanomagnetite, which creates slag that can block conventional blast furnaces unless carefully managed. By the late 1960s, Japanese steel producers had discovered that the same material known to block blast furnaces could be used to preserve furnace linings and aid the steel-making process.
In New Zealand, extensive trials using iron ore, coal and limestone led to the establishment of a pioneering direct reduction steel mill using New Zealand’s iron sand and coal to make iron and steel. This unique process led to exports of iron sands starting in 1972 and now to TTR’s exploration, with a view to establishing what is likely to be the world’s first marine iron ore harvesting project.
Tell me about TTR’s exploration in the Pacific Region. What makes this area so exciting?
I believe our harvesting operation will be one of the first offshore iron ore projects in the world. But while this aspect of our work is pioneering, at the moment we are proposing to use currently available dredging techniques. We envisage a totally marine operation, which means no expensive drill and blast operations, and no rail or port facilities, significantly reducing our overheads.
While the potential of the New Zealand iron sands has been known for a long time, they were not considered suitable for steelmaking. However, more recently steel mills in Russia, China and South Africa, as well as the small New Zealand Glenbrook mill, have successfully used this ore as feedstock. The advances in technology, combined with the adoption of titanomagnetite as a feedstock by some Chinese mills, has made the New Zealand resource attractive.
The iron-rich sands stretch along the western coast of North Island, both onshore and offshore, and have been pegged for prospecting and exploration by a range of companies, including TTR, Rio Tinto, FMG and Sino Steel.
What are your plans for exploring potential deposits off the coast of North Island?
We are well along the process of assessing the iron-rich sediment on the seabed in the area, and have drilled more than 600 shallow holes (up to 11 metres below the sea bed) and 20 deep holes (up to 30 metres below the sea bed). We have also completed seismic and aeromagnetic surveys that show further areas of significant resource potential. In addition, a wide range of environmental, social, cultural and economic studies have been conducted and the company is close to entering the formal regulatory process of applying for official approvals and consents to move into production. This is expected to proceed into 2014.
Once approvals are granted, we will move to the development of full-scale operations and will need to commission suitable vessels, plant and equipment, as well as sourcing staff and contractors. We hope to be in commercial production by the end of 2015.
While the project will be at the cutting edge in terms of offshore iron ore harvesting, we are working to ensure that tried and trusted dredging and beneficiation technologies are used to minimise risk.
What are the main challenges involved in such a large, complex operation?
The key challenges with this project can be summarised as follows: engineering to handle the very large sediment flow rates, engineering for safely operating in marine conditions, and understanding the effects of our operation on the environment and how to mitigate these effects.
What are the environmental issues and how are you dealing with them?
New Zealand has particularly robust environmental requirements that must be met through consenting processes before any construction or invasive extractive activities can begin. This is an official regulatory process and means that not only are issues identified, but appropriate and measurable mitigation processes to manage the effects must be described and implemented. Environmental effects must be monitored once operations commence to ensure they remain within the parameters of the consent granted.
Such issues must be fully studied and peer reviewed, and the results provided when seeking consents to operate. TTR is currently researching issues such as plumes arising from dredging, the effects of dredging on wave action and the seabed and, of great interest to New Zealanders, the effects of operations on cetaceans, particularly the endangered Maui’s dolphin.
How are you looking to grow the company?
Our strategy is to focus on a single area and a single operation as our first venture. What comes after that remains in the future. That said, once production begins, by New Zealand’s standards, the export earnings will be significant – although as a percentage of the world iron market, production will be small.
In such a competitive market, how realistic is it that smaller mining companies can thrive, both in the near and long term?
There is compelling evidence that the sea-borne iron ore market will continue to grow, irrespective of the speed of the various economies around the world.
The key to survival is where you are on the cost curve. Providing you are at the bottom half of the curve on a delivered cost basis, survival should not be an issue.
How can smaller companies best go about securing equity investment?
TTR has been successful in securing equity investment because it has a well-researched and viable offering. Of course, all greenfield operations such as ours present considerable risk. However, a number of elements, such as the accessibility of the resource and the relatively low capex development costs, made it attractive to investing partners from both the USA and Asia.
About Trans-Tasman Resources
Trans-Tasman Resources Limited (TTR) was established in September 2007 to explore, assess and develop the rich iron ore deposits (iron sands) off the west coast of the North Island of New Zealand. The company has rights to explore two areas inside the 12 mile limit, and holds a Continental Shelf Act prospecting licence for an adjacent area. These areas encompass 9,600km2.
TTR’s activities to the end of 2011 resulted in a JORC compliant in situ recoverable mineral resource, indicated and inferred, of more than 4.6 billion tonnes at 6.23% Fe. A high-grade area of resource several nautical miles out to sea in the South Taranaki Bight has been identified for further detailed exploration and for development of the first production module. TTR plans to file applications for regulatory approvals to move to production later in 2013.