INTERVIEW: Amur, Glencore to ship iron ore from NRR Australia mine from Q4

Russia-focused miner Amur Minerals has invested, alongside Glencore International, $4.67 million in Nathan River Resources, or NRR, which owns the Roper Bar iron ore project in Australia's Northern Territory, with plans to start shipments as soon as Q4 2020, Amur's senior adviser to the board, Adam Habib, said Aug. 25.

Expected revenues from the project restart will help finance Amur's major Kun-Manie Russian nickel-copper mine project, which is expected to start up in about four years' time.

Amur's entry into the project, together with a long-term offtake agreement struck with Glencore, will allow Roper Bar to start shipping from a stockpile of 194,000 mt of lump and Dense Media Separation, or DMS, fines, which has been held at the site since the asset went into administration under former owners in 2014 when iron ore prices collapsed, Habib said in an interview with S&P Global Platts.

Phase One mine production of 1.5 million mt/year of high-quality ore, mainly lump, is also set to start in Q4, for a three-year period, followed by Phase Two production of 4 million-5 million mt/year of 60% Fe content fines.

A large resource of 446 million mt ore with a 39.9% Fe content could allow for a mine life of around seven years in the second phase, that could possibly be extended via further drilling, Habib said. Glencore is likely to sell the ore to Chinese steelmakers, he said.

AIM, London-listed Amur will hold 19% of the voting and overall equity capital of NRR, whose majority shareholder is UK shipping company British Marine. The investment, following Amur's recent capital raising of GBP6.1 million ($7.97 million) in a new ordinary share placement, is a diversification for the company, whose existing Kun-Manie nickel and copper project will take nearly half of the financial resources recently raised.

Prices at six-year high

Prices for iron ore, the main steelmaking raw material, have hovered around a six-year high of $126/mt over the past week on stimulus-fueled Chinese steel demand, helping to speed the emergence of new mine projects.

Habib said Amur was "lucky" to have the opportunity to invest in the "transformational" Roper Bar mine project, an open-pit mine with existing infrastructure, which will have competitive costs and should provide the financial resources needed for development of the company's major Kun-Manie nickel and copper mine project.

Roper Bar is an attractive project with the potential to be highly profitable and should be self-funding from this point on, said Habib, who expressed considerable confidence in the continuing strength of the iron ore market.

"Governments globally will have to increase their stimulus packages and so demand for steel will be strong," he said. Iron ore could ease to pre-coronavirus levels of $80-$90/mt in six to nine months because there will be more material on the market when COVID-19 disruptions in mining nations Brazil and South Africa subside. The price fall will also be impacted by new marginal mines coming back on stream that are only profitable at higher prices, according to Habib.

"However, I see it remaining at that level on global demand for stimulus because governments will have to build things to look after their economies," he said.

Greater usage of steel scrap in electric arc furnaces is only a "medium to long-term challenge" to the use of iron ore in blast furnace steelmaking as the new EAFs still need to be built, Habib said.

Stocks of lump, DMS fines

The 194,000 mt stockpile at Roper Bar comprises 47,000 mt of 60% Fe lump ore and the rest is 52% Fe content DMS fines. A Dense Media Separator needs to be constructed at the site and this should be ready by end-2021, according to Habib.

The Phase One mine is a reserve of 4.76 million mt with a 60.1% Fe content, of which 4 million mt is lump and the rest is DMS fines. Pit-to-port infrastructure is already in place, including a 171-kilometer paved road to Bing Bong port.

Amur will also invest $3.26 million from its recent fund-raising in the continued development of its wholly-owned Kun-Manie nickel copper project, general working capital and to pay expenses.

Further substantial investments will be required in two-three years' time in Kun-Manie, in Russia's Amur Province, 300 km from the Chinese border.

Kun-Manie -- the second-largest nickel sulfide mine in Asia -- is considered "a strategic reserve for Russia" and will contribute to the battery and electric vehicle market, Habib said. It has around 1.5 million mt of nickel reserves to be exploited and with expectations for eventual production of 400,000 mt/year of nickel concentrates, Habib said.

The mine's expected copper output should be announced shortly, he said.