Investing in Australian minerals

Australia is a world leader in the global minerals industry thanks to our abundant minerals resources, skilled industry professionals and advanced extractive and processing technologies. Australia also boasts a transparent and predictable legislative framework that facilitates minerals development.

Abundant resources

Increasing numbers of foreign investors are targeting Australia’s minerals sector, keen to invest in iron ore, coal, nickel, copper, uranium, bauxite and other minerals projects.

Australia has the world's largest Economic Demonstrated Resources (EDR) of lead, nickel, tantalum, uranium and zinc. Australia is also the largest producer of bauxite, alumina and tantalum, the second largest producer of lead, nickel and uranium, and the world’s largest exporter of coal.

Australia’s identified minerals resources, production and ranking

Commodity	EDR	Rank	Production 2005	Production world rank
Bauxite	7.8 Gt	2	60 Mt	1
Alumina	N/A	N/A	17.7 Mt	1
Black coal	39.1 Gt	6	397 Mt	4
Copper	41.4 Mt	2	921 kt	5
Gold	5,225 t	2	263 t	2
Iron ore	16.4 Gt	5	261.4 Mt	3
Lead	23.8 Mt	1	767 kt	2
Nickel	23.9 Mt	1	187 kt	2
Silver	44 kt	2	2,407t	4
Tantalum	53 kt	1	840 t	1
Uranium	716 kt	1	10,592 t	2
Zinc	42 Mt	1	11,218 t	2

(Source: Geoscience Australia)

Mining and minerals activity currently comprises around 8 per cent of the Australian economy. The sector is experiencing a period of considerable expansion, driven primarily by huge demand for raw materials from China and India.

This heightened level of activity has helped drive even further research and development into more efficient surveying and exploration techniques and mineral processing technologies.

Although Australia is a world leader in resources with a long history of discovery, the continent remains significantly under-explored. Since 1990, more than a dozen new world-class mineral deposits have been discovered. Significant discoveries are still being made in areas mined for more than 100 years.

To learn more about Australia's expertise in mining, please see the list below:

• Bauxite alumina aluminium
• Coal
• Copper
• Iron ore
• Uranium

Bauxite alumina aluminium

Australia has vast deposits of bauxite, with current identified supplies capable of lasting 70 to75 years at the current rate of extraction.

Nine of the ten largest global aluminium companies have operations in Australia. Our vast bauxite resources, mining expertise and proximity to the booming Chinese and Indian markets continue to attract companies.

Bauxite to aluminium - Australia at a glance

• 7.8 Gt of demonstrated bauxite resources in 2005 - the second largest in the world
• The world's largest producer and exporter of bauxite and alumina
• The world's fifth largest producer of aluminium
• Alumina production increased by 4 per cent to 17.8 million tonnes (2005 - 2006)

Alumina and aluminium outlook

		2005	2006 f	2007 f	% Change
World Aluminium
Production	Kt	32,021	33,818	36,583	8.2
Consumption	Kt	31,703	33,895	36,147	6.6
Closing stocks	Kt	3,010	2,933	3,369	14.9
- weeks consumption		4.9	4.5	4.8	6.7
Price	US$/t	1,898	2,538	2,263	-10.8
	USc/lb	86.1	115.1	102.6	-10.9
World Alumina
Spot Price	US$/t	443	433	213	-50.8
		2004-05	2005-06 s	2006-07f	% Change
Australia Production
Bauxite	Mt	57.6	60.9	65.1	6.9
Alumina	Kt	17,161	17,826	19,598	9.9
Aluminium	Kt	1,890	1,912	1,920	0.4
Exports
Alumina	Kt	14,073	14,499	15,935	9.9
- value	A$m	4,383	5,262	6,373	21.1
Aluminium	Kt	1,512	1,616	1,658	2.6
- value	A$m	3,726	4,783	5,409	13.1

(Source: Australian Commodities 06.4 December Quarter 2006, ABARE) 

Coal

The Australian coal industry has an excellent record and reputation for consistency and reliability of supply. Australian coal is highly regarded in traditional global markets as cost-competitive and equivalent or better quality than competing sources.

As the world’s largest coal exporter in 2004 Australia produced 297 million tonnes of black coal of which 225 million tonnes was exported. The states of Queensland and New South Wales have over 200 years of identified black coal resources and Victoria has over 500 years reserves of brown coal. Minor reserves are also located in Southern and Western Australia as well as Tasmania.

Industry and Governments are working together to continually improve the international competitiveness of the coal industry by reducing costs and charges and improving industry efficiency.

There are investment opportunities in thermal, coking and Pulverized Coal Injection (PCI) as well as opportunities to value add to black coal in the production of chemicals, plastics and liquids such as high quality diesel fuel.

The vast reserves of brown coal in Victoria also present an ideal opportunity to utilise the reserves for the production of diesel, urea, chemicals and plastics.

Copper

Copper in Australia: at a glance

Australia has the world's second largest copper Economic Demonstrated Resource (EDR). In 2005 Australia's EDR stood at just over 41 million tonnes. Australia is currently the fifth largest producer of copper in the world and mine production is expected to increase to over one million tonnes in 2006–2007.

South Australia has the largest copper EDR with around 65% of the national total. Queensland has the second largest EDR with 19%, followed by Western Australia (7%) and New South Wales(6%).

Copper production in Australia is centred primarily on the major deposits at Olympic Dam in South Australia and Mount Isa in Queensland, which together produce more than two thirds of Australia’s copper output. There is significant growth in Australia's copper production due to planned expansions and the commencement of new projects.

Australia has seen a strong increase in exploration expenditure for base metals, which rose by 37% in 2005-2006. This increase is mainly due to a significant rise in expenditure for copper exploration that increased by 90% in 2005 to $105.8 million.

		2005	2006 f	2007 f	% Change
World
Production	Kt	16,599	17,448	18,283	4.8
Consumption	Kt	16,699	17,360	18,124	4.4
Closing stocks	Kt	548	639	798	24.9
- weeks consumption		1.17	1.9	2.3	21.1
Price	US$/t	3,678	6,816	6,250	-8.3
	USc/lb	166.8	309.2	283.5	-8.3
		2004-05	2005-06 s	2006-07f	% Change
Australia
Mine output	Kt	905	920	1,004	9.1
Refined output	Kt	479	461	494	7.2
Exports
- ores and conc.	Kt	1,326	1,636	1,729	5.7
- refined	Kt	322	314	312	-0.6
- total value	A$m	3,082	5,665	7,495	32.3

f. Forecast

(Source: Australian Commodities, vol. 13 no.4 December quarter 2006, ABARE)

Iron ore

Australia produces around 17% of the world’s iron ore and is ranked third behind China (25%) and Brazil (20%). Australia's iron ore industry is export oriented and it is dominated by BHP Billiton and Rio Tinto's wholly-owned subsidiary, Hamersley Iron, in the Pilbara Region of Western Australia (WA). (Rio Tinto is the world’s second largest seaborne iron ore supplier and BHP Billiton (BHPB) is the world’s third largest seaborne iron ore supplier. Both are significantly expanding production and infrastructure in Australia).

Western Australia has almost all of Australia’s Economic Demonstrated Resources (EDR) of iron ore with over 90% in the Pilbara district. In 2005 EDR increased to 16.4 gigatonnes (Gt). Magnetite ore currently constitutes 15.6% (2.6 Gt) of Australia's EDR. At current production levels the resource life of accessible EDR exceeds 60 years.

Virtually all of Australia’s iron ore is mined in Western Australia (around 98%). In 2005 Australia’s iron ore production was 261.4 million tonnes (Mt). Australian iron ore production in 2007-08 is forecast to be around 322 Mt.

Driven by demand from China and high iron ore prices, a number of Australian mining companies are planning to start producing between 1.5 and 45 Mtpa iron ore within the next 1-2 years. With the exception of FMG (whose project is in the Pilbara), most of the more advanced projects are located in the mid-west region of Western Australia. If all the projects eventuate it has been estimated the mid-west region could produce 60 Mtpa iron ore within a decade. Coupled with the major expansions planned by BHP Billiton and Rio Tinto, Australia's iron ore production is expected to increase significantly in coming years.

Exports of iron ore products totalled 239.0 Mt, with a value of A$11 billion. Australia’s major export markets for iron ore during 2005 were China, Japan, South Korea and the European Union.

Uranium

Australia has 716,000 tonnes of uranium (t U) in Reasonably Assured Resources recoverable at costs of less than US$40/kg U (referred to as low cost resources). This is the world’s largest uranium resource and represents 36% of the world's total resources in this category.

Almost all of Australia’s total uranium resources are within six deposits:

• Olympic Dam in South Australia (SA), which is the world’s largest uranium deposit.
• Ranger, Jabiluka, Koongarra in the Alligator Rivers Region of the Northern Territory (NT).
• Kintyre and Yeelirrie in Western Australia (WA).

Deposit types

Australia’s uranium resources occur in five types of deposits: breccia complex deposits (70%, all at Olympic Dam), unconformity-related deposits (20%, mainly in the Alligator Rivers Region of the NT); sandstone deposits (2%); surficial deposits (6%); and metasomatite deposits (2%).

Production

There are currently three operating uranium mines in Australia: Olympic Dam and Beverley in SA, and Ranger in the NT. A fourth mine, Honeymoon in SA, is expected to start production by the end of 2007.

Production in 2005 was as follows: Ranger (5906 t U₃0₈), Olympic Dam (4335 t U₃0₈) and Beverley (977 t U₃0₈), for a record total production of 11,218 t U₃0₈. With approximately 23% of world uranium production in 2005, Australia is the world’s second largest producer after Canada (28%).

Exploration

The dramatic global increase in the price of uranium since late 2005 has led to a resurgence in uranium exploration in Australia, with approximately 150 new exploration companies listing on the Australian Stock Exchange in this time.