Gina Rinehart: Government to Blame for High Mining Costs
The price of iron ore has lost more than two-thirds of its value since its peak in 2011. It is currently priced at less than $50 a ton, and according to some economists, it hasn’t even hit rock bottom. By that time, “bankruptcy” will be writ large on many a small miners’ walls. It will also have given Gina Rinehart indigestion.
Until recently, Rinehart was considered the richest woman in the world with $20 billion in her bank account. The plummeting of iron ore’s price has now wiped out about 36 percent of her wealth, leaving her with less than $15 billion, as reported by the Australian Broadcasting Corporation (ABC).
Rinehart, an Australian, is the heiress of Lang Hancock, her father, who built up Hancock Prospecting. Interviewed by ABC, historian David Lee explained, "Lang Hancock's main fortune was built on royalty deals. He wasn't able to bring to culmination some of the more ambitious ventures in his own right to establish a mine.”
According to ABC, “After a ten-year struggle, Gina Rinehart negotiated a $7.9 billion debt deal using a combination of multiple export credit agencies and commercial banks.” Rinehart would use this investment as leverage to began building the Roy Hill mine, in Pilbara, Western Australia, for $10 billion. If the dream had escaped dad it was not going to slip out of the daughter’s hands. In the process, Rinehart would gain respect among her peers as a businessperson in her own right.
The Roy Hill mine is about two-thirds finished. By the time it’s fully operational its capacity will be 55 million tons per year. 80 percent of its production has already been contracted. The drop in iron ore’s value, however, means that Roy Hill will be lucky if it breaks even.
Rinehart has taken out her misfortune on the Australian state and federal government, claiming that building costs have affected Roy Hill, not the drop in the price of iron ore. Quoted in the Sydney Morning Herald, Rinehart says, "What affects the project is high costs...As I have said so many times it is really important government cost burdens are lowered. We have regulations; be it approval processes, be it permits, be it licences, be it the checks that have to go on after those compliances."
"They have to cut these government cost burdens because our costs are incredible," Mrs Rinehart said.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.