Atlas Iron to start McPhee Creek iron ore mine in 2023

Australian iron ore producer Atlas Iron expects to commission its 9.5mn-9.7mn wet metric tonne (wmt)/yr McPhee Creek mine in mid-2023 after the successful start-up of its 1.9mn t/yr Miralga Creek mine this year.

Atlas, which is a subsidiary of Australian privately owned firm Hancock Prospecting, increased its iron ore exports to 9.8mn t in the year to 30 June 2022 from 9.7mn t the previous year. The increase was underpinned by the first ore delivered from Miralga Creek in February, supplementing falling production from the 2.8mn t/yr Mount Webber mine. All the mines are in Western Australia's (WA) Pilbara region.

The start-up of the A$605mn ($403mn) McPhee mine will add significant new tonnage for Atlas and take advantage of rail and port infrastructure owned by the Roy Hill joint venture, in which Hancock owns 70pc. Atlas will truck ore from McPhee to Roy Hill's rail infrastructure 100km away, rather than the 250km to Port Hedland where Atlas uses the Utah Point multi user terminal to deliver iron ore to the seaborne market.

Atlas has also committed A$46mn to complete a feasibility study into the 3mn t/yr first stage of the Ridley magnetite project, which is 60km from Port Hedland and has potential to expand to 16.5mn t/yr in a second stage. Atlas expects to make a final investment decision on Ridley by the end of 2023. It has also been appointed to manage the Mount Bevan magnetite project in the Yilgarn region of WA, as mining firms look to magnetite to provide higher grade concentrates that may be beneficial in lower carbon steel production.

Atlas agreed to pay A$225mn as a dividend to Hancock, despite the growth in spending and a slump in iron ore prices during the 2021-22 fiscal year ending 30 June. This is the first dividend paid since Hancock acquired Atlas in 2018. Atlas received an average price of $107/dry metric tonne (dmt) in 2021-22, down from $134/dmt the previous year, contributing to a fall in revenues to A$1.32bn from A$1.7bn in 2020-21.

The Argus ICX iron ore was last assessed at $98.60/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis on 28 November, up from $86.80/dmt on 7 November but down from $160.20/dmt on 7 March. Argus assessed 58pc Fe at $85.85/dmt cfr Qingdao on 28 November, up from $75.40/dmt on 7 November but down from $137.45/t on 7 March.

By Jo Clarke

Iron ore prices ($/dmt)