PERTH (miningweekly.com) – Iron-ore miner BC Iron on Friday announced that it would further cut back operations at its Nullagine joint venture (JV), in the Pilbara, after JV partner Fortescue proved uninterested in low-grade stockpiles.

Direct shipping ore (DSO) operations at Nullagine were suspended in December, owing to the ongoing decline in iron-ore prices.

However, during this time, Fortescue agreed to a trial in which a parcel of low-grade ore from the existing Nullagine stockpiles was hauled to the Christmas Creek operation, and sold to Fortescue.

The trial, for 200 000 t of low-grade ore, had now been completed, with Fortescue notifying BC Iron that at this stage of the company’s mine plan, it had no wish to purchase any more low-grade ore on an ongoing basis.

Following the completion of the trial, the Nullagine project had some 11-million tonnes of low-grade ore stockpile remaining, which BC Iron said could either be blended with DSO in future operations, or could be earmarked for future beneficiation opportunities that could produce a DSO product.

The company also identified future negotiations with Fortescue, should the opportunity present.

As a result of Fortescue’s decision not to purchase any more low-grade ore, BC Iron would implement further changes to Nullagine activities, including demobilising the remaining contractors from site, and further reducing overheads.

Meanwhile, BC Iron on Friday announced that following work on improving the economics of the Buckland project, also in Western Australia, the company was able to reduce expected C1 cash costs by more than A$10/t, to A$31.6/t, and total capital costs by A$55-million to A$942-million.

A previously completed feasibility study contemplated an eight-million-tonne-a-year operation with a mine life of 15 years, consisting of a mine at Bungaroo South and an independent infrastructure solution that comprises a 200 km private haul road and a multi-user transshipment port facility at Cape Preston East with a capacity of up to 20-million tonnes a year.

BC Iron MD Morgan Ball told shareholders that the Buckland project was a long-term strategic project for the company, that had its own mine-to-port logistics solution.

“While we are cognisant of the current environment, we are pleased with the reduction in costs achieved to date for an eight-million-tonne-a-year development of the Buckland project, particularly the operating costs.”

Ball said that while there was more work to be done, this was the first step to significantly enhance the project’s competitiveness.

“We will continue to position the Buckland project so BC Iron can participate in the future recovery in iron-ore prices and financing conditions.”

Additional optimisation work has now been planned with an immediate focus on re-evaluating the mining and processing operating costs at the Bungaroo South mine.

Furthermore, BC Iron was also assessing the potential for the provision of a standalone infrastructure service in the West Pilbara, using the proposed Buckland project’s independent infrastructure to accommodate throughput from other prospective iron-ore producers.

Capital costs for the infrastructure had been estimated at A$868-million, or a capital intensity of A$43/t of yearly throughput. This compared with an expected capital intensity of A$100/t for developing logistics infrastructure based upon a rail and deep-water port solution.

Ball said that these figures could underpin attractive tariffs for potential third-party users of the infrastructure.