Aim-listed Mozambique-focused explorer Baobab Resources says the geographic position of its greenfield pig iron and ferrovanadium project in Tete, Mozambique, holds many advantages.
The project’s favourability is attributed to its proximity to key steel and iron-making commodities, such as iron-ore, coal, power and water, which creates an opportunity not only to produce and export pig iron, but to also add value at the mine mouth through beneficiating the pig iron to produce a value-added product.
“Bench-scale pyrometallurgical testwork has confirmed the ability to produce a low-impurity pig iron product using our mined iron-ore and local Mozambique thermal coal,” says Baobab Resources MD Ben James.
The reduction and smelting testwork has been conduced using coarse concentrates derived from the Tenge resource block – one of three main prospecting areas.
Reduction testwork using a rotary kiln simulator has produced promising results, with more than 70% mineralisation being achieved after a short time using locally sourced thermal coal as a reductive agent.
Samples from the rotary kiln experiments were inductively smelted in a crucible to produce a clean disc of pig iron grading 97% iron and containing only 0.002% titanium.
The Tete pig iron and ferrovanadium project is the flagship project of Baobab Resources’ five Mozambique-based assets.
The project is being developed in joint venture with the International Finance Corporation (IFC), which holds a 15% participatory interest in the project, and Baobab Resources, which owns the remaining 85%.
Baobab Resources will be the lead on the project, while the IFC will play the role of environmental and social watchdog to mitigate any concerns or potential sovereign risks.
The Tete project started in 2005, when Baobab Resources acquired the licence for a base metals asset; however, only after conducting a literature review in 2007 did the explorer realise the potential for developing iron-ore in the province.
Since starting exploration in 2008 using high-resolution magnetic imaging, Baobab Resources has been discovering the tonnage potential of iron-ore in the area.
Subsequently, the company undertook discovery drilling in 2009 and drilled about 80 000 m of diamond and reverse-circulation holes. A resource of 727-million tons of iron-ore grading 33% iron, with an inferred resource of 510-million tons and an indicated resource of 217-million tons, was discovered.
Baobab Resources says one of the three prospecting areas, alone, a 2.5 km2 area of the Tenge/Ruoni prospect, hosts a Joint Ore Reserves Committee-compliant resource of 550-million tons of iron-ore grading 36% iron.
James tells Mining Weekly that a definitive feasibility study (DFS) is under way at the project, after the positive outcome of the prefeasibility study (PFS) in 2012 – supported through a pro rata contribution of about $1.9-million by the IFC – highlighted the robust nature of the project and its commercial viability.
“The PFS revealed the potential development of a low-cost one-million-ton-a-year openpit pig iron operation, with an expected mine life of 37 years. This means the development of only 15% of the total 727-million-ton resource.”
The operation will also produce about 3 000 t/y of ferrovanadium alloy, he adds.
Scoping-level assessments into a two-million-ton-a-year operation are being finalised and could yield accurate information on the possibility of this, while assessments of a four-million-ton-a-year operation are also being undertaken.
Study results also indicate that the resource could be developed at an estimated initial capital cost of $1.4-billion, including $1-billion for the pig iron plant, with an estimated payback period of four to five years.
Meanwhile, the DFS, which began at the start of 2013, will result in several time-critical programmes, such as the environmental baseline studies for the wet season, being under taken. This had to be comp- leted by the end of March, and the measured resource drilling figures for the first seven to ten years of mining, concluded.
The DFS will also result in the conclusion of the PFS documentation.
Baobab Resources has received tenders for the bulk of the work that needs to be carried out during the DFS.
James says the first 20 years of mining will entail using conventional openpit mining methods “to reduce a mountain to a pit”.
“The mined material will be fed through the beneficiation system where it will be crushed. The concentrate from this process will move through a direct reduction process during which rotary kilns and, thereafter, an electric arc furnace will be used to burn off deleterious materials and create vanadium slag. The hot metal is then sent to the caster where pig iron bullets are cast, while the vanadium slag is sent to the refinery facility, where it is converted into ferro- vanadium alloy,” he explains.
What makes the Tete pig iron and ferrovanadium project unique is that, unlike most magnetites, the product is beneficiated by being crushed to only -3.5 mm to produce a smelter-feed specification concentrate.
Further, Baobab Resources does not require coking coal for most of the smelting process but uses thermal coal instead, resulting in the advantage that a significant amount of low-quality thermal coal, which has been tested and confirmed to produce good metalisation during smelting, is being produced on Baobab Resources’ licence boundary.
“Using low-cost coal and having the advantage of low power costs brings our cost of production down towards the bottom of the cost curve,” says James.
Meanwhile, by producing pig iron pellets through smelting, the deleterious components of the iron-ore, such as the sulphur, silica and titanium, are removed to produce a higher-quality and purer pig iron product, which increases the value of the product from low-value iron-ore to a higher-value pig iron.
In addition, the valuable vanadium by-product is also recovered and, in turn, converted into a healthy credit, which can add to the overall revenue stream of the mining project.
Pig iron, which is classified as a raw material derived from the intermediate smelting of iron-ore, is used with scrap iron in electric arc furnaces to produce crude and finished steel products.
“While the seaborne pig iron market, at about 15-million to 20-million tons a year, is not large, the consumption of pig iron is much higher, specifically by the largest consumer, China,” says James.
Consumption of pig iron worldwide, including the domestic Chinese market, is estimated at 70-million tons a year.
Pig iron prices vary between markets, with North America typically reporting the lowest prices and Asia, particularly China, reporting the highest. Current pricing ranges from $425/t to $500/t.
Compared with the cost of production of about $385 for each free-on-board ton of the largest global pig iron producers – Russia, the Ukraine and Brazil – Baobab Resources will have a cost of production of about $225 for each free-on-board ton, owing to the low cost of producing the product at the mine mouth.
“Our aim is to get the project into production in the shortest timeframe possible, while also developing the pig iron asset. We have been undertaking routine exploration on several other assets in Mozambique, some of which are yielding exciting results,” notes James.
Besides investing in the mine infrastructure itself, Baobab Resources is also investing in infrastructure outside the mine, such as access roads, villages and training facilities. The company will also ensure that it makes provision for skills training and community initiatives during the construction phase of the project.