PERTH (miningweekly.com) – Bauxite developer Cape Alumina told shareholders on Friday that its entire focus would now shift to the development of the Bauxite Hills mine and port project, in Queensland, after the state government effectively canned the company’s Pisolite Hills project.

In November, the state government announced plans to declare the Steve Irwin Wildlife Reserve and the Wenlock river on Cape York peninsula the region’s first-ever strategic environmental area, effectively killing the Pisolite Hills project.

The state’s decision also caused Cape Alumina to abandon a proposed merger with fellow-listed MetroCoal, which had been looking at developing Pisolite Hills.

Following a meeting with the state government this week, the Cape Alumina board has decided to shift its focus to the Bauxite Hills mine.

“The Queensland government committed to work with Cape Alumina during the finalisation of the Cape York regional plan to ensure that the true economic and environmental values associated with Cape Alumina’s Cape York bauxite tenements are fully understood,” said Cape Alumina MD Graeme Sherlock.

He noted, however, that while the overall meeting had been positive, the government and the company had “agreed to disagree” on several matters.

“If the government is serious about creating environmentally sustainable economic development on Cape York, then it will work cooperatively with us to advance the development of Bauxite Hills,” Sherlock said.

He again expressed his disappointment in the lack of fair warning given around the declaration of special status to the Steve Irwin Wildlife Reserve, saying that the company had not been warned in advance.

“All we have ever expected is a fair go, for due process to be allowed and, more importantly, for decisions to be based upon scientific rigour, not politics.

“We reserve the right to challenge the Queensland government’s decision, which will not be enacted until legislation is passed next year.”

Sherlock said that, in the meantime, the company would focus on Bauxite Hills.

“The company is confident that, with its remaining bauxite tenements, excluding the resources within the Steve Irwin Wildlife Reserve, it will be able to develop successful bauxite mines on Cape York in a sustainable and environmentally responsible manner, which will benefit its shareholders, the local communities and all of Queensland.”

A prefeasibility study has previously found that the Bauxite Hills mine could deliver five-million tonnes a year, over a life-of-mine of ten years. The study proposed that the Bauxite Hills mine would start production at 2.5-million tonnes a year of dry beneficiated bauxite, building to an output of five-million tonnes a year over a two-year period.

Capital costs for the project have been estimated at between A$234-million and A$250-million, depending on the time and development option chosen for the Bauxite Hills project, with operating costs estimated at between A$24/t and A$27/t.