Arafura Resources has decided to shelve its plans for a mineral processing plant in South Australia which was slated to cost around$1 billion and bring more than 1,000 jobs to the local economy.
Arafura had originally planned to build the plant at the port city of Whyalla on the eastern coast of the Eyrie Peninsula, securing a site for the purpose in 2011. The plant would be used to process rare minerals mined at its Nolans Bore Mine in the Northern Territory before having them exported to other regions.
Arafura Resources chairman Ian Kowalick pointed to rising operating costs as one of the chief reasons behind the decision to shelve the project - an issue which has recently becoming endemic to the Australian resources sector.
“The costs are making project uncompetitive and radical measures need to be taken. While taxes and labour costs do impact, the general cost of doing business is very high because of the perceived resources boom,” Kowalick said.
A slump in rare earth prices and scarcity of capital were also cited as factors behind the decision.
Arafura has since announced it is considering sites for the processing plant in the Northern Territory which are closer to the Nolans Bore Mine, with the rare earth products to be exported to offshore markets via Darwin.
The Whyalla rare earth processing plant was considered a priority project by the state government and would have reaped major benefits for the South Australian economy. The project would have created 1,000 jobs during its first two years and 300 long-term jobs. It would also have brought about $100 million a year in broader economic benefits.
Its shelving is the latest in a string of major capsized projects for Whyalla, including BHP’s decision to delay expansions to the Olympic Dam uranium mine and Deepak Fertilizer’s cancellation of an ammonia nitrate processing complex.
Kowalick says Arafura may still have other plans for the 800ha plot of land is secured at Whyalla.
“It’s a good location and is close to rail infrastructure. We may have some options for it down the track,” he says.