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Iron ore country

Australia's economy rides on the red rocks of the Pilbara, but scientists predict we may run out of high quality exportable iron ore within 50 years.

On a stormy day in the summer of 1952, the mining entrepreneur Lang Hancock and his wife Hope were flying from his asbestos mine in Nunyerry in the north of Western Australia towards Perth, when looming clouds forced them to take their small plane low over the cliffs and gorges of the Hamersley Ranges in the Pilbara district.

"On going through a gorge in the Turner River, I noticed that the walls looked to me to be solid iron and was particularly alerted by the rusty looking colour of it," he famously recalled. "It showed to me to be oxidised iron."

After the rainy season was over, Hancock flew back to the region, tracing an ore body that stretched for 70 miles. Landing in a patch of spinifex, he took samples that turned out to be high in iron.

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The boom begins

Hancock's discovery had been pre-empted by a geologist called W. P. Woodward, who reportedly said in 1890 that "this is essentially an iron ore country," yet it was widely believed at the time that Australia had very little iron ore.

So strong was this belief that there had been for some years a national embargo on the export of iron ore, and a state blanket on the issuing of mining titles. So Hancock kept his discovery quiet while he lobbied for the ban to be lifted.

Meanwhile, in 1957, another prospector called Stan Hilditch made his own discovery not far away, on the side of a high hill later named Mount Whaleback. He also kept his find under wraps until the embargo was finally lifted in the early 1960s, and Australia's massive iron ore industry took flight.

"Australia's iron ore industry was pretty small scale until the 1960s when ore was discovered in the Pilbara," says Dr Gavin Mudd, a lecturer in Monash University's department of Civil Engineering and author of a report into the sustainability of mining in Australia.

Today, that industry — including companies such as BHP Billiton, Rio Tinto and Hancock Prospecting — now exports more than 300 million tonnes of iron ore a year, with a value over $30 billion. The vast majority is used to produce iron and steel.

But the export boom could all be over within 50 years if production continues at the present rate and we don't discover any new substantial deposits of high-grade ore, say scientists.

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What's so special about the Pilbara?

Iron is one of the most abundant minerals in the Earth's crust, but it is often found combined with oxygen to form minerals such as hematite (Fe 2 O 3 ), magnetite (Fe 3 O 4 ), goethite and limonite.

In the Hamersley ranges of WA, as in many other parts of the world, the iron is found in a distinctive type of rock known as banded iron formations, which consist of thin layers of iron oxides alternating with bands or iron-poor rock.

These are sedimentary rocks, which scientists think were formed more than two billion years ago when oxygen released by blue-green algae combined with the large amount of iron dissolved in seawater to form iron oxides that eventually settled in thin layers on the muddy ocean floor.

What makes the Pilbara deposits so valuable is that these banded formations have been further enriched by the action of water, which has washed away waste minerals including quartz and carbon leaving concentrated bands of iron oxide, says Jonathan Law, an expert in locating and managing mineral deposits at CSIRO.

"Banded iron formations in their own right are not great iron ore deposits," he explains. They might have 20 to 25 per cent iron in them, which is not great — although they do mine them in some parts of the world. The ones that have made the Pilbara great are secondary enrichments of banded iron ore. All the major resources that have been mined in WA fall into this category."

According to Geoscience Australia, a government agency, in 2008 Australia had about 15 per cent of the world's economically mineable iron ore, ranking third after Ukraine with 19 per cent and Russia, with 16 per cent.

Australia also produces around 15 per cent of the world's iron ore, making it third behind China and Brazil. Almost all of Australia's production comes from Western Australia (WA), which dominates the Australian iron ore industry with nearly 97 per cent of total production.

The Pilbara region alone is particularly significant, with more than 92 per cent of Australia's production. Other, smaller, iron ore operations exist in the Northern Territory, South Australia, Tasmania and New South Wales.

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Current estimates

In the 1960s, Thomas Price, the vice president of US-based steel company Kaiser Steel famously said there were untold millions of ore in the Pilbara deposits.

"I think this is one of the most massive ore bodies in the world," he is reported to have said. "It is just staggering. It is like trying to calculate how much air there is."

These days, estimates of the amount of iron ore in the Pilbara are a lot more precise.

Geoscience Australia calculates that the country's "economic demonstrated resources" of iron — an estimate of what is likely to be available for mining in the long term — currently amount to 24 gigatonnes, or 24 billion tonnes.

According to the Australian Bureau of Agricultural and Resource Economics, that resource is being used up at a rate of 324 million tonnes a year, with rates expected to increase over coming years.

"If you extrapolate that out, then it's pretty easy to see that within 30 to 50 years, the high quality ore in the Pilbara will be essentially mined out," says Mudd.

That's a figure that Law broadly agrees with. "My calculation is 56 years if you take the current production rate and what we know about in that economic demonstrated resource basket."

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Easy come, easy go

Of course, current estimates of the country's iron ore supply cannot include the discovery of new deposits we do not yet know about that might increase our reserves.

The Australian Bureau of Statistics reports that the mining industry spent $583 million on iron ore exploration in 2008, more than one-fifth of all mineral exploration spending in Australia that year.

But most of that money has been spent on evaluating the size and quality of ore deposits that had been identified relatively easily on the surface of the Earth, Law says.

"Banded iron formations are extremely easy to find because they are magnetic, and the deposits we've found so far have been discovered on the surface so it was literally a case of walking along, finding them and then drilling them out."

If the industry was to find currently untapped rich deposits below the surface, that could dramatically extend the life of the country's iron ore reserves, he says. "We just don't know."

On the other hand, if the industry doesn't discover other big deposits we may need to begin mining lower quality deposits, Mudd notes. In which case, the environmental costs of the industry will grow. "It's not just a matter of what's there, but what the environmental cost is of extracting it."

In fact, the energy and water-use implications might mean that mining low-grade iron ore deposits is not feasible, says Law.

"While these enormous resources are out there, they're probably not the ones you want to use unless you absolutely have to."

"I guess the challenge for the future is to see whether or not Australia remains an attractive place to explore for these buried deposits that will almost certainly be more expensive to produce, or whether the big companies just move to use the equivalent easy deposits in Africa or South America."

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