Australian mining firm Mineral Resources (MinRes) will ramp up production at its Western Australian (WA) iron ore operations over the next nine months, and add another 1mn-2mn wet metric tonne (wmt) of exports in January-June through the development of a new mine.

The firm has maintained its guidance for existing operations at 19.5mn-21.2mn t of iron ore in the 2020-21 fiscal year to 30 June, despite lower than expected production from its Koolyanobbing mine in the Mid-West region of WA in July-September compared to April-June. MinRes expects to make up for the disappointing quarter by ramping up mining to a run rate of 13mn t/yr by June 2021, from just over 8mn t/yr in July-September.

The firm also expects to ship 1mn-2mn wmt of 56-58pc Fe ore from its Wonmunna iron ore mine in the Pilbara region of WA in the second half of this fiscal year, as the new 5mn t/yr mine ramps up to full capacity. MinRes is pushing forward with development even as WA iron ore mining firm Fortescue Metals began legal proceedings to have the mining lease for the project deemed invalid.

Wonmunna is close to MinRes’ Iron Valley operations in the Pilbara, which are expected to produce 7.5mn-8.5mn t of ore in 2020-21, and will have similar operating costs.

MinRes expects its average operating cost to remain steady this year in line with the previous year, when it recorded an average cost of A$72/t cfr China for its Koolyanobbing operations and A$81/t cfr China for Iron Valley. It received an average price of A$116/t at Koolyanobbing and A$104/t at Iron Valley. At these prices the firm recorded a strong margin but its high costs make it vulnerable to any decline in iron ore prices, particularly for the lower grade ores that it produces. UK-Australian mining firm BHP by comparison expects its cash costs in the Pilbara to be around $13/t fob Port Hedland.

The continuing high operating costs, despite the planned increase in production, is partly because of the high stripping ratio at Koolyanobbing. The stripping ratios are much lower at Iron Valley, but the cost of transporting the ore by truck to the port is high. MinRes plans to reduce the cost of its operating in the Pilbara through the development of rail options and developing a project in the West Pilbara, closer to the coast.

MinRes ships ore with around 58-60pc Fe. Argus on 23 October assessed the 58pc Fe grade at $107.20/dmt cfr Qingdao, up from $77.95/dmt on 1 January. Argus also assessed the ICX 62pc Fe at $115.85/dmt cfr Qingdao on 23 October, up from $91.15/dmt on 1 January.