Iron ore one day may join gold, silver and copper as a major commodity exported across the world perhaps to China from Nevada.
Western Resources Group has assembled a block of iron ore claims in the Buena Vista iron district in Pershing County and is pitching the property for $75 million, President Gary Clifton says.
The block encompasses hundreds of claims on mostly private land and includes four prior-producing iron ore mines. The open pit mines were operational between 1940 and 1960.
Clifton says measured and indicated resources in the area total 500 million tons of iron ore. The site may prove interesting to resource-hungry countries such as China or India, but so far response has been limited to inquiries, he says.
However, Al DiStefano, global business development director with the Nevada Commission on Economic Development, last week was stumping for business in China and pitched the property to several potential investors.
The 15-square-mile claim block has been on the market for about a year. Clifton says that iron eventually will be mined at the site.
"Iron deposits like this, they aren't making any more of them. It is going to go," he says.
A problem for exports from the site: Ore would need to be exported from the Port of Stockton, the only port in the Bay Area that can handle a high volume of Union Pacific rail traffic.
The Port of Stockton can only accommodate smaller 40,000-ton ships, which limits exports to several million tons per year. Transloading by barge to larger 70,000-ton ships at the Port of Oakland would boost export capacity, but that plan also is too limited for serious shipping.
"That is a very small ship when moving high bulk, such as iron ore," Clifton says.
Shipping has proven to be a sticking point in discussions with potential Chinese investors, DiStefano says.
"To be economical, the Chinese like to ship 150,000 to 200,000 tons in bulk carriers, which the western U.S. ports cannot accommodate," he says.
Refining the iron ore at the site into high-grade iron nuggets that can be shipped in higher concentrations is the most likely scenario for future development.
After rock is ground and passed through magnetic separators, bulk iron ore contains about 65 percent iron. Smelting that processed ore into higher-grade nuggets of pig iron would allow for more economical shipments from the site. It also may make the mine more attractive to smaller U.S. steel mills, which typically use scrap iron to produce steel.
"This is what we think will happen," Clifton says. "That smelting process is closed, it is reasonably clean, and it's done all over the world. Those are feed stock to steel smelters.
"That process is a value-added process, and it potentially could be sold domestically. We have several dozen mini mills or custom steel mills, which produce most of steel in the U.S., and they use that type of product as their feed stock."
Pig iron is about 96 percent iron and could be shipped 40,000 to 50,000 tons at a time at a value four or five greater than that of iron ore. Due to the recession and global construction slowdown, iron concentrate prices are less than half of what they were just 12 months ago. Clifton says spot prices a year ago were about $200 per metric ton, and now they are down to $80 per metric ton.
The NCED's DiStefano agrees that smelting the ore in northern Nevada is a likely outcome.
"The value increases five-fold," he says. "Forty-thousand tons of iron nuggets equates to 200,000 tons of iron ore, meaning that a 40,000-ton bulk carrier of iron nuggets is economically feasible. Using this scenario I definitely believe that the Chinese would be interested."
Capital investment for a smelting facility would run upward of $250 million. Construction of a smelting plant would take several years, and it would take several years to receive permitting as well much less time than permitting for mining other commodities, however.
"It doesn't take 10 years," Clifton says. "You are dealing with a local plant either fed by natural gas or coal. Permitting would be shorter because you would not be using chemicals. Ours is just an industrial rock; there are no chemical treatments."
Clifton adds that it would take several decades to mine out the site due to the extent of the resources. The Buena Vista iron district is south of Lovelock on the Carson Sink. There are no residences within 20 miles of the mine site except for one ranch. A paved road runs to the middle of the property from former mining operations.
"It is just sagebrush, and it's flat as a board," Clifton says. "There is nothing within 20 miles of us. It is absolutely perfect."
Western Resources Group is working with potential Chinese investment through two firms located in Hong Kong and Washington, D.C.
