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neWs

Yansteel, Sheffield united

in Thunderbird plan

fter more than a year, Sheffield Re- said. “Yansteel is a long-term, new player
Asources Ltd has landed the sort of into the sector and its objective is to se-
project partner it has been searching for; cure years of supply and they know that
a group with deep pockets and a strategic by investing in Australia and Thunderbird
interest in the long-term future of the com- in particular they will get that without any
pany’s Thunderbird mineral sands mine in disruption.”
Western Australia. The agreement will see Yansteel invest
From its discovery in 2014, it was always $13 million for a 9.9% chunk of Sheffield (at Sheffield is confident in the product mix it
assumed Thunderbird would move seam- a 130% premium) and commit $130 million has coming out of the Thunderbird mineral
lessly through development, funding and for a 50% share in the project. The deal sands project
then construction; its high-quality orebody also includes life-of-mine Stage 1 offtake
seemingly prime for development. Howev- of Thunderbird’s ilmenite product at arm’s
er, this assumption never took into account length pricing. McFadzean said.
the vagaries of the mineral sands scene. “It is as simple as that, there is no other The deal will also see Thunderbird’s
“The expectation from the market was complexity,” McFadzean said. flowsheet redesigned. Sheffield’s 2019 up-
that, because it was such a good project, The main complexity hanging over the dated BFS replaced the low-temperature
it would be a three-month process to find investment is largely in the court of the roast circuit with a mineral separation plant,
a partner but this is not a gold project; you Foreign Investment Review Board (FIRB) designed to reduce capex and produce a
could fit all the mineral sands industry which is yet to rule on Yansteel’s proposed premium zircon product. McFadzean said
players on two hands,” Sheffield manag- investment. Several Chinese takeovers that change would be reversed to suit Yan-
ing director Bruce McFadzean explained of Australian resources companies have steel’s requirements.
of the company’s long search. been stymied in the last 12 months but “We have been working with Yansteel
While Sheffield had arranged the $240 McFadzean is confident the Yansteel bid on what they want, and they are keen on
million debt component of Thunderbird’s will clear all relevant hurdles. a low-temperature roast process because
$463 million capex in late 2018, a change “We support the FIRB process and you it produces the best ilmenite product for
in conditions meant it was in no position have to be conscious of what’s key in their them.”
to raise the equity portion on market. An decision-making,” he said. “The company The mineral separation plant will be re-
exhaustive process ensued but after the is of good character, it will not go beyond moved from the flowsheet with all zircon
company announced in August that it had 50/50 ownership, there are no board seats sold in concentrate format.
secured a $143 million investment from attached to the deal and the offtake is “The objective is to produce a concen-
Chinese group Yansteel for a 50/50 share kept at arm’s length. The recent examples trate and then customers do the premium
in the project, McFadzean declared the which have been denied have had differ- upgrade somewhere else,” McFadzean
search over. ent structures. We are positive it will be said. “It removes a lot of risk because we
“We set out last year to fill that $143 mil- seen as being in favour of the national in- are not guessing what offtake parties will
lion equity gap, so we have achieved what terest.” want for either product.”
we set out to,” McFadzean said. “The trou- McFadzean also expects Yansteel’s sta- Once FIRB approval is granted, Shef-
ble is when you are down at 10c/share it tus as a new supplier of pigments to play field will restart development in earnest.
is difficult to fund a project equitably for in its favour. The industry has undergone The Thunderbird BFS will be updated to
shareholders, so you have to look else- a prolonged period of consolidation in the satisfy debt providers Taurus Funds Man-
where. Private equity groups have expec- last five years and with supply now tight- agement and the government-backed
tations for returns which can be very ag- ening, feedstock availability is falling. The Northern Australia Infrastructure Fund
gressive, so the only alternative is to have arrival of a new player could ease some of (NAIF).
a strategic partner who is in it for reasons the squeeze throughout the supply chain. “Because of the shift in flowsheet we
other than the short-term return on invest- “In the pigment industry globally titanium have to renegotiate the terms of the debt
ment.” feedstocks are falling away so a new pro- finance, but it won’t take long there has
In Yansteel, that is exactly what Shef- ducer like Yansteel could provide alterna- been no stone unturned on the due dili-
field has found. The company is a sub- tive supply,” he said. “They could do that gence and NAIF and Taurus keen to con-
sidiary of Tangshan Yanshan Iron & Steel by going into the market, but they are much tinue the process,” McFadzean said.
Co. Ltd which produces around 10 mtpa of better off JV’ing with a producer, which is “If FIRB comes through early we can
steel products in Hebei province, China. It what they are doing with us. The JV allows get on the ground early and have GRES
is now expanding into the pigment market Yansteel to underpin its investment in the at the start of the dry season. It is only a
by building a 500,000 tpa integrated tita- pigment plant.” 15-month build for Stage 1 which is when
nium dioxide processing facility including Yansteel’s focus on ilmenite means we generate a lot of cash.
a titanium slag smelter. Thunderbird offers Sheffield is free to sell its zircon product to “Once FIRB is done, we will be cashed
ideal feedstock for the facility. third parties. up and in a pretty good spot to execute this
“We are really glad we have an industry “Some 70% of the revenue comes from project.”
player involved because they are commit- zircon but that is not attached to the JV, so – Dominic Piper
ted to long-term outcomes,” McFadzean we are free to sell it into the marketplace,”

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