IRON sands and coal could become Papua New Guinea’s latest export commodities, with Mayur Resources outlining plans to be producing from their Gulf assets by as early as mid 2015.

Mayur managing director Paul Mulder said at the 13th PNG Mining and Petroleum Investment Conference that the country’s iron sands deposits were “as good as it gets globally” and described local coal reserves as “far, far cleaner” than other coal mined in the region.

Mr Mulder said the iron sands had an iron grade of between 58 per cent and 67.5%, a value comparable with the highest-grade fields in the world.

Mayur was planning to produce 1 million tonnes of ore per year, with initial activity to consist of a 100,000 tonne bulk sample, to be produced by mid-2015.

The company has a coal exploration target of 50-100 million tonnes.

PNG Chamber of Mines and Petroleum president Greg Anderson said it was “early days” for coal and it had “a long way to go” but said it was a possibility in the future.

He said there were some “substantial coal seams…and quite considerable outcrops” in the area, adding there was strong potential for high-grade coal.

Mr Anderson said there were several parties looking at mineral sands exploration.

“There are [also] juniors very actively looking at potential for other nickel laterites so there are a few additional things going on,” he said

Mr Mayur said the project would compare favourably with competing Asia-Pacific fields.

“Over 400 million tonnes of sediment flows out of the river systems of PNG every year – it has been doing so for millions of years and within those 400 million tonnes contains a consistent percentage of iron sands and mineral sands such as zircon,” he said.

“This consistent deposit of mineralisation is going somewhere and data can reveal where those accumulating areas are.”

The sale of 30,000 tonnes of zircon, produced annually as a by-product, would generate 30% of the project’s revenue.

“Zircon is keenly sought after in the Asian and particularly the Chinese markets,” he said.

Mr Mulder dismissed the significance of the global downturn in iron ore prices in affecting potential investment, saying the company’s iron sands play was potentially among the cheapest iron-producing fields in the world.

“We’re committed to ensuring that those on the bottom end of the cost curve get noticed, and that’s what PNG is,” he said.

“The reality is, even when times are tough, those that can produce it the cheapest will still make money, capital will still be attracted to those very promising future assets that lie at the end of the cost curve.”

“At $25 a tonne… we’re at the bottom of the cost curve… you add the zircon and then you’re down at the very, very bottom of the global cost curve – some of the cheapest iron in the world.”

Mr Mulder said Mayur could be confident it would run a lean operation because of the lack of a need for rail lines and ports to move the materials.

“We don’t need those sorts of things here – we are right on the coast with multiple river systems,” he said.

Mr Mulder used Bluescope Steel’s move into iron sands production in New Zealand as an example of the potential value in the sector.

“They’re a steel-maker, right? Yet they’re still mining iron sands so you’ve got a large major that can see the value in it…it is a low cost source of iron.”

One of the critical advantages of the projects, he said, was the ability to use a shared infrastructure base for both minerals, which lie in close proximity to one another.

“That is going to provide an additional synergy – same company, two different products, suing the same infrastructure,” he said

He said the location meant the company could replicate the work that had been done in coal mining in Indonesia’s East Kalimantan.

“Because it could very quickly get to the market, it didn’t have to worry about railways, it didn’t have to worry about port facilities,” he said.

“PNG is no different – we’ve looked at the rivers… this is not new, this is a very simple process.”

He said the coal business had a “multibillion tonne upside” but said Mayur would focus on the “small end first, proving up that record and then extending the business”.

“It is a very good quality coal, very low ash,” he said.

“To give some perspective, Australian ash levels are between 10% and 20% – this is sitting in the range of 1% and 3% range so very attractive if you look at it from an environmental perspective.”

Further, Mr Mulder explained the potential to produce pig iron in the area.

“This is a longer term play, combining the two products together you will have a distinct advantage,” he said.

Mr Mayur said while copper-gold underpinned the country’s resource sector, the new commodities would continue to expand PNG’s resource base.

“We looked at Myanmar, Indonesia, South Africa, and Australia and on the basis of having weighed all that up, PNG came up trumps as a resource and investment destination,” Mr Mulder said.

“We were fairly agnostic about which country we invested in – we just wanted to have a level of confidence that our investment dollar was wisely spent.”