Legal papers are on their way to the Warden’s Court to argue that Teck has not been spending enough on its mothballed Lennard Shelf zinc mining assets and, as such, they ought to be surrendered.
The company behind the push to relieve Teck of the Pillara and Kapok mines is Ord River Resources, a tiddler of a business, but one led by a family with a nose for a quick killing.
John and Jeremy Towner are best known as the chaps behind Sydney Gas and Sunshine Gas. They launched Ord River earlier this year with the help of a Chinese company, China Nonferrous International Mining.
As Dryblower understands the situation, the Towner boys have been watching Teck’s work at the Lennard Shelf ever since it bought the assets from the receivers of Western Metals in October, 2003, for around $26 million – and promptly shut down the operation, dismissing 229 employees and 160 contractors in a major blow to jobs in the Kimberley region.
Teck’s argument was that it wanted to take a totally fresh look at the resource position in the region, and perhaps launch a bigger mine later – and to help with that that aim last year sold a 50% stake in exploration tenements on the Lennard Shelf to fellow Canadian, Noranda. The price of $26 million for a 50% share of the exploration tenements recovered all of Teck’s original outlay and left Teck in for a free ride on the exploration upside – while the mines stayed closed.
The government of WA was never particularly impressed with the closure, and after the price of zinc subsequently rose and the Noranda deal was signed, the Minister for the Kimberley, Tom Stephens, wrote to Teck (last April) asking that it re-open the mines.
Teck has obviously decided against a quick opening and its chief executive, Donald Lindsay, as recently as three weeks ago, said he had no plans to open any zinc mines until the price of the metal showed an ability to stay consistently high, and stocks of zinc in warehouses fell.
Lindsay told a mining conference in New York that “we’re committed to doing whatever we can to make sure the inventories on the London Metal Exchange continue to decline”
A reasonable interpretation of that comment is that Teck is more than happy to play a role in keeping production low so prices can rise, and one way of keeping production low is to keep mines closed.
Ord River Resources, apparently with the blessing of its Chinese friends, and by keeping in touch with other companies which had bid for the Lennard Shelf mines, reckons that Lindsay’s comments, plus the lack of action at the mines, is sufficient reason to ask the Mining Warden to order Teck to forfeit the mines.
Dryblower has been around long enough to know that it’s always hard to convince a Mining Warden to order forfeiture.
That fact of life will probably make it hard for Ord River to win its day in court. There is also little doubt that Teck will call in the legal big guns to fight tooth and nail to keep what it acquired in 2003, even if it is in mothballs.
But, having acknowledged Ord River’s problem there is also the position of the WA Government in the dispute with Minister Stephens no doubt delighted to see the start of a legal process which might force Teck back to work – or at least embarrass the Canadians into doing something.
