HAVING demonstrated the technical capability of its ATC Ferrotungsten Project and its operational team, Hazelwood Resources aims to demonstrate the viability of the operation. The first product was sold in May last year with three successful campaigns following which resulted in production doubling in each campaign.
A tilting furnace at Hazelwood Resources’ ATC ferrotungsten plant in Vietnam.
In May 2010 ASX-listed Hazelwood acquired a majority interest in Asia Tungsten Products Company (ATC), which was constructing a new ferrotungsten refinery near Vihn Bao. Stage one of the plant has an annual nameplate capacity of about 4000 tonnes of ferrotungsten alloy, equivalent to 3000 tonnes of contained tungsten. It is the largest ferrotungsten plant outside China and its design is believed to be the most advanced in the world.
Ferrotungsten is used in steels and alloys where hardness and heat resistance is required. Outside China, there are few sources of supply and since 2008 strategic ferroalloys such as ferrotungsten have been subject to a range of restrictions by Chinese authorities, including a 20% export tariff.
Hazelwood’s managing director Terry Butler-Blaxell told The ASIA Miner: “We have penetrated the market in Europe, Japan and unconventional markets such as the Americas, and now it is about achieving profitability as well as continuing to capture market share with our high quality product.
“With specialty metals you must use a measured approach. Initially we had to establish supply chains of raw material and as with any new purchaser suppliers are a bit stand-offish at the start. We are now fostering a network of semi-regular to regular suppliers which has improved our ability to procure the raw materials required to run a refinery.
“We need to ensure we are producing a product that meets end-user specifications and that can be confidently distributed, which includes ensuring operations are performing according to triple bottom line criteria because we are a listed company. We need to keep a close eye on the market for any signs of volatility. You need to be extra cautious with specialty metals - you operate to make a refining margin and you have to be careful not to oversupply the market at any one time.
“At this stage there is strong demand for our product, everything produced is being sold and it doesn’t appear likely that we will oversupply the market.”
Terry Butler-Blaxell said Vietnam offered Hazelwood an opportunity to fast-track through the permitting and construction processes compared to Australia. “We were able to build this project for a fraction of the capex that would have been required in Australia. The permitting and approvals process was straight forward and Vietnam is a great country for foreign direct investment in manufacturing and processing ventures.
“Our partner, who came from the Chinese tungsten industry, had prior experience in Vietnam and was comfortable operating in that framework. It was an easy decision to take their recommendation to construct the plant in Vietnam, which was vindicated because the cost came in under budget.
“A number of large multi-national companies have significant manufacturing bases in Vietnam, including Samsung, Kyocera, Yamaha and Bridgestone, as the country is very good for this activity but not so good yet for mining. The framework for foreign direct investment in mining is an area that is evolving and needs some improvement.”
He said the plant was on track to achieve the 2014 production target which meant similar sized campaigns over the course of the year. “The level we are producing at is a level the market can comfortably absorb. Although there is not a huge amount of ferrotungsten around, we are the only western company producing it. The end-users value dealing with a western-owned company and it is starting to show with our sales performance and repeat orders.
“We are a long way short of our valuation target but are showing some recovery with increased interest in the shares. We are at the start of a long journey but we started downstream at the refining end with a niche product and ultimately to improve this company, grow margins and improve performance, we need to look at something else.
“One of the strategies involves upstream vertical integration to replace part or all of our supply chain with material from our own mines, which could add substantially to refining margins and improve the security of the business.
“We are a campaign producer and given our capability of delivering capital efficient refining capacity, there is a plethora of other specialty metal processing opportunities we could readily launch into, leveraging off our capabilities in Vietnam,” he added.