World Economy

Searching for $27b in Australia’s Buried Riches

Searching for $27b in Australia’s Buried RichesSearching for $27b in Australia’s Buried Riches

Mining companies are searching in Australia for an estimated $27 billion in buried riches, hidden beneath the world’s biggest weapons testing range.

The Woomera Prohibited Area, a remote stretch of the outback that’s larger than the US state of Pennsylvania, has been bombed, blasted and even nuked after it was declared off limits almost 70 years ago, Bloomberg reported.

With Australia now easing restrictions, more miners including Teck Resources Ltd. and Vale SA are moving in to search for gold, uranium, oil and other valuable commodities.

Teck began drilling in May and early results hint at a potential major copper and gold deposit. Vale has received two exploration licenses to pursue metals, uranium and rare earths in the test range in south Australia.

“It’s been pretty much unexplored because it’s been locked up,” said Richard Schodde, managing director of exploration adviser MinEx Consulting Pty., whose clients include BHP Billiton Ltd., the world’s biggest miner. “There’s room for two or three significant discoveries.”

BHP and Fortescue Metals Group Ltd. are among other companies with exploration licenses in the area.

 Biggest Miners

Even as the biggest miners trim exploration budgets to reduce costs amid a commodities rout, spending on mineral and petroleum prospecting in South Australia jumped 20 percent in 2014, according to the country’s industry ministry.

Companies have submitted applications for licenses to explore about 19,000 square kilometers (4.7 million acres) of the Woomera since August, when the government issued rules to ease access.

While companies have to evacuate their sites to allow weapons tests, working alongside the military can be done, according to Kingsgate Consolidated Ltd. The gold producer has one of two mines that currently operate in the Woomera, allowed under initial government moves to open the range.

The policies approved last year provide more specific guidelines on when parts of the Woomera will be off limits, and for how long.

At least A$35 billion ($27 billion) worth of metals are recoverable in the Woomera and surrounding areas, the south Australia government calculated in May.

 Green Zone

In the green zone, miners may be barred for as long as 56 days a year. That’s where Australia’s air force tested cruise missiles capable of striking targets from 300 kilometers for about two weeks in 2013.

Initially, Australia blocked state-owned China Minmetals Corp.’s A$2.6 billion deal in 2009 for OZ Minerals Ltd., because its Prominent Hill copper and gold mine is inside the Woomera. Australia later cleared the sale of most of the rest of OZ Minerals’ assets to Minmetals. Defense officials will continue to judge security risks around foreign mining investment, according to the new legislation.

“It’s definitely become more open,” said Ian Finch, executive chairman of Ironclad Mining Ltd., which holds 7,100 square kilometers of Woomera tenements and is beginning a new drilling campaign this month.