Production has ground to a halt at a major garnet mine in central Australia leaving nearly 50 people out of work.
The Harts Range garnet mine’s owner and operator, Australian Abrasive Minerals (AAM), has been placed in administration for the second time in two and a half years.
Located about 200 kilometres north-east of Alice Springs, the operation is one of only five major garnet mines in the world.
But despite the area containing the world’s largest alluvial garnet deposit, the mine has not produced enough garnet to operate at a profit.
KordaMentha partner Rahul Goyal has been installed as administrator of the company, and will oversee a feasibility study on the mine.
Mr Goyal told ABC Rural the mine was not producing enough garnet per tonne of ore, and was losing AAM about $1 million per month.
“The recovery rate of the mine is not as high as it should be,” Mr Goyal said.
“It was making losses up until the appointment of our administrator.”
Mr Goyal said the garnet being transported out of Harts Range had also been dirty and not up to standard.
“Some feedback from a customer was when they used the garnet for sandblasting it was leaving a red residue, which is, effectively, the red dirt,” he said.
Mr Goyal said further investment was needed to improve infrastructure at the mine and processing plant, estimating $10-20 million would need to be raised to get the mine back in production.
Jobs lost, creditors out of pocket
Since going into administration, AAM has let 48 of its 58 employees go.
“We’ve retained ten people — there’s about four or five people maintaining the mine itself and also the mineral separation plant, and also some admin staff to assist with the process,” Mr Goyal said.
On top of the job losses, there are also creditors who have yet to be paid by the company.
“There are a number of suppliers that are out of pocket,” Mr Goyal said.
“That includes utilities, hire companies, electricity, rent.
“I can’t tell you what will happen to those creditors in this administration until I know what the plan is going forward.”
AAM has previously drawn the ire of local businesses, some of whom were left with “crippling” debts when the company first went into administration in August 2017.
High hopes for restart
Mr Goyal remained optimistic about the prospect of getting the garnet mine back into production in the future.
“Everybody says there’s garnet there and there’s a market there,” he said.
A feasibility study will soon be conducted, and Mr Goyal said they should have a clearer idea of how to proceed with the mine by March 2020.
“[The study] includes everything from a hydrologist, a metallurgist, transport logistic reports, and also someone looking at the way the mine is set up … and what capital upgrades are required to get it up and running,” he said.
Mr Goyal conceded that local businesses might be reluctant to deal with the mine after going into administration for a second time in little more than two years.
“If you’re a small supplier or a local operator, you’d be quite wary of dealing with the garnet mine in going forward,” he said.