Indo Mines expects to take the remainder of 2015 to complete phase two of a definitive feasibility study (DFS) into its iron sands and pig iron production project near Yogyakarta in eastern Java. The primary focus of this work is to determine the feasibility of the pig iron plant with additional lines of production.

The projects are held by PT Jogja Magasa Iron (JMI), a joint venture between Indo Mines, which holds 70% of the issued capital, and PT Jogja Magasa Mining (JMM), which holds the remaining 30%. PT JMM is a consortium of individuals, including the Sultan of Yogyakarta. Indo Mines and PT JMI are going through a restructuring process, from a mining company to a development organization.

The DFS is also looking at a captive power plant and co-generation preliminary design and capacity, port preliminary design and bathymetric surveys, and a detailed logistics analysis for a land-based solution (rail). Another important aspect is the intended use of Equator Principle (EP) standard social and environmental studies, which is a first tier funding requirement.

The DFS will upgrade the JORC compliant iron sands resource to 2012 standards, examine geotechnical aspects, including a detailed soil investigation where heavy equipment is located such as smelter site, multi hearth furnace units, etc, and involves additional smelter test work on raw material.

Approximately 15 tonnes of DRI will be required for the submerged arc furnace pilot plant, which in turn will provide accurate power requirement data, pig iron yield/quality and slag partition ratios.

Outside the battery limits of the beneficiation and iron plant, the studies are not as detailed in either analysis or engineering design work. This is because it is likely power, water treatment and port facilities will be outsourced to third parties. The level of detail provided in these studies though, will allow PT JMI to negotiate with potential interested parties and have a Capex/Opex margin of error of approximately 20% (preliminary design and pre-FS level).

One of the most important studies to be undertaken by PT JMI during the DFS is upgrading the current AMDAL report (Indonesian environmental study) to EP standard environmental and social analysis. Currently PT JMI is completing a GAP analysis on the current studies it has completed to date. This has been insightful for the DFS Project Management team, as there is a significant body of work already in existence that will provide valuable data towards upgrading the AMDAL report.

PT JMI has appointed CRL labs in New Zealand to assist MBE in beneficiation test work of the iron sand for the BED contract. Microscopic analysis is being undertaken which in turn has identified the need to utilize a low intensity magnetic rougher to separate low grade magnetite from the high grade. This is because low grade iron sand will not liberate iron, even under the most intense grinding – for efficiency purposes it is best to screen this material out immediately, thus increasing both yield and plant performance.

PT JMI holds a Contract of Work concession in the Kulon Progo region, about 30km from the Javanese city of Yogyakarta. The CoW holds a production licence to mine iron sands and produce pig iron within a 2977 hectare area. The area covered by the license is approximately a 22km-long by 1.8km-wide stretch of beach, between the Kulon Progo and Serang rivers. The asset currently holds a defined 163.5 million tonne JORC-compliant probable ore reserve with an average grade of 13.7% iron.

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