King Island Scheelite tackles supply chain problems, brings forward plant equipment buys
King Island will pay deposits in advance to ensure it secures key equipment to meet its development and production schedules.
Emerging Tasmanian tungsten producer King Island Scheelite (ASX: KIS) is to address potential shipping delays and rising freight prices by stepping up orders for long lead items needed for its processing plant.
The company, in order to meet its projected timelines, is also committing to paying deposits in advance.
King Island is progressing its Dolphin project on King Island which, at full production, is expected to produce 3,100 tonnes per annum of tungsten trioxide concentrate.
The company has described Dolphin as “one of the world’s richest tungsten deposits”.
The move comes as global supply chains are clogging up due in part to COVID-19.
Key Chinese ports hit by coronavirus
Chinese ports have been hit hard by outbreaks of the virus, while cases are also rising on merchant ships, forcing quarantines and further delays.
Ningbo, the world’s third-busiest container port, in partially closed. Previously Yantian part at Shenzhen was shut down in May due to an outbreak.
Diversions of ships away from Ningbo is worsening congestion at other major Chinese ports, such as Shanghai and in Hong Kong.
Xiamen port in southern China is seeing a growing number of ships anchored offshore waiting for berths.
King Island reports that, during the past few weeks, it and its processing engineers, Gekko Systems, have carried out a systematic review of the procurement schedules for the processing plant to be built on King Island.
This review has identified various items of equipment that are key in the construction and commissioning of the new plant.
In order to meet the forecast production timeline, the company says it has committed to paying deposits in advance.
The board has approved spending $800,000 for these deposits.
“Overseas suppliers are currently indicating significant shipping delays, with significant increases in freight costs, following various maritime events exacerbated by COVID-19,” the company states.
“As these delays are expected to continue for some time, the decision to pay certain deposits reflects the company’s intention to commence the redevelopment of the Dolphin project as soon as possible.”
Tungsten discovered at Dolphin more than a century ago
It was in 1911 when a prospector, searching for tin, discovered what is now the Dolphin deposit.
Mining began in 1917 but was short-lived, closing down in the mid-1920s.
It was later revived, and then production boomed during World War II as the Federal government provided equipment to extract the strategic metal.
Prices soared again during the Korean War by which time the mine was operated by a listed company, King Island Scheelite (1947) Ltd, which was taken over by the former Peko-Wallsend in 1969.
The mine, along with many other Western tungsten producers, was hit in the 1908s by large tungsten quantities being dumped by China into the market and closed in 1990.