Aviva’s coal deposit is located north of Perth and contains an 80 million tonne resource of coal in seams with a thickness of between 7-9m. The deposit was found by Renison Goldfields in the 1980s and could provide ideal feed for either power production or iron making, Cambrian said.

Cambrian managing director John Byrne said the company viewed its investment in Aviva as the next step towards furthering a direct interest in iron making. Byrne pointed out that while there are billions of tonnes of iron ore and coal in the world, there were few areas in which the two minerals existed in close proximity.

“The rising transportation costs for iron ore and coal together with the fact that more than 35% of the material being shipped is waste, means the future trend is likely for iron making moving away from steel mills,” Byrne said.

“Aviva’s coal deposit is ideally located close to a number of new iron ore projects and other sources of magnetite that together can be converted into iron,” he said.

Cambrian has also increased its holding in Aztec Resources to 19%. Aztec is completing a feasibility study on developing a 4Mtpa iron ore project planned to start construction in 2005.