The rise of SA mining

IN 1841 sheep farming and agriculture dominated the South Australian landscape. By 2013 mining earns the state’s economy $A2 billion annually. As part of Australia's Mining Monthly's award-winning Mining Towns feature, Ron Berryman explores SA’s shift in primary industries, spanning generations.
The rise of SA mining The rise of SA mining The rise of SA mining The rise of SA mining The rise of SA mining

Arckaringa Basin

Ron Berryman

Mining has played a vital role in the economic fortunes of South Australia, with the first mineral discoveries just two years after the first non-convict settlers landed on Kangaroo Island in July 1836.

Today, minerals are the state’s biggest export item, according to SA Mineral Resources Group senior geologist Greg Drew.

“The majority of this comes from the world-class Olympic Dam mine but there are a number of developing mines,” he explained.

“Mining now directly employs more than 10,000 people and it has been predicted to be the major driving force in the state’s economy for the next 30-40 years.

“This is a case of history repeating itself, as South Australia’s early economic development also relied heavily on the mining industry.”

The settlement in SA, more than any of the other Australian colonies, was “planned”, albeit by bureaucrats, to be more of a commercial enterprise than the settlements which preceded it.

SA has worn its “non-convict” badge proudly for almost 180 years but it has also had to overcome the economic domination of its east coast neighbours, which had the benefit of “cheap” convict labour in the early years.

While mining has not had constant input into the state’s economy, it has helped alleviate pressures at particularly trying times.

When the settlement was trying to find its feet opening up tracts of land with pastoral leases, the commercial aspect of its establishment struggled to generate sufficient funds to keep the architects of the scheme totally happy.

However, the first mineral strike at Glen Osmond in 1841 changed the game.

Although the mines only provided employment for a limited number of people, it provided income for the young settlement at a time of extreme economic difficulty, enabling parallel industries to be started and waving the first welcome flag to encourage Cornish, Welsh and German miners to make the journey to SA.

Drew pointed out that SA’s first mining boom gave the new colony an influx of a skilled mining workforce – Cornish and German miners, a land survey system, settlement patterns and housing as well as transport networks of road and rail.

Mining at Glen Osmond was basically finished by 1851 but by then copper had been discovered at Kapunda, Burra, Moonta and Wallaroo.

A fair indication of the importance of mining to the colony was the fact that in 1850 minerals constituted 67% of the value of exports and SA was the third-biggest producer of copper in the world.

The other big ticket item at the time, wool, contributed 29% in exports in the same period.

Former SA mines and energy director-general Keith Johns has no doubts that mining has been a major factor in driving the SA economy.

“For 80 years, it was copper and it was Kapunda, Burra, Moonta and Wallaroo from the early 1840s through to World War I,” he said.

“It gave us mining towns, transport, railways, industry, water supply and – first and foremost – employment.

“Without mining, this state would have been battling because the pastoral and agricultural industries were slow in providing economic support. Copper proved a real shot in the arm from day one.”

When copper started to wane, with international copper prices falling, the discovery of the rich silver-lead-zinc orebody at Broken Hill in 1883 provided a timely lift for the SA economy.

Rather than send ore almost 1200km to Newcastle or Sydney, Broken Hill Pty Co Ltd opted to use a railway line established by the SA government to Port Pirie and began lead smelting there in 1889.

Johns said this move helped establish Port Pirie as a key centre for smelting and refining base metal sulphide concentrates.

“It was also the entry for running supplies and for the export of mine products, serving initially the Broken Hill Pty Co Ltd and later, other company mines,” he said.

“When the copper ran out, iron ore took over and the Australian steel industry was based on iron ore from the Middleback Ranges.

“It’s all very well talking about Western Australia now but in those days it was Iron Knob and Iron Baron in South Australia where the iron was mined to feed the smelters for the Broken Hill ore.”

Uranium took centre stage in 1906 with the opening of SA’s first uranium mine at Radium Hill, although it didn’t create the excitement and employment opportunities previous mining had.

When iron ore became the flavour in the early 1900s SA received another mining boost when the federal government passed the Manufacturers’ Encouragement Act 1908 to assist in establishing an iron industry in Australia with a scale of incentives for smelting pig iron for the production of bar iron and steel from Australian ore.

Iron Knob, a hill of high quality iron located about 68km west-southwest of Port Augusta, in the Middleback Ranges, is often referred to as the birthplace of the commercial iron ore industry in Australia.

A Calltowie wheat buyer named Ernst Siekman, who supplied flour to Broken Hill, was the first to peg a lease at Iron Knob in 1880 and the Siekman family’s Mount Minden Mining Company was established and extracted iron ore from the area for the next 16 years.

The iron ore industry received a setback in 1938 when the Commonwealth government placed an embargo on all exports to conserve available known resources as war threatened Europe and Japan.

However, following World War II, iron ore led the second major phase of metal mining in SA with the development of integrated steelworks and shipbuilding yards at Whyalla and the lifting of the export embargo in 1960 gave the burgeoning steel business an added lift.

In 1997-98, mining investment surged to more than triple the 1996 level mainly due to the Olympic Dam project ($1.94 billion), which commenced in 1988 and reached capacity in 1997-98. However, mining investment then declined, although at levels well above those of the early 1990s.

According to Drew, the diminishing chance of further major discoveries near the surface resulted in mineral exploration redirecting its energies towards areas where potential host rocks were concealed by deep weathered profiles, surface cover or barren blankets of younger sediments.

“Such a potential province of potential host rocks is the Gawler Craton, which underlies a vast area in the centre of South Australia,” he said.

“Today, the state’s mining industry is dominated by the Olympic Dam mine, which is based on the world’s largest known single concentration of combined copper, uranium, gold and silver mineralisation.

“It was discovered in 1975 by drilling below 300 metres of barren cover rocks. This single mine now accounts for more than 60 per cent of the value of South Australia’s mineral resource production, which is comparable to the impact of the Moonta-Wallaroo mines (in the 1860s) on the state’s economy.”

Mineral exploration spending in SA in 2011-12 rose by an impressive 29% to $328.4 million, up from $254.7 million in 2010-11.

It was the highest expenditure since the peak of pre-global financial crisis spending in 2007-08, according to the SA Department for Manufacturing, Innovation, Trade, Resources and Energy.

The department introduced its innovative plan for accelerating exploration (PACE) in 2004, a move that has motivated other states to follow with similar programs to encourage resource exploration.

DMITRE has since expanded the program with PACE 2020, injecting an additional $10.2 million into the original $30.9 million funding.

“Although South Australian spending has grown strongly, its share of total Australian spending fell slightly to 8.3 per cent from 8.6 per cent in 2010-11,” DMITRE explained.

“This was influenced mainly from the growth in spending on exploration for iron ore in Western Australia, which rose by 75 per cent to more than $1 billion, coal in Queensland which grew by 57 per cent and coal in New South Wales which more than doubled.

“These growth rates accounted for 46 per cent of all Australian mineral exploration spending in 2011-12. On the basis of that outcome, the loss of only 0.3 percentage points in the state’s share of spending reflects a very strong overall performance.”

*A version of this story first appeared in Australia’s Mining Monthly, which thanks DMITRE for assistance with research.