Poor old Iron Knob

Advertisement

From the ABC:

The dusty old mining town of Iron Knob, 50 kilometres north of Whyalla in South Australia, is a eerie shell of its glory days.

Empty, decrepit houses line its quiet streets and most of the shops in the centre of town have been long boarded up.

But there’s an abundance of optimism here because mining has returned, and a revival of this quiet community could be on the horizon.

Abandoned by big business

The birthplace of Australia’s steel industry, Iron Knob turned into a ghost town when BHP stopped mining iron ore there fifteen years ago.

“BHP ran Iron Knob, it was the ‘big brother’,” says Bryan Lock Public Officer of the Iron Knob Progress Association.

“The population peak in its heyday was around 3000. We had shops open, the servo was open, post office was open.”

There was life, but Mr Lock says once BHP left it all changed.

“The mine closed in 1999 and the population dropped down from about 800 to 150 within a few weeks.”

As the population plummeted, so did the town’s services, but the optimism and determination of the community’s remaining members did not.

“The thought was what is going to happen to us now, do we just go home and put a blanket over our head and wait for the end?” Bryan Lock says.

But they didn’t. The residents banded together to buy the post office with their own money, attracting grants to expand the building and create a new ‘town centre’.

The town went down the path of tourism, fixing up its campsite to attract visitors, and running tours up to the historic mine pit.

The visitor’s centre which sits in the back corner of the town, at the base of the towering mine site, is now a hub for visitors and residents alike.

“We’re not under a council so we are our chief administrators and the town is run by volunteers,” says Bryan.

“You don’t sit back and wait for somebody else to do it for you, you do it yourself.”

The town had been reliant on BHP for survival and the residents had learnt a valuable lesson.

Cautious optimism from the community

When Arrium, formerly known as OneSteel when it was spun off from BHP in 2000, decided it wanted to resume mining at Iron Knob last year the townspeople had their whits about them.

Angie Stokes is Arrium’s manager of stakeholder engagement and says the town’s experiences hugely influenced the way it negotiated with the company.

“I think they were very keen to not end up in a similar position in the future,” she says.

“Because I think what they saw was being so dependent on an external body who will move at some point is not a sustainable position.”

The Iron Knob community had some demands.

With tourism now the town’s most important industry, the golf course and mine lookout had to be preserved and so did their old cemetery.

So when Arrium’s initial design clashed with all three the company had to compromise.

Ms Stokes says not many mining companies have changed their plans for golf.

“When I did the research to find out if there were any examples of this around the country I couldn’t find any,” she says.

“But it’s been fantastic, now they talk about being in the middle of a mine site playing golf.”

Bright future ahead

Arrium’s mine only has a 10 year lifespan, but the town isn’t worried. The residents say they know how to stand on their own two feet.

But the resumption of mining is being welcomed and is expected to further enhance the community’s hard work.

“I’m only hoping it will bring more people who would like to live in Iron Knob,” says resident Jill Szkolka.

“Then that could bring more businesses opening, we could have a take-away, maybe even get petrol.

“People here are really tough, the town is run by volunteers and everyone pitches in and helps each other.

“Before I moved to Iron Knob I always thought I’d love to be the mayor of Iron Knob, I’d love that.”

And today from The Oz:

“Without an unexpected steel and iron ore recovery, we consider Arrium may have to sell an interest in its grinding media business, but may struggle to match the 9.3x EBITDA paid for Moly-Cop in Dec 2010,” Credit Suisse analysts Michael Slifirski and Nick Herbert said in a note to clients on Friday.

Sales of non-core assets and cost-cutting would not be enough to bridge the gap, the analysts said.

Advertisement

Poor old Iron Knob.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.