Department of State Development

When the Chairman of the Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd, Chaodian Chen, formed the Murray Zircon joint venture (JV) in 2011 he had two broad missions:  to clean up the site and the community relations in South Australia’s Murray Basin and to establish a sustainable company which would provide his company with a secure source of supply of zircon.

Nearly four years on Murray Zircon has ticked both boxes and despite falling world prices for the heavy mineral sands output from the operation, it has managed to maintain its commitment to long-term operations.

Wind back the clock to 2009 and the Mindarie Mineral Sands Project was closed by its then owners and placed on care and maintenance. Mr Chen opened talks with a South Australian consortium in 2010; the joint venture was established in 2011 and production began under the new management in December 2012.

But it certainly hasn’t all been smooth sailing, and as CEO Patrick Mutz is quick to point out, the world price of zircon and other heavy minerals started heading south at about the same time production began and prices have been going that way relentlessly ever since.

“We take two things from that,” Patrick said. 

“One, Orient Zirconic is in this for the long haul; and two, we get tremendous support from the South Australian Government. 

“At a Ministerial level and through the regulator, we know that the attitude and the policy is to be proactive and supportive of the mining industry. That undoubtedly helped get the deal over the line but it’s also a great source of day-to-day comfort.

“Clearly the Government wanted someone to take over the mothballed project and run it properly. Orient Zirconic is one of the largest zircon processors in China with one of the most diversified zirconium product lines in the world. In 2010 the price of zircon was starting to climb so it made sense for Orient Zirconic to adopt a policy of vertical integration and set up a mining company which would also provide a security of supply.

“The JV is based on a long-term commitment and the development of long-term relationships. A key part of this long-term approach was accepting that the JV had to do a lot of site rehabilitation work and re-build relationships with landowners before it would be given a licence to restart mining operations.

“It amazed some people that the Chairman took a personal role in redeveloping the project.  He is very hands-on, and met with landholders to reassure them that Murray Zircon would clean up what had been left behind, would operate differently, and would take community engagement seriously. I believe a core characteristic of Mr Chen’s personal approach is his demonstration of real respect for others and his desire to work to earn their true respect. However, as with most astute business people, this is appropriately tempered with a strong instinct for identifying like-minded people.

“That personal approach was very powerful and it typifies the way he does business.  The site has been cleaned up, and the third crop from the rehabilitated area has been successfully harvested – in some cases, with better yields than adjacent non-mined areas. Where we mine today, we rehabilitate contemporaneously, and those areas become available for cropping more rapidly than with past operations.

Walking the walk and talking the talk is backed up with hard science and engineering.  “Mr Chen recognised the need for appropriate experts.  We had the right professionals working with us every step of the way in rehabilitating the old site and planning the rehabilitation where we mine now.  And of course, in turn this served to build confidence with the landowners.”

The personal, face-to-face approach with landowners and community is held up as being class-leading, and last year Murray Zircon was recognised with a prestigious Premier’s Community Excellence Award in Mining and Energy.

“We work hard at maintaining our good relationships with the Government and the community.  This JV came together largely because of the support of the Government, so we give that support back. This sort of relationship ensures that when the inevitable happens and things go off the rails, the basic understandings and trust are there and things can be resolved quickly and efficiently.

“I am a firm believer in not over-selling projects.  I think that if you are fair with investors, it helps eliminate disappointment down the track.  I believe Mr Chen did appropriate research to understand the nature of the project he was getting involved with, and he entered with eyes wide open and a long term strategy; a strategy than can overcome shorter term market downturns.

“Inherently, mining is a risky business; and clearly not all ventures will be successful. However, there are a few things I believe we can and should do to improve the odds of achieving sustainable success in our dealings, especially in our international relations. Contrary to Western practices, we should take the time to get to know the parties (the key decision makers) we are planning to deal with. While ‘getting to know the other party’ might be difficult to define, the value of doing so should not be under estimated. We should also work to achieve a win-win strategy and focus on building a long-term, sustainable relationship.”

Murray Zircon is an excellent example of how foreign investment can be done correctly for all stakeholders. This investment was born out of forging a positive relationship with government, regulators, community and landowners and there is little doubt its future success will depend on maintaining those relationships. And while positive relationships do not influence the market, they can help bridge the gaps across short-term market downturns.