says the developer of one of the world’s largest projects under construction (reports The Australian Financial Review).

Strandline Resources revealed on Friday that its mining contractor, Mine Site Construction Services, was preparing to start pre-production operations at its Coburn mineral sands project north of Geraldton in Western Australia in May, a few months before originally planned.

Despite skills shortages and rising inflation sweeping through the WA mining sector, the $338 million project remains on budget and on track to begin production of zircon and titanium in the December quarter, with construction 65 per cent complete.

Strandline managing director Luke Graham, an engineer who worked for more than a decade at Sedgman before it was bought by CIMIC, said it had “broken the back” of the project as mineral sands prices hit 10-year highs amid booming building and renovation activity globally spurred by government stimulus.

“The big trend in the market at the moment that’s driving demand is larger format tiles. If you’re renovating your kitchen or bathroom, you’re probably doing floor to ceiling tiles or something, which means double the amount of zircon for its strength properties,” Mr Graham told The Australian Financial Review.

“That’s a real trend in Europe in particular, and it’s coming through in other areas which is driving that demand.”

Following recent warnings from UBS analysts that COVID-19’s prevalence in WA could interrupt projects, Mr Graham conceded that outbreaks at mines around the world remained a key risk, but said there had been no impact yet and safety protocols were working well.

As WA recorded 8731 cases on Friday, fewer than previous highs during the week, he declined to comment on whether the government should relax the state’s close contact and isolation rules.

“We’ve had a few cases on our site as lately as the last few days and it’s inevitable because it’s rife through the state right now,” he said. “We haven’t lost any time or any issues, but in saying that, this thing can get out of hand really quickly … but we’re doing everything we can to mitigate that.”

According to the Perth-based company’s definitive feasibility study in mid-2020, the project was forecast to pump out average annual earnings before interest, tax, depreciation and amortisation of $104 million over the project’s 22.5-year mine life. But since then, mineral sands prices have jumped. Zircon is trading at around $US3200 a tonne and bulk rutile – the most common form of titanium dioxide used to make paint, varnishes, paper and plastics – is selling for about $US1800 a tonne.

Along with strong demand driven by the global recovery, governments around the world are trying to lock in the supply of minerals deemed critical for their future demands, particularly battery materials and commodities required for defence and energy. The Australian government’s list of 26 priority critical minerals includes mineral sands zircon and titanium, plus rare earths.

Like many of these minerals, Mr Graham said demand for zircon and rutile had shot higher after years of underinvestment across the industry. He believes the Coburn project is the biggest mineral sands venture under construction around the world. It secured $150 million from the government’s Northern Australia Infrastructure Facility, one of several schemes set up in recent years to pump billions of dollars into critical minerals.

“There’s kind of a mad rush to bring new projects on, but there’s just not good quality projects around the world,” Mr Graham said. “[And] the lack of supply and the strong underlying demand has basically surprised the sector and the pricing is all of a sudden just red hot.”

Following a site visit to Coburn last month, Shaw & Partners analyst Andrew Hines said the project was set to come online amid a “very tight” mineral sands market, and it had been “exceptionally well managed” to date, noting the use of fixed-price contracts with contractors early on. It has locked in offtake agreements for all the initial production.

Although conceding some help from the commodity pricing environment, Mr Graham said fixed-price contracts were part of the project’s success to date, but ultimately the company’s leaders were navigating WA’s “really hot” mining market by leveraging their years of engineering and construction experience, and focusing on its people and culture.

“We just keep it real and really understand risk profile, and we locked a lot away [prior to final investment decision],” he said.