Dapto Smelting Works
Dapto Smelting Works, also known as Lake Illawarra Smelting Works, was a smelter for base metals and gold-bearing pyrite and telluride ores, at modern-day Kanahooka, near Dapto, New South Wales. The smelter operated, from 1897 to 1905. It also produced sulphuric acid, some of which it used itself as a reagent. The smelter was established and first operated by Smelting Company of Australia Limited. From 1902, the smelter was owned and operated by another company, Smelting and Refining Company of Australia Limited, until that company went into voluntary liquidation, in 1905. The relocation of smelter operations, to Port Kembla, by then owner Australian Smelting Company, was abandoned in 1908, and was not revived by its successor Australian Smelting Corporation. None of those four companies should be confused with, Electrolytic Refining and Smelting Company of Australia Limited, which operated a copper smelting and refining plant at Port Kembla, from 1908. Australian Smelting Company, as referred to here, should not be confused with the nearly identically-named company, Australian Smelting Company Proprietary Limited, that earlier had operated a smelter at Dry Creek, South Australia.
In the years when the Dapto Smelting Works operated, the area where it was located—now Kanahooka—was sometimes referred to as 'Lake Illawarra', but that should not be confused with the modern-day suburb of Lake Illawarra, which is on the opposite side of the lake, to the south of its entrance.
Historical context
British capital investments in Australia
In the two decades prior to the outbreak of the First World War, British investors were seeking opportunities, outside the United Kingdom. The smelter was one of a number of large investments made in Australia. Such investments, in New South Wales, included Great Cobar mine, British Australian Oil Company, Commonwealth Oil Corporation, Mount Boppy Gold Mine, and the Prince of Wales Mine. A few, such as the Sons of Gwalia mine in Western Australia, were long-lived, fabulous earners, and others like the Mount Boppy were highly remunerative. However, some were financially unsuccessful, and lost their shareholders' investment. The various ventures which controlled the short life of the Dapto Smelting Works were among the failures.Smelting site choices and 'the sulphide problem'
Australian base metal mines in the 1890s faced a dilemma over where and how to smelt their ore. The dilemma could be stated in simplistic terms as, 'bring the fuel to the ore or the ore to the fuel'. Essentially, it was a choice between smelting ore at the mine site or at a port or coastal location, especially one near coal mines. John Howell, later a key figure in the Dapto Smelter was an exponent of 'bringing the ore to the fuel'.The simple ore concentration methods of the 1890s—manual 'picking' and gravity separation—resulted in large amount of gangue material in ore destined for smelting. When smelted, the gangue was separated as slag. Water jacket furnaces were capable of handling large volumes of slag; that made mine site smelting of lower-grade ore seem more viable, provided the mine had a long-enough expected life to justify the capital cost of a smelting operation and the ore was suitable. It was not until the following decade that the development of the froth flotation process, would emphatically alter the balance away from the mine site smelting. Separation using froth flotation, at the mine site, produced high-grade ore concentrates, with much less gangue content, making it more economic to 'bring the ore to the fuel', or even to sell the concentrates to an overseas smelter.
Also during the early 1890s, most mines at Broken Hill were encountering massive quantities of lead-silver-zinc sulphide ore at deeper levels; that type of ore was more difficult to treat profitably, a metallurgical conundrum referred to as 'the sulphide problem'. It appeared that no one process would be a suitable solution, but instead a combination of processes might be effective. The cost of a specialised smelting plant at a mine site was not economic for smaller mines, especially if the ores needed prior 'wet treatment' using chemicals, such as sulphuric acid, and large volumes of water.
In the later half of 1895, reportedly, there was only limited treatment of sulphide ores, in Australia, with much of it being shipped overseas.
Gold ores - pyrite, sulphide, and telluride ores
typically occurred as native gold in a quartz matrix, but sometimes occurred associated with pyrite and sulphide ores of other metals such as copper. In the 1890s extracting the gold from such an ore was often not economic for a small mine. Further, the presence of some metal compounds, such as those of lead and copper, in an ore could prevent use of newer gold-recovery methods such as the cyanide process. Ores would be sent to specialist smelters to recover the gold content, such as Cockle Creek smelter and, once it opened, to the new Dapto Smelting Works.The Kalgoorlie gold fields of Western Australia encountered another problem, a telluride gold ore, calaverite. In the earlier stage of gold mining, the mineral had been discarded—it resembled iron pyrite, or fool's gold—and was even used for making roads. By 1896, it was recognized as being a rich gold ore. Treating the telluride gold ore, if it could be done profitably, would vastly increase gold production.
In the 1890s, the first stage of the treatment to recover gold from telluride ores involved roasting the ore, which caused the tellurium to form tellurium dioxide leaving a crude form of gold metal behind. The gold metal could then be extracted and refined. Given the value of the gold, it was more economic to 'bring the ore to the fuel'. The treatment of pyrite gold ores also involved an initial roasting of ore. By the 1890s, wet chemical processes such as chlorination and, later, the cyanide process were becoming effective ways of extracting gold from the roasted pyrite or roasted telluride ores.
Business model
The concept underlying the planned operation of the Dapto Smelting Works was set out in a newspaper interview given, in September 1896, by the first general manager of the Smelting Company of Australia, John Howell. He stated that the lesson of Broken Hill had been that it was cheaper to 'bring the ore to the fuel'. Howell stated that the primary objective of the new plant was to smelt zinciferous lead sulphlde ore from Broken Hill, and to also recover its hitherto troublesome zinc content. He also clarified that, while it was expected that much of the ore would come from Broken Hill, it was envisaged that the new smelter would take ore of various base metals from other sources, allowing continuous operation of the plant and economies of scale.Howell summarized the anticipated business model of the Dapto Smelting Works, as follows, "You may have the countryside dotted with sulphlde mines, but for them to be worked at a profit, there must be disassociation of the mining from the metallurgical portion of the business.That is the basis of our scheme. We separate mining from the treatment of the ore. We say to the miners all over New South Wales, 'Produce as much base ore as you like. We do not care what it is. We are not particular as to quantity. We will take flve-ton lots, or 50,000-ton lots. You bring the ore to the surface. We will sample it and assay it, and pay you at a specified rate in proportion to the quantities of metals which it contains, and according to the distance which it has to be conveyed by rail or water. You will have a sure purchaser and prompt payment'."
Working capital and ore purchases
For purchasing the ore a venture using that business model would need a very significant amount of working capital. Further, the venture was critically-dependent on its own ability to sample and assay the ore—with a sufficient level of accuracy—and to have facilities that would efficiently process a wide range of potential feedstock. There was also a potential exposure to downside movements in base metal prices, before the final product was sold.Rail and sea transport
The smelting works at Dapto was planned to have connections by both rail and sea. It was connected to the railway network, located close to well-proven sources of metallurgical coal and gave ready access to fluxes, such as limestone and iron ore, shipped by rail. However, it was built in anticipation of the development of a deepwater port on Lake Illawarra, but that port development never materialized. Unexpectedly, the venture would be totally dependent upon rail transport. The Broken Hill lead-silver-zinc ore intended to be the mainstay of the planned production could only be shipped by sea from South Australian ports and then transshipped from a sea cargo to rail, at a relatively distant port, such as Sydney or Newcastle. At that time, there was not yet a railway line to Broken Hill from the New South Wales side and Port Kembla was not yet developed to receive cargo. Dependence on rail freight also limited the smelter's ability to treat low-grade ores, due to freight costs.The distance from working port would disadvantage the Dapto Smelting Works, relative to the Cockle Creek Smelter, owned by Sulphide Corporation, a company floated around the same time as Smelting Company of Australia. The Cockle Creek smelter commenced operation around the same time as Dapto, and also sought to process lead-silver-zinc ore from Broken Hill. After some initial difficulties, the Cockle Creek smelter operated profitably for many years.
One of the original directors of the Smelting Company of Australia, Mr T.A. De Wolf, later stated, during a select committee hearing in late 1898 that, "If it had not been for the intention to construct that harbor, the present site would not have been chosen for the smelting works." Paradoxically, from 1889 until 1894, de Wolf had been a founding director of Illawarra Harbour and Land Corporation—the company which failed to construct the port, over the period from 1889 to 1902.