Australian Gold Reagents


Australia Gold Reagents (AGR) is jointly owned by Wesfarmers CSBP (75%) and Coogee Chemicals (25%).

Australian Gold Reagents (AGR) manufactures sodium cyanide in liquid and dry form at Kwinana in Western Australia with a production capacity of about 65 000 tonnes of sodium cyanide (on a dry weight basis). Sodium cyanide is supplied in liquid solution (30 per cent solid) and more recently now in solid. The raw material ammonia is supplied by Wesfarmers and caustic soda by Nufarm-Coogee. Though  more than twice the bulk of the dry form and hence more expensive to distribute, it is generally more competitive by avoiding additional equipment and drying costs. Liquid cyanide was considered by the West Australian Environmental Protection Authority to be more hazardous to transport and until 1996 in Western Australia it was required to be moved by rail. Without railway access, some locations were for a time compelled to use the imported dry form of cyanide.

In 1998 a A$30m expansion doubled production to 70 000 tonnes per year by plant duplication. 

In September 2001, the EPA approved production of 25 000 tpa of the solid form.

Prior to the AGR expansion, Orica indicated an interest to establish a 30 000 tpa plant at Kalgoorlie (Mungari Industrial Park) (Kalgoorlie Miner, 28 Sept. 1996 but shelved in February 1998 [together with a xanthate plant]. It involved a $25m ammonia import terminal in Esperance.). Given such a plant would require around 1 petajoule of gas provided by the new Goldfields gas line, it would (by ACTED calculations) incur a pipeline overhead charge penalty of around $70 per tonne of cyanide compared with its competitor AGR at Kwinana. The freight saving of regional manufacture would be further offset by having to freight the caustic soda and ammonia to Kalgoorlie at around $100 per tonne each (say $160 per tonne of cyanide produced).

Reflecting international scales of production and technology, quality is equal to imports with prices at import parity. Liquid cyanide, though cheaper to produce than solid sodium cyanide that advantage is offset by higher transport costs, and is generally priced by AGR to be competitive with the dry (ie. imported) form on an into store basis. Cyanide prices in Western Australia during 1995 ranged from $1 300 per tonne to $2 800 tonne depending on form, size of packs and size of orders. Liquid cyanide prices tend to be about $100 to $200 per tonne cheaper than dry cyanide (ex factory dry weight basis). Offsetting that advantage is the additional cost of freight and specialist equipment required to receive and dispense. However, the additional transport cost has its limits so that dry form is more economic if freighted more than about 1 000 kilometres inland. Accordingly, the rail head near the gold producing area around Kalgoorlie is dominated by liquid cyanide produced by AGR while more distant locations tend to use cyanide from Australia's other two producers, ICI and Ticor in Queensland (and some imports from overseas suppliers such as Degussa). In other words, AGR can readily set the ex factory price to maximise income and market share currently supplying about one-half the West Australian market.

It was fortunate for AGR that its competition chose to establish in Queensland - a decision that now provides a substantial local market advantage. AGR can now expand its market with liquid (or dry) cyanide. Although its raw materials and energy requirements are at or above international prices, but with no other source of competitive advantage, domestic and international transport cost savings provide a substantial advantage.