UPDATE: Australia's Woomera Prohibited Area Opened To Miners

Miners will have a presumption of access to a resource-rich missile testing range nearly as large as Greece in the Australian outback, opening up mineral developments worth up to A$35 billion, under new rules announced by the country's government Tuesday.

The 127,000-square-kilometer Woomera Prohibited Area--the world's largest missile range, built around the site of some of the U.K.'s first atom bomb tests in the early 1950s--is largely closed to the public, although several miners have already made inroads into the zone in the arid outback of South Australia state.

In a joint announcement by the country's defence and resources departments, Australia said the vast area of steppe and desert would be opened more widely to miners, only a handful of whom can currently access the region.

"A new management framework will be introduced to increase use of the Woomera Prohibited Area in Australia's national interest by better balancing national security and economic considerations," said Defence Minister Stephen Smith.

At present, access to the zone is highly restricted. Aboriginal traditional landowners, owners of several large livestock farms, and workers on a handful of permitted mine sites are the only people allowed to enter the region, although others are allowed to cross it on a road and rail line running from South Australia's state capital Adelaide to Darwin in the country's tropical Northern Territory.

"This is certainly an improvement on where we were with the zone," said Johann Jacobs, chairman of IMX Resources Ltd. (IXR.AU), whose Cairn Hill iron-copper-gold mine is located in the north of the zone.

"When we get staff you have to get them cleared and the military is taking in the order of two months to clear people. It's become a huge administrative burden," he said.

The sensitivity of the zone has held back deals in the past. In 2009, Australia's Treasurer forced state-controlled China Minmetals Non-Ferrous Metals Co. to spin OZ Minerals Ltd.'s (OZL.AU) Prominent Hill mine out of its US$1.35 billion takeover of most of the company's assets, citing national security interests. Sichuan Taifeng Group Ltd. was also blocked from taking more than 51% of IMX's Cairn Hill mine in a A$24 million investment last year.

However, the zone contains vast stretches of the Gawler Craton, a geological structure which contains some of the world's major base metals mines, including Prominent Hill and BHP Billiton Ltd.'s (BHP) Olympic Dam mine. Surveys suggest the region has significant reserves of copper, gold, uranium, iron ore, and other industrial metals.

At present, outside parties are only allowed access to the zone with the permission of Australia's Department of Defence. That system will now change, so that in the vast majority of the area, the so-called green zone, the defence department will only have access for 56 days a year.

"New non-defence users should be entitled to a presumption of access in the green zone," a government-sponsored review of the system recommended. "The Woomera Prohibited Area should be opened up to resources exploration to the maximum extent possible."

A small area in the far southeast of the zone will be reserved for full-time defence use, while defence forces will have exclusive access for 70 days and 150 days for two other parts of the zone.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]