fmg rail sale, page-2

Everyone appears to be pinning their hopes on the FMG announcement (due before June 30) who will be the buyer of 40% of their rail and port infrastructure. I hope I am wrong but I don’t think there will be any mention of FMS when this announcement comes. I can’t see this announcement of any immediate value to FMS.
Why would FMG muddy the waters by trying to include a competitor (FMS) in their negotiations? The fact is when FMG ramps up their production to 155m tonnes this will almost fully utilize their (mainly) single line track. To haul 155m tonnes is approx 28 trains per day, 365 days per year, allowing empty return trips…i.e. a train every 50 minutes. Add to that the ore from Atlas which is part of the deal. The fact is the FMG rail will be used to capacity without FMS ore.
The only way to increase capacity further would be to duplicate the remaining 160km of track (FMG is currently duplicating 120km of track).
So who is going to fund the duplication and pay for the rollingstock (FMG has approx 25 locos + 1500 ore wagons which it will use to full capacity). So $billions of dollars are going to be needed to purchase rollingstock and duplicate the remaining single 160km line plus extend a single spur line to FMS mine (about 20km). Remember FMG are selling a 40% share now to pay down debt. FMG will still own 60% of the infrastructure and either Temasek, Noble or Canada pension fund the remaining 40%. What is certain is that FMG are not going to put $billions of dollars back into an infrastructure upgrade that will only benefit a competitor.
All that FMS can hope for is that post this announcement they can sit down with FMG and the 40% owner and discuss how the infrastructure upgrade can be achieved. But funding will, in my opinion, have to be sourced through FMS and/or FMS strategic partner. This could take months to negotiate.
The forthcoming announcement will be a step forward but will not be the immediate infrastructure answer that FMS needs IMO.