notice received nc, page-73

Hope Downs is a useful case study.

Despite having 400Mt plus of marra mamba and the backing of Kumba (now Anglo) it was going nowhere for a number of years as a standalone project, the rail and port capex were too onerous even for a mooted 20Mtpa project. Hence the negotiations for access to BHP rail system, then the RIO involvement to integrate it through their system when Anglo got booted out of the Hope Downs JV.

So while iron ore prices are considerably higher than say 2004, the capital costs for rail in particular has blown out to around $3M per km. This says to me that short of a 1Bt find that would give a 50Mtpa operation - ie the original FMG concept - that only mine gate sales are possible for orebodies too far from the coast for trucking. Unless FMG does suceed in opening up rail access, but this action will be probably still be paying private school fees for the lawyers in five more years

Which is ok, selling iron ore at the mine gate on a take or pay contract sounds pretty good. Minimal capex, no market risk, no time delay etc. But mainly as UMC is beautifully positioned to play off RIO/BHP rather than be held captive to a singular infrastructure solution. If we find it, they will come.