altas to unveil possible rail jv with qr, page-2

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New rail line plan for Pilbara

Peter Ker
April 26, 2012

THE long-held dream of an open-access railway in the Pilbara is a step closer, with QR National and Atlas Iron believed to be working on a feasibility study into such a landmark piece of infrastructure.

Confirmation of the partnership is expected to emerge in coming days, in a development that could affect numerous landlocked miners in the Pilbara region.

Infrastructure, and particularly access to port, is the rarest and most valuable commodity in the Pilbara, which ranks as the world's most important iron ore province.

Companies with their own railways to Pilbara ports - BHP Billiton, Rio Tinto and Fortescue Metals Group - have guarded their infrastructure, with only Fortescue offering limited access at a very high price.

Gina Rinehart's Hancock Prospecting is also building its own railway to connect its Roy Hill mine to Port Hedland.

Atlas and QR National are expected to spend the rest of this year working on a feasibility study for the railway, which has an initial aim of being able to carry iron ore to port by 2015.

QR National has pegged a possible route between the south-east Pilbara and Port Hedland, and is shaping as the senior partner in any joint venture with Atlas.

Atlas has rapidly increased its iron ore holdings in the south-east Pilbara over the past 12 months, thanks to the acquisition of small companies such as FerrAus and Giralia Resources.

The company now trucks iron ore to Port Hedland from a different set of tenements, but will need rail if it is to develop its assets in the south-eastern Pilbara.

Development of those assets could see Atlas increase its production of about 6 million tonnes a year to about 40 million tonnes.

Atlas management is expected to be quizzed further on the issue when it discusses the company's March-quarter production figures tomorrow.

A price tag of $3 billion to $4 billion has previously been suggested for such a multi-user rail project.

Brockman Resources (controlled by Hong Kong's Wah Nam) and Flinders Mines ( being pursued by Russia's MMK) shape as other iron ore juniors that could benefit from a multi-user infrastructure project in the Pilbara.

Fortescue Metals Group has spent years fighting BHP for railway access, in a battle that is still in the courts.

Fortescue gave Pilbara junior BC Iron permission to use its railway, but forced BC Iron to hand over 50 per cent of its Nullagine project in return for the access.

Read more: http://www.smh.com.au/business/new-rail-line-plan-for-pilbara-20120425-1xlho.html