EDITED BY SARAH THOMPSON AND ANTHONY MACDONALD Iron Ore Holdings (IOH) is dusting off its contact book after striking a deal to buy out an option over its Iron Valley project held by Fortescue Metals Group for $4 million.
The Kerry Stokes-controlled iron-ore developer held talks with Fortescue about alternative deal structures, including a mine gate sale or paying a fee for rail haulage and port access.
In what may not bode well for those looking to pay $US3 billion or more for a minority stake in Fortescue’s infrastructure on hopes of more third parties using it, the economics did not stack up.
IOH will now go back to a list of parties it had met to discuss deals last year before the Fortescue deal was reached, having gained $21 million in the process.
Those are likely to include all of the key players with infrastructure or potential infrastructure in the region, including Rio Tinto, BHP Billiton, Hancock Prospecting and Atlas Iron.
Construction of a $150 million project capable of exporting about 5?million tonnes a year could start mid-year if a partner is found.
At IOH’s larger Buckland project in the Western Pilbara, the board has also kept its search for a joint venture as an internal process, likely to the dismay of investment bankers who were hopeful of an appointment in December.
The $800 million Buckland project could produce 8 million tonnes of iron ore a year that would be trucked to a smaller new port facility at Cape Preston East.
Interestingly, there would be an option for Aquila Resources, whose $7.4 billion project is stalled, to share the port facility if it scaled back its own export ambitions.
Baosteel and Posco, which are involved in Aquila’s project, might be interested in taking a look at Buckland. But so too would other parties such as Glencore and Noble Group.
The Australian Financial Review"
IOH Price at posting:
85.0¢ Sentiment: ST Buy Disclosure: Held
