afr article, page-2

its a few days old but here it is,

Atlas Iron executive Mark Hancock has said a deal to share rail access in the Pilbara is still a long way off, despite pressure from shareholders and suggestions that Gina Rinehart had become a more appealing partner after securing $8 billion in debt funding for her Roy Hill project.

“I think that [Roy Hill] has always been one of the options that we believe has existed,” he said. Discussions were continuing with the “few” parties involved, namely Roy Hill and Fortescue Metals Group, which owned two of the three private rail lines in the region, Mr Hancock said.

“We are not in a position to commit to a timeline, our driver is to do it as quickly as possible,” he said. “But it is a long-term agreement that involves lots of money being spent on the ground, so there is no point in doing it fast and having something that is not sustainable over the long term.”

Shares in Atlas Iron were down about 15 per cent since the start of the year to about 97¢, despite the company posting a $74 million profit after tax in the six months to December 31 last year, up from its $256 million loss in the first half of fiscal 2013.

Considering Atlas Iron is one of the largest iron ore miners not to have rail access to support its Pilbara operations, such a deal would greatly improve its all-in cash costs and would be welcomed by the market.

Last week, Ms Rinehart’s Roy Hill iron ore project officially secured its required $8 billion in debt financing to complete its mining and rail operations at the site.

News of the funding injection prompted speculation that the development would have an adverse impact on the increased export intentions of rival miners BHP Billiton and Fortescue at Port Hedland.

Concerns have also been raised that it might put the squeeze smaller miners like Atlas.

Speaking on the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong, Mr Hancock said he was aware that shareholders wanted an answer on a rail deal, but the company would not rush the decision.

‘DRIVEN BY THE RIGHT OUTCOME’
“There is only a few railway owners that are there and we are trying to join up with existing railway owners, so I don’t think that is a massive stretch to say Roy Hill, but it is among others – it is not an Atlas-Roy Hill discussion that is solely the focus at the moment.”

He said the company was trying to work on a solution that would benefit shareholders and would be reasonable to the other party.

“The quickest and cheapest way to get started is to be able to share something with the other projects because obviously you don’t have to replicate the same infrastructure.”

He refused to be drawn on a time for completing a rail access agreement, but was “hopeful” of a deal in the near future.

“When you’ve spent a billion dollars on your mine, and you don’t have a good rail agreement that supports continued access, then that becomes problematic,” he said.

“We are driven by the right outcome, rather than time. But we do accept that there is an expectation from shareholders and time is not infinite around these things.

“We do believe that it is moving forward and we have definitely made progress. We will do it as quickly as possible.”

Mr Hancock said conversations with BHP were not particularly active because of the mining giant’s tougher stance on allowing third party access to its rail lines.

He said the company had not completely ruled out taking part in independent rail lines, but that the “cheapest way” to move forward was to partner with one of the existing rail lines for access.

Atlas is building its fifth iron ore mine in Western Australia’s Pilbara region. So far, the company has moved all its iron ore by truck on public roads to Port Hedland because it does not have access to a railway line, which will be important to its remote operations.