KATE EMERY, The West Australian July 7, 2011, 7:26 am
Analysts say Aquila Resources needs to secure up to $3 billion in funding "as soon as possible" to have a hope of beating out Fortescue Metals Group as lead proponent to develop a new port in the West Pilbara.
Bell Potter analysts Fleur Grose and David George weighed into the Anketell Point story yesterday, writing in a report that if Aquila could not convince the WA Government it could fund both its West Pilbara API iron ore joint venture and the port they expected Fortescue would "pounce on the opportunity to drive this project".
Aquila and Fortescue are lobbying furiously to be in charge of developing the port at Anketell Point, which has the potential to rival Port Hedland's.
Lead proponent status is important because it will determine the speed and scope of development. Aquila, the only party to have started work on getting environmental approvals for the port, wants it by early 2014 but Fortescue does not need it until 2015.
Premier Colin Barnett is expected to make a decision within months, although he has not ruled out third party involvement.
"Aquila must progress its funding plans ASAP to secure the lead proponent position," Ms Grose and Mr George said.
"API's weak point is that it has no track record in delivering or financing a major project."
They said cost and time blowouts at the Oakajee port and rail development could favour Fortescue over its smaller rival.
"From the Government's point of view it will be looking to appoint someone it can count on to deliver," they said. "The other port project that the Government has supported is the Oakajee Port project which has failed to deliver on time. From that perspective Fortescue is well-credentialed."
Although Aquila is a junior compared to Fortescue, its $5.8 billion iron ore project is indirectly backed by both China's Baosteel, which owns 15 per cent of Aquila, and Korea's Posco, which has a stake in its joint venture partner.
Aquila hopes to raise its share of financing through $2 billion of debt funding from China Development Bank and $1 billion from asset sales.
On Bell Potter's numbers Aquila could pocket up to $1.5 billion from proposed asset sales, which include Queensland coal projects Belvedere and Washpool and a South African manganese project.
But the clock is ticking: Aquila still needs to convert its memorandum of understanding with CDB into a binding deal - which it hopes to do this month - and the Belvedere sale is being delayed by a dispute with Vale.
