Looks like Clive needs to find another partner for the new...

Looks like Clive needs to find another partner for the new port.

Love the comment at the bottom of the third par.


http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=112014

Aquila favours Anketell Point over Palmer port

8th December 2008, 9:15 WST

Aquila Resources has bitten the bullet in its long-standing attempt to convince Clive Palmer to share his proposed iron ore port at Cape Preston in the Pilbara.

Instead, Aquila is targeting Anketell Point, next to Rio Tinto’s massive Cape Lambert port, as the ideal location from where it hopes to ship its hematite sometime next decade.

Although the Anketell option will require a longer railway linking Aquila’s West Pilbara deposits than the one to Cape Preston, and of course there’s the cost of a stand-alone port, Tony Poli’s company has decided that enough is enough, and that if it waited to strike a deal with Mr Palmer it would probably miss the next five resources booms.

Aquila and its US joint venture partner, AMCI, hope to have a definitive feasibility study (DFS) on its $4.1 billion mine-rail-port project completed by the middle of next year.

So far the partners are reluctant to flag a first-ore-on-ship target but then again there’s a lot of water to flow under the bridge before that happens.

The iron ore market should look far better by the time Aquila’s DFS is completed. Most analysts expect Chinese demand for the steel-making commodity to pick up by late 2009, while there is evidence the country’s iron ore stockpiles are gradually being whittled away.

That is not to underplay the challenge Mr Poli will face in trying to finance his project. And although all efforts between now and the DFS conclusion will focus on Anketell, the door has been left ajar should Mr Palmer have a change of heart — or should Rio, whose Cape Lambert railway line runs across Aquila’s deposits, express an interest in Mr Poli’s company.

After all, Rio waited until the eleventh hour to stitch up a deal with Gina Rinehart over Hope Downs (in the process sending Anglo American offshoot Kumba Resources packing) and took over North to snuff its rival’s railway access claim as well as double its Pilbara infrastructure network.

At the moment Rio is tagged as financially distressed and widely expected to shelve its own $14 billion Pilbara expansion program.

Any takeover of a junior like Aquila, therefore, would seem fanciful at this stage. There is another potential benefit to Anketell that offsets the higher cost when compared to the Cape Preston option.

Andrew Forrest was also eyeing Anketell as a second port before China’s iron ore crunch really hit and scuttled Fortescue Metals Group’s aggressive short-term growth pipeline.

A co-tenant at Anketell with Fortescue would reduce Aquila’s capital costs, while the other unknown is whether Mr Poli’s company even needs to budget for its own railway, given the various regulatory demands that Rio and BHP Billiton open up their lines to third parties.

Two things are for certain: Aquila’s DFS team will be flat out trying to crunch all the variables into their study. And Mr Poli won’t rush into any deal with Aquila’s shares at $3.20, compared to almost $17 four months ago.