I make it a rule to not post on threads where I don't hold a stock. Mainly because some may see it as impolite and also because I know I'll be ganged up on if the post is negative. So I've just broken my own rule.
At the moment trucking is restricted to Port Hedland at 6Mtpa for Iron Ore. 60,000 trucks a year, (100t each truck). AGO is the only miner currently trucking to Port Hedland - Anderson(FMG). There's ultimately only so many trucks that can pass through the township, although Utah should alleviate some of the congestion. However the chances of BRM trucking it's Iron Ore to Port Hedland would be seen as almost impossible for the above reasons unless future circumstances change.
There's a cue of other miners such as GIR who are wishing to truck to Port Hedland as well.
There's also the question of how deeply the 10 to 13 cent per tonne, per Km (Depends on trucking demand through the Pilbara, on what the real cost will be) cost of trucking would cut into margins. (Memory) BRM is over 300Km away from Port Headland which equates to a cost of over $30 a tonne just for trucking.
BRM's only way to get the IO to the port is BHPB rail. The chances of BRM entering a MoU with FMG would be seen as very remote at present. Obviously the close proximity of BHPB rail to BRM makes it the obvious candiate. Rather than trucking ore to a newly completed Christmas Creek (FMG) rail head. Or the current Cloud Break (FMG) rail head (Unlikely).
At the 2009 "Diggers and Dealers" Conference, BHP made it quite clear to a half stunned audience that they would fight third party rail access all the way. In a recent newspaper article the QC representing BHPB in their current court case had this to say,
"BHP counsel Alan Archibald QC said third-party access, if granted, would start in 2014 at the earliest, and that was in the extremely unlikely event there was no appeal".
Even if BHPB was forced to give over access by the W.A Government there's question marks as to what limits will be placed on Third parties. With FRS and BRM looking at a combined 30Mtpa target. It would be very hard if not impossible for the W.A Government to force BHPB to give over 10% of their capicity to third parties. FMG could only find 20Mtpa of spare capacity on BHPB rail in the recent court case. With FMG wanting space for Mindy Mindy as well. It's not certain that BRM will receive it's 17Mtpa. Even if BRM wins the court case and BHPB DON'T appeal the decision. There's also the question of FRS and the capacity they are wishing to obtain as well. Ultimately with BHPB's current expansion, there's a real possibility that BHPB will infact be at full capacity by 2012. And to my understanding, BHPB doesn't need to give third party access if they are at full capacity.
The other thing to consider is that even if BRM obtains third party access, and BRM is on BHPB rail. BHPB could make it so hard for BRM logistically regarding train availability, that BRM may not meet it's 17Mtpa target. Even if it's BRM's intention to do so. Ultimately that is BHPB's decision on how "nice" they wish to play.
There's something that is also missing when BRM posters do a quick comparision between FMG and BRM. FMG has a Multi -Billion Dollar Rail/Port Infrustructure system. Guys, I'm sorry to say, until you receive a Infrustructure deal for rail/port, you've just got a pile of dirt in the Pilbara.
Please no offence meant. This is only my opinion. At the end of the day I don't hold BRM so don't know the in's and out's as well as those who have invested in the company. I'm only placing a different point of view.
When I read, "we might eventually see production approaching FMG's current level of 40 million tons".
I have to ask you, on WHO'S RAIL?
It's probably best I don't reply to this post.
Good luck to BRM holders, I hope it works out for you.
BRM Price at posting:
$3.70 Sentiment: None Disclosure: Not Held
