fmg to sell at gate to bhp

FMG looks to BHP over Mindy Mindy

JOHN PHACEAS


Andrew Forrest's Fortescue Metals Group may be forced to strike a supply deal with BHP Billiton over the stranded Mindy Mindy project, potentially derailing the aspiring miner's campaign to force its way on to the Pilbara giant's Newman railway.

Fortescue admitted yesterday it would consider a deal with BHP Billiton after Mindy Mindy manager Consolidated Minerals said a deal to sell ore to the mining giant "at the mine gate" was now its preferred option.

The Mindy Mindy project, which lies about 50km from the nearest BHP Billiton rail siding, has formed the basis of Fortescue's push to have the National Competition Council force BHP Billiton to provide third-party access on the Newman line.

Mindy Mindy is considered too small to support the cost of its own railway, so Fortescue has lobbied the NCC to declare the Newman railway a service under the Trade Practices Act in order to force BHP Billiton to open its Pilbara rail network to other users.

But in an apparent split in the joint venture, outgoing ConsMin managing director Michael Kiernan told WestBusiness a deal with BHP Billiton might be the best way to ensure the timely development of the project.

"What I want to do is get that business up and running as soon as possible and the only thing stopping me is access to a railway line," he said. "Once we get access to a railway I reckon we could bring that online within 12 months."

Though Mindy Mindy was a 50-50 venture, Mr Kiernan said ConsMin had the power to decide what was the best means of taking the project forward.

"ConsMin is the operator, and my charter says quite clearly that if it's in the best interests of the joint venture, we have the authority to go ahead," he said.

Fortescue operations director Graeme Rowley denied any split between the Mindy Mindy partners, but said he was surprised by Mr Kiernan's comments given BHP Billiton had declined a similar approach 18 months ago.

Nonetheless, Fortescue was open to any deal that could fast-track development of the Mindy Mindy project.

"We would always be open to commercial approaches from BHP or anyone else for that matter," he said.

"If BHP came to us tomorrow with a proposal to take our ore we would obviously have to consider it and take it to our board and our shareholders."

A BHP Billiton spokesman declined to comment yesterday, saying only that talks with current and potential partners were confidential.

But BHP Billiton iron ore president Graeme Hunt told the AJM iron and steel conference last week that mine-gate supply deals or similar joint venture arrangements were a far more cost effective means of securing access to rail infrastructure for stranded deposits than lobbying the NCC.