Understandable given the resources tax, but there has been no acknowledgement (other than today's green finish) of DF's success in finding a solution to FMG's refusal to allow port access. It's not a perfect answer but it buys AGO some time before Utah is ready to go. DF nine times out of ten comes up with a solution.
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Iron ore miner Atlas finds a new route to market
Sarah-Jane Tasker From: The Australian May 06, 2010
PILBARA iron ore miner Atlas Iron has secured new port access after Fortescue Metals Group put the brakes on the company using its infrastructure.
Fortescue, the self-proclaimed third force in iron ore -- which has been battling majors Rio Tinto and BHP Billiton for access to their infrastructure -- has told Atlas it could not ship through its Anderson Point facility because it had capacity constraints.
Atlas had previously secured an access agreement with Andrew Forrest's Fortescue Metals Group to utilise its port until the new Utah Point facility in Port Hedland was opened later this year.
The miner said yesterday that the Port Hedland Port Authority had granted it permission to make additional shipments between June and September 2010.
Atlas will export up to one shipment of around 60,000 tonnes per month, during this period. The combined tonnage available to Atlas in the next four months is expected to be up to 240,000 tonnes.
Managing director David Flanagan said the approval from the Port Hedland Port Authority did not represent an increase in tonnage on what it had planned to ship through Fortescue's port.
"We could have shipped half a million tonnes through Fortescue's port," he said.
Mr Flanagan said the agreement is still open with Fortescue, and the third force in iron ore still had an obligation to provide Atlas with capacity if they had it.
Fortescue's market guidance is to ship 40 million tonnes and the port capacity is for 55 million tonnes, which the miner has said it plans to reach.
Mr Flanagan said that even after allowing for the modest additional costs of using smaller ships through the new arrangement, the company expects to generate strong operating cashflows.
"With the current high iron ore prices, every tonne we can get into the market will capture current high prices and make a big difference to our bottom line," Mr Flanagan said.
The company said yesterday that it was continuing to seek clarification as to the extent and duration of the capacity constraints at Fortescue's Anderson Point facility and will take advantage of additional exports through that port when capacity is available. Atlas will continue to stockpile its ore ready for the new Utah facility, which it expects to be exporting from by October.
AGO Price at posting:
$2.31 Sentiment: LT Buy Disclosure: Held
