Peter Kerr, The West AustralianUpdated May 10, 2012, 2:20 am
Juniors seek port certainty
Atlas Iron chairman David Flanagan has warned junior miners will struggle to fund the vital South West Creek expansion at Port Hedland by 2015 unless they get long-term certainty over their leases at the harbour.
Despite winning backing from Premier Colin Barnett yesterday in their battle with the port authority - which has floated plans to cut the junior miners' allocated space from 50 million tonnes a year to 35mtpa - Mr Flanagan said the equally critical issue of the lease conditions at South West Creek had yet to be resolved.
"The negotiation that is ongoing right now (with the port) is around lease terms and conditions of the lease," Mr Flanagan said.
"There has been talk around who can access the facility and those sort of things, and that is all part of it. But if you were a financier who was looking to finance that facility (you would need to be sure) . . . we had all of the same levels of flexibility the other proponents have got in terms of managing their facilities.
"If we don't get that we are at a competitive disadvantage and we are already facing some seriously capable organisations in seeking to keep us out of the market to maintain their dominance."
As _WestBusiness _reported on Tuesday, the port wants the North West Infrastructure partners - Atlas Iron, Atlas subsidiary Ferr-Aus, and Brockman Resources - to cut their annual allocation at South West Creek from 50mtpa to 35mtpa.
A desire to free up capacity for future potential industrial projects at the nearby Boodarie industrial estate is said to be behind the authority's push.
Further complicating negotiations is whether valuable port capacity would be transferable or revert to other junior miners in the event a company such as Atlas was swallowed by a major miner such as Fortescue Metals Group.
Against this there is a recognition financial backers of NWI would need to be able to on-sell the capacity as security in the event of a corporate collapse - as long as other junior miners were given pre-emptive rights to take the space.
The port also wants the junior miners to relinquish their South West Creek port space in as little as a decade after it is built, and join BHP if the global resource giant proceeds with its $22 billion outer harbour proposal, to free up room for future producers.
However, the NWI partners have argued this would undermine the financial viability of the berth, and potentially a fourth rail line in the region backed by QR National and Atlas that could throw a lifeline to other junior miners.
Mr Barnett yesterday backed his Transport Minister Troy Buswell, who has been adamant that the authority would not be allowed to cut the amount of port space allocated to junior miners.
"We are very determined to make sure there is room in the port for some of the smaller emerging iron ore producers," Mr Barnett said. In response to questions whether BHP or FMG, who retain seats on the Port Hedland board, could be behind the push, Mr Flanagan said: "If you wind back the clock to 2005 when Twiggy (FMG's Andrew Forrest) was doing what he was doing, there was a mountain of opposition and all sorts of things were done to block him in places by pretty much all of the incumbents."
AGO Price at posting:
$2.51 Sentiment: Buy Disclosure: Held
