morgan ball on brockmans rail plan

From The Australian
http://www.theaustralian.com.au/business/companies/miner-casts-doubt-on-aurizons-pilbara-rail-project/story-fn91v9q3-1226674525963

BC IRON chief executive Morgan Ball has cast doubt on plans by Brockman Mining and rail operator Aurizon to develop a new rail network through the Pilbara, questioning whether there are sufficient resources to support such a development.

Speaking at the company's Nullagine mine in Western Australia's Pilbara region, Mr Ball queried whether Aurizon could find enough partners with large enough deposits to justify a major investment.

"I think you've got to go back to the source and I'm not sure there's enough tonnes to justify a stand-alone third-party network at the moment," Mr Ball said.

Brockman and Aurizon have been exploring the potential development of a new multi-billion-dollar rail and port development that would support Brockman's proposed Marillana iron-ore mine and, potentially, other miners.

The pair took a step towards solidifying their relationship on Wednesday, signing a three-year exclusivity agreement that would see Brockman use Aurizon rolling stock in the event it finds a transport solution.

Brockman yesterday announced its second alliance in as many days, declaring that it would work with fellow Pilbara junior Flinders Mines to explore opportunities, including potentially working on infrastructure and transportation solutions.

Brockman said it signed a non-binding memorandum of understanding with Flinders and the two companies would form a working group to discuss the sharing of contractor costs and other issues.

Both companies have also applied to WA's Economic Regulation Authority in a bid to win access to Fortescue Metals Group's railway line for haulage.

However, uncertainty surrounds the role Atlas Iron will play in any infrastructure tie-up in the Pilbara. Atlas, which has one of the largest ore reserves outside of the Pilbara's major iron ore miners, had previously agreed to study a broader mine and infrastructure agreement with Aurizon and Brockman, but was conspicuous by its absence from Wednesday's announcement.

Mr Ball said he expected Atlas to be critical to the outcome of the plan. Atlas is talking to both Fortescue Metals Group and Aurizon about potential infrastructure access. In addition, Fortescue's proposed sale of a stake in its infrastructure assets, called TPI, could open up another rail option.

"The big swing factor there is what Atlas (Iron) is doing. I'm not privy to what (Atlas chief executive) Ken (Brinsden) is planning but clearly he is talking to Fortescue, he is talking to Aurizon.

"If Ken ends up with an infrastructure solution through TPI in some way, I can't see Brockman alone supporting Aurizon," Mr Ball said.

BC Iron has been in production at Nullagine since 2010, having found a solution to a lack of infrastructure by partnering with Fortescue Metals Group. Fortescue took an initial 50 per cent stake in Nullagine in return for allowing BC Iron access to its infrastructure.

The plans for a new rail network face the added challenge of an increasingly uncertain outlook for iron ore prices.


As Morgan said previously, a co-operative approach will achieve more than an aggressive one. I can see AGO doing a deal with FMG. Possibly by buying into TPI. Maybe BCI will be involved somehow.

I can't see the FMS/BCK agreement getting far.
FMS is desperate to start mining but will have to do some sort of deal to make things happen. Having only $6m in the bank limits their options.
After the Wah Nam/BRM fiasco, anyone getting involved with BCK would need to be very cautious.