must read iron ore hopeful news

US-based iron ore miner Cleveland Cliffs says there is no chance of any iron ore developer establishing a pellet plant iron ore operation in Western Australia in the next five years.

Joseph Carrabba is president of Cliffs, which owns 80 per cent of WA iron ore miner Portman Mining, told reporters on the sidelines of the annual Diggers and Dealers mining forum that industry pressures would delay all projects.

"Capital equipment is just so hard to procure, if you just look at a few long lead time items, if they aren't already ordered and put the time into build them, find the people to erect and construct them .... it's just hard to construct a timeline that would suggest anything different," he said.

"I think eventually in the mining industry everything gets up as long as prices stay high."

Mr Carrabba's comments directly affect a number of junior developers hoping to establish iron ore mines and pellet plants in the next few years.

Gindalbie Metals plans to develop the $720 million Mt Karara magnetite deposit with a plant by 2009, while Midwest Corp Ltd has outlined the development of the $1 billion Koolanooka magnetite deposit by 2010 at the earliest.

Private outfit Mineralogy Pty Ltd is also working towards mining the $1.4 billion Fortescue magnetite deposits, which would include constructing a pellet plant.

"We have very realistic views of what it does cost to get these projects off the ground having done a number of them ... and also the operating costs that it takes to manage them," Mr Carrabba said.

"It's just going to be a very difficult environment to get these big projects over the line in a period of time that is reasonable."

Despite his pessimism about the ability of the juniors to get these projects off the ground, Mr Carrabba said his company kept an active watching brief on the Australian iron ore industry.

"We would like to have another asset in Australia - it's a fantastic place to be," he said.

"But they are very expensive assets as it stands right now, it's risk and reward."

He said he expected iron ore prices, which increased by 19 per cent this year, would be stronger next year with China continuing to drive demand and supply battling to meet it.

Outside of iron ore Mr Carrabba signalled an interest in buying a coal mine in Australia, saying the bulk commodity was a good fit with its existing portfolio.