So much promise really turned out to be so much propaganda.Some...

So much promise really turned out to be so much propaganda.
Some of his spiel and claptrap would make the SS envious.

Sadly this is not an episode of "Hogans Heroes"
After three promising years I feel like Schultz.

"I know nuzzing!!"

.............................
rio-bhp iron ore merger a boon for small miner

A merger of the Australian iron ore mines of Rio Tinto and BHP Billiton could open their prized rail networks to smaller miners and pour millions of tonnes of ore into the world's supply pool.

Rio and BHP have so far refused to share rail lines, citing lack of spare capacity, but faced with stiff regulatory checks by the European Union and the Western Australian government, they will want to appear competition-friendly.

A growing army of small Australian mining firms hopes to capitalise on such a concession when the merger eliminates duplication and frees up capacity for third parties to haul ore.

"With access to a rail line, these guys have viable mines," said DJ Carmichael & Co analyst James Wilson. "Without it they've got nothing."

Rail access would justify developing the junior corps' own stagnant deposits spread over half a million square kilometres of the Pilbara iron ore belt, many drilled and ready to go and capable of yielding 50 million tonnes a year by 2013.

"The Pilbara is incredibly endowed with iron ore, so much of it not yet exploited," said Graeme Rowley, executive director of Fortescue Metals Group Ltd , Australia's third largest iron ore miner.

"By unlocking the rails to everyone, the balance of world supply would move much more in favour of Australia."

Iron ore regains momentum

Iron ore, after a brief hiatus, is gold again for anyone who can dig it up and get it on a ship, preferably bound for China, whose strong appetite for imported ore was not blunted by the global financial crisis.

For the first eight months of 2009 imports rose by a third to 405 million tonnes from a year ago, China's customs figures for September show. Goldman Sachs predicts demand will only get stronger as more rural areas are industrialised and the need for steel goes up.

Prices recoiled between 33 and 44 per cent in the shipping year ending March 31, 2010 as the global financial crisis took hold, but forecasters now expect a resumption in annual price hikes as steel mills crank up production again.

The biggest anti-trust hurdle facing the Rio-BHP joint venture is the European Commission, which aired concerns last year, when BHP was trying to take over Rio, that the combination could lead to higher prices and less choice for customers.

"If Rio and BHP really want to show regulators they are serious about competition and not pursuing a monopoly, the best way to do this is by providing rail access to the junior miners," said Mr Wilson.

"They'd have a much better chance of getting it through."

Overtaking Vale

If the merger goes through, by next October BHP and Rio combined will be mining more than 350 million tonnes of ore, overtaking current top producer Vale of Brazil.

That is more than a third of global seaborne trade in iron ore and about two-thirds of top buyer China's total imports. No wonder China's Ministry of Commerce said the merger displayed the "obvious colour of monopoly" and the World Steel Association also expressed strong opposition.

The smaller miners collectively sit on more than a billion tonnes of reserves, though less than 30 million has been mined -- most from just one company, Fortescue Metals, the only firm besides BHP and Rio to build its own rail network.

That's not enough to influence world pricing of ore, a fact unlikely to be lost on Rio and BHP.

"These guys are accustomed to sitting at the negotiating table knowing full well they, and they alone, control supply in the Pilbara," said a former Pilbara mining executive familiar with the annual price negotiations held with major steel mills.

"The prospect of having to factor in a hundred or so million more tonnes from third parties would not sit well with them," he said on condition of anonymity.

A lasting solution

Two years ago producers Atlas, BC Iron, Brockman and FerrAus banded together in the Northwest Iron Ore Alliance, to create or win access to shared shipping infrastructure in their districts.

Getting BHP and Rio to open up rail lines "was critical to finding a lasting solution to mining in the Pilbara," said Derek Humphry, chief financial officer of Brockman Resources , because laying new railtrack over thousands of kilometres, at a figure Fortescue puts at $3 million per km, would be exorbitant.

A lack of berths to load ore onto freighters has also dogged efforts to develop new Pilbara mines, though that is changing.

A public access inner harbour berth being built at the Port Hedland iron ore terminal's Utah Point will have a capacity of 18 million tonnes per year in vessels ideal for smaller miners. Atlas Iron and Moly Mines have already committed to using Utah Point when it is operational next April.

Two additional inner harbour berths are so far reserved for Atlas, Brockman, BC Iron and FerrAus .

Fortescue, which has already built its own terminal, has agreed to haul to port an initial 1.2 million tonnes of ore mined by BC Iron, increasing to 5 million, and is in talks to share its rail lines with Atlas. The 50 million tonnes of annual output targeted by the alliance would generate about $200 million a year in state royalties. Fortescue's initial target of 55 million tonnes added to that will increase output from the Pilbara by a third.

Rio and BHP acquired or built their rail lines decades ago when few were mining the Pilbara and are just as reluctant to share now as then. But if opening them is the price they have to pay for their merger, they are likely to do it.