Mining services company Mineral Resources is close to implementing ambitious plans to develop new transhipment facilities in the Pilbara and in Cockburn Sound to support growth in iron ore exports.
Mining services company Mineral Resources is close to implementing ambitious plans to develop new transhipment facilities in the Pilbara and in Cockburn Sound to support growth in iron ore exports.
After announcing strong growth in interim profit, managing director Chris Ellison said today he expected the infrastructure plans to be implemented in the "very near future".
“My main focus, and where I want to take the business over the next couple of year, is two areas: one is transhipment, and the second is transport to the coast, either by private haul roads or a railway system,” Mr Ellison said today.
“We believe we have got an opportunity to do both of those. We want to start making something happen in that area quite soon.”
MinRes currently exports iron ore through the Utah Point berth at Port Hedland and the Kwinana Bulk Terminal in Cockburn Sound.
Mr Ellison said a transhipping facility, similar to what has been introduced in South Australia, would lead to a substantial reduction in costs and remove the cap on export volumes at the government ports.
“We need to connect with a rail solution or private haul road or both, and we believe we are going to achieve that in the very near future,” he said.
MinRes is targeting iron ore exports of 8 million tonnes in the current financial year but Mr Ellison envisages the new facilities would also export iron ore for junior miners.
“We will be looking to bring multi-users onto those facilities,” he said.
“We also want to share in the prize of getting iron ore into China at a very low cost.”
The company’s ambitious plans could provide an infrastructure solution for aspiring iron ore miners in the Yilgarn, which may see transhipping through Kwinana as an alternative to the long-awaited private development of new export facilities at Esperance.
MinRes already operates the Carina mine in the Yilgarn and is buying new rolling stock to support its operations.
In the Pilbara, MinRes uses private haul roads to transport its ore to Port Hedland.
Two aspiring Pilbara miners – Iron Ore Holdings and Rutila Resources – are working on their own plans for transhipment facilities.
Mr Ellison said Mineral Resources’ expansion plans built upon its unique business model, which combined mining services and direct mining activities.
“We use the production of base commodities as leverage to underwrite and support our infrastructure and ‘build own operate’ business in a very unique way,” he said.
Mr Ellison told Business News the company was looking at transhipping options at Kwinana and in the Pilbara.
“We’re looking at both of them simultaneously; we’ve been moving that along for over 12 months and both of them are highly likely.
“The cost savings are more than enough to get our attention."
He said the most important savings would come from being able to use transhipping to link with Cape size vessels, which carry up to 180,000 tonnes.
Kwinana is currently limited to vessels with a capacity of about 50,000t, while at Utah Point the maximum size is ‘mini Cape’ vessels, which go up to 115,000t.
“We can make (transhipping) viable at Kwinana at 4 million tonnes,” Mr Ellison said.
“Depending on what transhipper we use, they are generally good for five to 10 million tonnes per trans-shipper.”
Meanwhile, MinRes today posted record half-year revenue of $928 million.
Its half-year net profit after tax of $130.4 million represents a 107 per cent increase on the six months to December 2012.
The company’s strong results were driven by a 90 per cent increase in iron ore export volumes from its Pilbara mines, including at Phil’s Creek and Spinifex Ridge.
MinRes shipped more than 5,000 wet metric tonnes in the six months to December 2013, a result close to matching the total amount shipped during the entire 2012-13 financial year.
Margins from the company’s mining services business were driven slightly lower after Fortescue Metals Group took control of processing facilities at its Christmas Creek mine.
FMG bought the Christmas Creek plant from MinRes subsidiary Crushing Services International for about $300 million in the wake of two fatalities at the mine in less than five months.
MinRes expects the exit will have an impact on future crushing volumes.
However the company reaffirmed profit guidance for the 2013-14 financial year, which it has put between $248 million and $252 million.
MinRes said it had repaid $117 million, or 32 per cent, of its total debt in the six months to December.
MinRes chairman Peter Wade said the company continued to improve its financial position and would look to opportunities to grow the business.
“The business now has significant financial and operational resources to develop the strategy laid out for shareholders at our annual general meeting in November and a number of strategically significant opportunities are being considered by the management team to grow the business and shareholder value,” he said.
MinRes shares closed the day's trade 13 cents higher at $11.44.
