Atlas targets ore opportunities

Atlas Iron managing director Ken Brinsden told a business forum in Perth today the big mining houses’ practice of locking-up resources in the Pilbara was depriving smaller miners of development opportunities.

The big miners, Mr Brinsden said, would never develop many of the smaller resources under their control because it was unviable to do so; Atlas Iron, however, was ideally placed to exploit such resources, he said.

Atlas, which currently produces just more than 10 million tonnes per annum from four mines, has a fifth mine under construction and has targeted production of 15mtpa in the near future.

This is compared with the big miners’ annual targets of 360mtpa for Rio Tinto, 270mtpa for BHP Billiton, and 155mtpa for Fortescue Metals Group.

Mr Brinsden, speaking at an American Chamber of Commerce in Australia event today, said the key to Atlas’s growth was its scale of business and keeping low capital costs.

“In Australia, developing any industry it should include operators at a small scale, operators at a medium scale and operators at a large scale,” Mr Brinsden said.

“For the first 40 years of the Pilbara’s life, realistically, the businesses were medium or very large, and of course the global majors have a big presence there.

“Now I think that, in essence, is unhealthy. There’s lots of by-products that fall away from that, that aren’t necessarily good for WA, or good for Australia.

“Our contribution was to develop those smaller resources that were never going to be touched by the global majors because they just can’t operate at that scale. And in a sense that’s the opportunity that Atlas has brought to the table.

“Now there’s a catch, and the catch is that unfortunately the majors still sit on a lot of resources that still fit in that very small scale, and I can tell you that they will never be developed, and I think that that’s a shame.”

Mr Brinsden said the opportunities for development in the Pilbara were vast, and that it was confident its major customer base in China would continue to demand more iron ore.

“We feel, even to this day that the Pilbara is grossly underexplored. There are still huge opportunities to be won in the Pilbara, and we are looking to grab that with both hands,” he said.

“There are those who wonder how long the mining story can last. Is Australia just a short-term quarry? Well I’d go out on a limb and suggest nothing could be further from the truth. We will still be mining in Pilbara in 150 years time. I’m certain of that. We have only just scratched the surface so far.”

Mr Brinsden wouldn’t be drawn on when an announcement would be made about a deal to finalise an agreement with a third party for a rail agreement, which would make it economically viable to progress more deposits and pursue further growth.

Last month, Atlas publically announced that progress on the rail agreement was tracking well, but would not elaborate due to confidentiality agreements.

Mr Brinsden told the Amcham event he believed Atlas could secure a win-win outcome based on sharing infrastructure, including its 63 per cent interest in North West Infrastructure, which has rights to a yet-to-be-built 50mtpa of export capacity at Port Hedland.

“Our confidence (in finalising a deal) comes from the idea that we have a valuable port position and that there is leverage in that valuable port position against rail services,” Mr Brinsden said.

While Atlas could do a deal with any of the major miners, FMG is on the record saying it is open to discussions about sharing infrastructure and Atlas has previously announced it has held discussions with rail freight operator Aurizon Holdings.