Chris Ellison-led Mineral Resources has struck an agreement with Gina Rinehart’s Hancock Prospecting to jointly pursue the development of a new iron ore export berth at Port Hedland’s South West Creek.
The agreement proposes that Hancock subsidiary Roy Hill Holdings, which already operates two berths at South West Creek, would help develop the new berth and provide rail haulage and port services.
The JV agreement represents a change of tack by Mr Ellison, who has previously talked up Mineral Resources’ capacity to develop on its own two new export berths with a combined capacity of 40 million tonnes per annum.
The agreement will likely make it easier for the state government and the Pilbara Ports Authority to assess multiple competing applications for increased capacity at the famously congested inner harbour at Port Hedland.
The port’s biggest users are iron ore miners BHP and Fortescue Metals Group, which have also signalled their desire to expand their shipping capacity (but not necessarily add extra berths).
Two remaining sites suitable for export berths in the inner harbour are berths three and four at South West Creek, which in 2008 were allocated to ‘junior’ miners.
Mr Ellison has previously argued that Mineral Resources was the last remaining company to meet that definition, even though the ASX-listed miner now has a market value of more than $8 billion.
Another company that has laid claim to being a ‘junior’ miner is Atlas Iron, which is now a wholly owned subsidiary of Hancock Prospecting.
Atlas last week reported an annual profit of $938 million.
MinRes needs extra capacity at Port Hedland to support the planned development of its Marillana mine.
Mr Ellison said recently that Marillana was a four-to-five-year project and would follow development of the 30mtpa Ashburton mining hub, which would use a new port at Onslow.
Both projects are in addition to MinRes’s existing small-scale iron ore exports through Port Hedland’s Utah Point berth.
Hancock Prospecting and its subsidiaries are also in a growth phase.
The privately owned company confirmed last week that Roy Hill was working to de-bottleneck its mining, processing, rail and port systems to lift capacity to more than 60mtpa, up from the 57.5mt it shipped last financial year.
Atlas Iron – which currently exports via Utah Point - is conducting a feasibility study on its forecast 10mtpa McPhee Creek deposit while Hancock has commenced a pre-feasibility study on its Mulga Downs project.
In a joint statement, MinRes and Hancock said they were targeting Stanley Point berth three in South West Creek for their proposed export berth.
They noted the project was subject to the Pilbara Ports Authority granting a capacity allocation and development approval.
Ports Authority chief executive Roger Johnston said it was in the process of undertaking its review of the port's development plan to accommodate forecast growth in iron ore exports
Mr Johnston said the review also involved an update to the Port Capacity Model, which would result in revised capacity allocations for each of the port users.
"PPA expects the consultation process with port users to be completed shortly, and the revised development plan and capacity allocations to be completed during the first quarter of 2022," he said.
Mr Ellison said the joint venture agreement built on MinRes's long and strong relationship with Hancock.
“This partnership and infrastructure sharing is the first of its kind in the Australian resources industry and would enable significant value to be unlocked for MRL in a sustainable manner,” he said.
“Our long-stated strategy is to transition from short-life, high-cost mines to lower-cost, long-life operations underpinned by innovative infrastructure solutions.
“Developing our stranded assets will provide additional growth for MRL’s unique mining services build-own-operate model.
"We look forward to working with Hancock, Roy Hill, PPA and the state government to progress this project which would help unlock stranded assets in the Pilbara and would create thousands of jobs for West Australians for years to come.”
Hancock said it would begin further studies on the project.
“Hancock said MRL will conduct an expedited study to assess the economic and technical feasibility of the proposed project in the coming months, to usual market standards,” the company said in a statement.
“In addition, Hancock and MRL will seek to undertake discussions with the government of Western Australia and the Pilbara Ports Authority in relation to the potential project.”
