Golden glow to iron ore

Has anyone noticed that the iron ore industry is morphing into something resembling gold?

There are big talking entrep-reneurs, claim jumping, allegations of plainting, prospectors making big money, new provinces and prospectuses launched on a few cobbled-together leases which may or may not be a resource.

Oh, and don’t forget a bit of legal action.

Until a few years ago, there were just a couple of staid global giants whose biggest worry was making sure their workers got the right flavour of ice cream.

Scale, it seemed, was what you needed to make a living in this low-margin commodity, where mountains regularly had to be moved.

Now there are a dozen or so companies that call iron ore their core business.

Some are actually mining the new gold, others are keeping the speculators guessing and the day traders in business.

Cazaly Resources Ltd is that represents this new breed of iron ore company very well.

During the past month of trading and announcements, the stock gained around $1.20 a share from late August before trading was halted at $1.50.

Everything hinges on the fate of a tenement dubbed Shovelanna, which has been warehoused by Rio Tinto Ltd and its partners linked to the original claimants, Lang Hancock and Peter Wright.

Everything was normal until August, when the lease lapsed and the tenement was pegged by associates of Cazaly joint managing director Nathan McMahon. In fact, he told a court last week, it was his brother.

Whether or not they will get to keep to the lease is up to State Development Minister Alan Carpenter, who is being petitioned by both parties.

But that is not the end of the matter.

Optimistic that the outcome will be favourable, Cazaly and its junior partner, Echelon Resources Ltd, signed a deal with BHP Billiton Ltd to take the ore.

That set off a seismic reaction from another of the new Pilbara players, Andrew Forrest’s Fortescue Metals Group Ltd.

FMG claimed Mr McMahon had an agreement to give it a look at anything he found. Mr McMahon denies this and, at this stage, the courts have agreed with him, tossing out FMG’s claim.

FMG, BHP and Rio all want their foot on this resource because, as prices continue to climb, iron ore in the ground is an increasingly bankable commodity.

Some need it more than others, of course.

For the majors, it’s as much a case of keeping their options open as it is closing them down for upstart rivals like Forrest, who has already won round one of his war to get access to their extensive Pilbara rail networks.

For FMG, under pressure all year to show it has the reserves it needs to produce the ore if and when it gets contracts and infrastructure, Shovelanna would be a handy asset.

In the end, it’s just a sideshow to major business going on in the Pilbara, but that’s what makes iron ore suddenly all the more inter-esting for observers and investors.