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Hope Downs plan changes

THE Hope Downs project is considering a railway link to Port Hedland as part of a much-expanded $1 billion bid to become the third force in the Pilbara’s iron ore industry.

Controlled by the Hancock group and South African mining giant Iscor, the project launched on Monday a new feasibility study to determine whether a separate railway and port could be justified, not to Cape Lambert, as previously envisaged.

The 360km route would run parallel to BHP iron ore’s main railway to the coast, and would deliver ore to a new port facility, land for which has already been identified by the Port Hedland Port Authority.

The two Hope Downs partners see an opportunity to persuade Japanese steel mills to support a new railway and port for the project, to replace the Robe River group, which was recently acquired by Rio Tinto.

The Japanese mills are still bitter over the departure of a third independent iron ore source, and, in particular, the likely cancellation of a parallel railway that would have served the new West Angelas mines being developed as part of the Robe group.

It is now likely that Rio Tinto will carry ore from these along its existing line that already serves a number of operations in the Hamersley Iron Ore complex.

“It is still very tense in Tokyo,” said one iron ore executive, recently returned from a visit to the Japanese steel companies.

Two Japanese trading houses have an interest in Robe River and they have joined the steel mills in protesting at the absorption of the miner, which had been owned by North Ltd., and is now within Rio Tinto.

Hope Downs acknowledges that the economics of the expanded venture would require much swifter growth in sales of ore, to justify the higher investment, but hopes that the Japanese and other customers will respond, to ensure that there will still be a third, independent, supplier in the region.

The 800 million tonne resource of high quality ore at Hope Downs could produce up to 25 million tonnes a year, after initial sales of perhaps 10 million tonnes.

The Hope Downs partners have not discarded the earlier options – that Rio Tinto may reconsider its previous opposition to sharing its railway line to Cape Lambert, or that BHP might agree to do so.

Court actions last year sought to compel Rio Tinto to share its railway with Robe and Hope Downs but the proceedings failed.

Hope Downs interests may see a separate line along the route to Port Hedland as a long-term asset for BHP; it would have considerable spare capacity, and could be useful if BHP’s mines in the interior increase production and place some strain on the existing railway.

BHP has until now rejected any suggestion that it might share its railway or port facilities.

Hope Downs Management Services, the current vehicle for the joint venture, has just completed new design and cost estimates which will be employed in financial modelling and be invaluable in studying the ambitious option of building a separate railway and port.

Hancock Prospecting was the core of the late Lang Hancock’s empire. He and his geologists discovered Hope Downs in the early years of the iron ore boom in the Pilbara, but it has been difficult to carry to the mining phase.

The company formed a joint venture with Iscor three years ago to continue feasibility studies.

The South African company is one of the biggest companies on the Johannesburg Stock Exchange, producing 24 million tonnes of iron ore, 15 million tonnes of coal and more than five million tonnes of steel last year.

Iscor, which has faced serious problems in South Africa, has acquired considerable interests in the Australian gold industry in recent years.

Historic footnote: Hope Downs was named

after Lang Hancock’s previous wife, who died

many years ago, and is the second name of her daughter, Gina Rinehart.

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