18/08/2014 - 13:23

Prices down, exports up

18/08/2014 - 13:23


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Iron ore prices may have softened significantly from about $US130 a tonne during the past year, but that has not stopped local miners ramping up exports.

Prices down, exports up

Iron ore prices may have softened significantly from about $US130 a tonne during the past year, but that has not stopped local miners ramping up exports.

Research by Business News has revealed several smaller miners are competing to be Western Australia's fourth largest exporter of high-grade iron ore, after tier one miners Rio Tinto, BHP Billiton, and Fortescue Metals Group.

Based on recent export data, Cliffs Natural Resources, Atlas Iron, Mineral Resources and Mount Gibson Iron each shipped about 10 million tonnes or more of ore last financial year.

While the majors are making the news for cost cutting and efficiencies, including BHP’s much-publicised redundancies, mid-tier miners have been attracting attention for different reasons.

Last week’s friendly takeover bid by BC Iron of Iron Ore Holdings in a deal worth $256 million could more than double BC Iron’s current output from its six-year Nullagine joint venture project with FMG, if it brings IOH’s assets into production. 

The deal could propel BC Iron, which currently exports about 4.3mtpa, up the ranks of iron ore exporters with the potential to add a further 8mt.

It also further highlights the value of undeveloped assets.

At this month’s Diggers & Dealers conference in Kalgoorlie, Atlas Iron managing director Ken Brinsden said Baosteel and Aurizon’s joint $1.4 billion bid for Aquila Resources put a value on unrealised assets and, by proxy, added value to Atlas.

While stressing Atlas was not a target for takeovers, Mr Brinsden said there was implied significant unrealised value in its assets.

Atlas plans to expand production and exports, including through the development of its North West Infrastructure alliance, which could unlock the company’s export capability to 46.5mtpa.

In the near term it is targeting 15mtpa by late next year, which is its full export allocation at the existing Utah Point facilities in Port Hedland.

Canada-based Cliffs Natural Resources, which is the only current exporter of iron ore from Esperance, became the subject of asset sale speculation this month after hedge fund Casablanca Capital took control of almost half its board.

A potential sale of Cliffs' profitable Koolyanobbing operations in WA is likely to attract the interest of nearby miners Mineral Resources and Cazaly Resources, which lobbied for the Esperance port expansion as members of the Yilgarn Iron Producers Association.

In May, the Yilgarn Esperance Solution consortium was chosen to develop, operate and fund a new multi-user iron ore port in the town, designed to double iron ore exports from Esperance to 20mtpa.

Mineral Resources, which has large in-house capabilities relative to its size, currently exports about 5mt of iron ore from the Pilbara through Port Hedland, and a similar amount from the Yilgarn region through Fremantle.

Its stable of producing assets are nearing the end of their mine lives, but it is pursuing significant development plans and recently signalled longer-term intentions in the Yilgarn area by investing $70 million in six new trains to transport ore to Fremantle.

WA’s smallest iron ore exporter, Cockatoo Island, led by a joint venture between Pluton Resources and Wise Energy Group, boasts the highest-grade iron ore with the lowest impurities.

Cockatoo Island, off the coast of Derby, is a direct ship ore operation and is aiming to crack the 1mtpa export figure next year.


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