18/06/2008 - 22:00

Small step for iron ore haulage regime

18/06/2008 - 22:00

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With the release of the state government's Pilbara Third Party Haulage Regime last week, iron ore juniors in the area are hopeful their production aspirations will get a boost, though they are not expecting quick resolution of the issue.

Small step for iron ore haulage regime

With the release of the state government's Pilbara Third Party Haulage Regime last week, iron ore juniors in the area are hopeful their production aspirations will get a boost, though they are not expecting quick resolution of the issue.

The regime, which has been released for public comment, sets out a process for junior miners to negotiate rail haulage agreements with BHP Billiton and Rio Tinto.

Iron ore hopefuls such as Brockman Resources, FerrAus, Atlas Iron and BC Iron support the proposed regime but need to get details about the price and terms that BHP and Rio will set for third-party haulage.

The proposed regime includes an arbitration process if a commercial agreement cannot be negotiated.

North West Iron Ore Alliance chair Megan Anwyl, who represents junior miners in the region, believes the proposed regime will be approved, but expects the process will take time to reach a conclusion.

"We are very pleased that the government has recognised the fundamental necessity of third-party rail haulage to the viability of the junior iron ore industry in the Pilbara," Ms Anwyl said.

"This is one step on a really long road. It's taken a long time to get to this position...we may be looking at well into next year at a guess (for haulage access to be granted)."

Atlas Iron managing director David Flanagan believes haulage on the rail lines is an even more distant prospect.

"With respect to haulage, I think its still years off. It could be three years, maybe four before someone actually gets on the railway lines," Mr Flanagan told WA Business News.

Despite Atlas being the closest of all the juniors to production, Mr Flanagan said the proximity of its Pardoo and Abydos projects to the port meant they were not as reliant as other companies on rail haulage, and would transport by road.

"Those guys (FerrAus and Brockman) are actually reliant on (rail) freight, we're only 120 kilometres out of town at the worst," Mr Flanagan said.

Atlas' Pardoo project, which lies just 75 kilometres from Port Hedland, passed another milestone this week when the Environmental Protection Authority of WA recommended that it be approved.

Atlas is expected to export its first shipment by October, in contrast to other juniors who are several years away from production.

However, they will be keen to get some certainty around the rail haulage regime to help with their planning.

Hartleys research analyst Andrew Muir said junior miners would still need to get their ore from the mine site to the existing rail links, which may require building a spur line.

This cost, and the cost of building new port facilities, may be prohibitive for juniors.

While some companies may be left stranded by the cost of building further infrastructure, Brockman Resources managing director Wayne Richards believes the company's Marillana project is well located to exploit the benefits of third party haulage.

"The Marillana Project lies within two kilometres of BHP's Mt Newman rail line...and is within 40 kilometres of Rio Tinto rail line," Mr Richards said.

"In terms of proximity to existing rail infrastructure, Brockman is certainly one of the best placed iron ore juniors to benefit from the enforcement of third party haulage."

The proposed haulage regime followed a campaign by Fortescue Metals Group to gain third-party access to the existing railways, which would have allowed FMG to run its own locomotives and ore wagons on BHP's and Rio's railways.

FMG has since completed its own railway and says it will be able to carry ore for junior miners in the region.

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