fmg - ago rail discussions, page-2

Have a read, port authority trying to reduce NWIOA allowance from 50 mtpa to 35 mtpa, government against this unless outer harbour up and running and offering alternative space. Means more risk to rail being developed, needs 50 mtpa to be viable, and also acute pressure on getting into production asap, AGO target is 2015,BRM who knows?


Juniors under pressure over port space
Peter Kerr, The West Australian
May 8, 2012, 7:22 am


Juniors under pressure over port space
A proposed Pilbara railway that would break the dominance of the iron ore majors is under threat, with the Port Hedland Port Authority trying to force emerging mining companies behind the rail proposal to slash their allocated berth space at the giant harbour.

The port wants the North West Infrastructure partners - Atlas Iron, Atlas subsidiary FerrAus, and Brockman Resources - to cut their annual allocation at the planned South West Creek facility from 50 million tonnes to 35 million tonnes as part of final negotiations over the site, according to sources close to the talks.

A desire to free up capacity for future potential industrial projects at the nearby Boodarie industrial estate - scene of BHP's disastrous HBI project - is said to be behind the authority's push.

But the cutback in harbour capacity could undermine the financial viability of a fourth rail line in the region, which would potentially throw a lifeline to otherwise-stranded junior players.

Atlas and Queensland-based QR Rail announced a jointly funded feasibility study into the project last week.

As part of the port negotiations, which will also resolve the contentious "use it or lose it provisions" for the junior players and whether their leases will be transferable, the authority wants to require the NWI partners to relinquish their South West Creek space by as early as 2025 should BHP's $22 billion outer harbour development get up.

They would then be expected to piggy-back off BHP's project.

This latter clause would add further doubt to the financial viability of the junior miners' attempts to gain an extra foothold in the hotly-contested harbour, in addition to the Utah Point facility, which opened in 2010.

Mike Loly, project director for NWI, declined to comment yesterday other than to confirm talks were "ongoing".

However, State Transport Minister Troy Buswell warned the port authority that the Government would not tolerate a cut in the NWI's 50 million tonne annual allocation, and that he was keen to ensure junior miners had a seat at the lucrative iron ore export table.

"A reduction in capacity, and the enforcement of the relocation of the outer harbour clause, would make the NW Infrastructure project incredibly difficult to fund and therefore advance the project," he said.

Mr Buswell did say that he was comfortable with a clause that ensured the NWI partners would relinquish their South West Creek capacity if they did not develop the facility within a "reasonable period of time", but Atlas has said it wants the site operational by 2015.

The South West Creek extension is also the site of Hancock Mining's berth for its $10 billion Roy Hill mine, which will ship up to 55 million tonnes of iron ore a year from 2014.

Industry speculation has also centred on Andrew Forrest's Fortescue Metals Group eyeing off some of the capacity at the NWI site.

Despite holding talks with the port recently, the authority is said to be baulking at the Government edict not to slash the NWI allocation. A spokesman for the authority said yesterday that the talks were part of its broader ongoing "strategic review", and that a decision on the NWI facility had still to be taken.

"Decision gateways are some months away around many of the review items being discussed and considered, so the PHPA is unable to provide any new information," the spokesman said.