Pilbara still a viable option, says BC Iron bossby: Andrew...

Pilbara still a viable option, says BC Iron boss

by: Andrew Burrell From: The Australian
August 07, 2013 12:00AM

BC IRON chief executive Morgan Ball says the miner is looking to Australia rather than overseas for its growth options, declaring that companies who are "smart, patient and commercial" can still make money in the Pilbara.

Mr Ball's comments are a departure from those of mining chiefs in recent years who have targeted overseas investments or threatened to leave Australia as a way of countering fast-rising costs, especially since the introduction of the Labor government's controversial mining tax.

Speaking yesterday on the sidelines of the Diggers & Dealers conference in Kalgoorlie, Mr Ball said he believed miners were now more comfortable about remaining in Australia because the minerals resource rent tax was not raising money due to weaker commodity prices.

Mr Ball's comments about growth in Australia came despite BC Iron's recent moves to investigate growth options overseas, including a plan unveiled this year with fellow miner Cleveland Mining to take a potential majority stake in three iron ore projects in Brazil.
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While he did not dismiss diversification beyond iron ore, Mr Ball said that the Pilbara still offered significant opportunities.

"I think if you're smart, patient and commercial, you can make money in the Pilbara with iron ore projects still," he said.

"And that would clearly be a better option for us and our shareholder than holus bolus spending a bunch of money overseas.

"Plenty of companies larger than us have ventured overseas that haven't been successful."

Mr Ball said companies seeking access to infrastructure in the Pilbara faced a challenge, but one that could be overcome.

BC Iron sold 50 per cent of its Nullagine project to Fortescue Metals Group in exchange for railway and port access and it remains the only junior to have struck such a deal with an existing miner. Mr Ball said he preferred "commercial negotiations" to the path chosen by rival miner Brockman Mining, which is attempting to force Fortescue to provide it with rail access under West Australian laws.

"We are a company that has accessed third-party infrastructure and it's been successful for us," he said.

However, Mr Ball did not rule out buying Fortescue's remaining 25 per cent stake in the Nullagine project.

While describing it as an "obvious opportunity", he said BC Iron was not desperate to do a deal and neither was Fortescue.

"The relationship is very strong and Fortescue is very comfortable with the status quo, as are we," Mr Ball said.

"They add real value to our products, not just in the logistics, but in their experiences, their access to their buying power."

Mr Ball believed the iron ore price would remain above $US100 a tonne for some time.

Separately, Atlas Iron chief executive Ken Brinsden said he believed his company's margins had improved by 25 per cent Australian dollar falling.

He said strong iron ore demand from China would continue for the next five to 10 years and it was "inconceivable" that the country's steel industry would shrink. Mr Brinsden said he did not believe demand for iron ore would collapse in coming weeks as it had done around this time last year, when the price fell below $US90 a tonne.