Junior miners stand to gain mostKate Emery Analysis, The West...

Junior miners stand to gain most

Kate Emery Analysis, The West AustralianApril 26, 2012, 7:32 am


There is an irony in the fact Atlas Iron and QR National will today announce their rail plans at the same time as WA iron ore veteran George Jones is in Africa trying to secure government approval for Sundance Resources' Mbalam project.

In the part of West Africa where Sundance wants to build its mine, it is widely assumed there will be only one railway line to service operations owned by different miners in the Republic of Cameroon, the Republic of Congo and Gabon.

In WA, meanwhile, the proposed Atlas-QR line will be one of four stretching across the Pilbara alongside those owned by BHP Billiton, Rio Tinto, Fortescue Metals Group and Gina Rinehart's Hancock Prospecting.

In theory, junior players are welcome to try to do a deal with one of the majors for railway access and very rarely an agreement might be reached, such as BC Iron's joint venture with Fortescue. However, in practice it's impossible for an iron ore explorer to negotiate with the country's biggest miners from a position of strength.

The Atlas-QR line could therefore be the first to unlock otherwise-stranded deposits.

The most obvious beneficiary is arguably the majority Chinese-owned Brockman Resources because Brockman, unlikely many others, already has space allocated to it at Port Hedland.

But it's not just Brockman. Every iron ore explorer in the Pilbara has reason to celebrate because for some the railway will mean the difference between sitting on a pile of dirt and sitting on an iron ore mine.
Make no mistake: if this is built it will be a genuine game-changer for the Pilbara. Given Africa seems to have woken up some time ago to the need for multi-user infrastructure to avoid the mistakes made in the Pilbara, it's just a shame it's taken so long to get to this point