Article by Mark Beyer courtesy of Business News.
Chris Ellison-led Mineral Resources has struck an agreement with Gina Rinehart’s Hancock Prospecting to jointly pursue the development of a new iron ore export berth at Port Hedland’s South West Creek.
The agreement proposes that Hancock subsidiary Roy Hill Holdings, which already operates two berths at South West Creek, would help develop the new berth and provide rail haulage and port services.
The joint venture agreement represents a change of tick by Mr Ellison, who has previously talked up Mineral Resources’ capacity to develop two new export berths with a combined capacity of 40 million tonnes per annum.
The agreement will likely make it easier for the state government and the Pilbara Ports Authority to assess multiple competing applications for increased capacity at the famously congested inner harbour at Port Hedland.
The port’s biggest users are iron ore miners BHP and Fortescue Metals Group, which have also signalled their desire to expand their shipping capacity.
The last remaining development opportunities in the inner harbour are berths three and four at South West Creek, which in 2008 were allocated to ‘junior’ miners.
Mr Ellison has previously argued that Mineral Resources was the last remaining company to meet that definition, even though the ASX-listed miner now has a market value in excess of $8 billion.
Another company that has laid claim to being a ‘junior’ miner is Atlas Iron, which is now a wholly-owned subsidiary of Hancock Prospecting.
Atlas last week reported an annual profit of $938 million.
MinRes needs extra capacity at Port Hedland to support the planned development of its Marillana mine.
Mr Ellison said recently that Marillana was a 4-5 year project and would follow development of the 30mtpa Ashburton mining hub, which would use a new port at Onslow.
Both projects are in addition to MinRes’ existing small-scale iron ore exports through Port Hedland’s Utah Point berth.
Hancock Prospecting and its subsidiaries are also in a growth phase.
The privately owned company confirmed last week that Roy Hill was working to debottleneck its mining, processing, rail and port systems to lift capacity to more than 60mtpa, up from the 57.5mt it shipped last financial year.
Atlas Iron – which currently exports via Utah Point – is conducting a feasibility study on its forecast 10mtpa McPhee Creek deposit while Hancock has commenced a pre-feasibility study on its Mulga Downs project.
In a joint statement, MinRes and Hancock said they were targeting Stanley Point berth 3 in South West Creek for their proposed export berth. They noted the project was subject to the Pilbara Ports Authority granting a capacity allocation and development approval.
Mr Ellison said the agreement builds on the “long and strong relationship we have with Hancock”.
“This partnership and infrastructure sharing is the first of its kind in the Australian resources industry and would enable significant value to be unlocked for MRL in a sustainable manner,” he said.
“Our long-stated strategy is to transition from short-life, high-cost mines to lower-cost, longlife operations underpinned by innovative infrastructure solutions.
“Developing our stranded assets will provide additional growth for MRL’s unique mining services build-own-operate model.
“We look forward to working with Hancock, Roy Hill, PPA and the State Government to progress this project which would help unlock stranded assets in the Pilbara and would create thousands of jobs for West Australians for years to come.”
Hancock said it would commence further studies on the project.
“Hancock said MRL will conduct an expedited study to assess the economic and technical feasibility of the proposed project in the coming months, to usual market standards,” the company said in a statement.
