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Gina Rinehart, Mineral Resources are winners in Port Hedland expansion

Article by Nick Evans courtesy of the Australian.
Bulk carriers docked at Port Hedland, where a new berth has just been approved, allowing an expansion of iron ore exports. Picture: Bloomberg via Getty Images
Mineral Resources and Gina Rinehart’s Hancock Prospecting have won the battle for the right to build a new shipping berth at Port Hedland, as Western Australia flags a huge expansion of the world’s biggest iron ore port that could add more than $20bn to iron ore export earnings a year.
 
Iron ore exports through Port Hedland could surge more than 25 per cent on the 523 million ­tonnes shipped through the port last financial year, with WA Ports Minister Rita Saffioti on Tuesday flagging an expansion plan that could allow the port a 660 million tonne capacity.
 
At current prices the additional 137 million tonnes of iron ore would be worth $US20bn ($28.3bn) – although current prices are unlikely to hold up forever.
 
Ms Saffioti said the port’s major users – BHP, Fortescue and Gina Rinehart’s Roy Hill operations – would each get a 25 per cent lift in export allocation at Port Hedland. BHP currently has the right to export 330 million tonnes through Port Hedland, with Fortescue allowed 210 million and Roy Hill 70 million.

But the big winners are Chris Ellison’s Mineral Resources and Hancock Prospecting, which have won the right to build a new berth at the port which would cater for stranded Pilbara iron ore deposits that do not belong to any of the majors.

Mineral Resource and Hancock signed a joint venture to jointly develop the new berth in November 2021, ending years of wrangling over who would emerge with the rights to build and run the 50 million tonne a year export facility.

Under the deal Roy Hill – 70 per cent owned by Hancock – will provide rail haulage and port services to the berth. Stanley Point could allow the development of a range of iron ore deposits owned by smaller explorers in the Pilbara, and offers a path to market for Hancock’s planned new Mulga Down mine.

The pair have said they will make a final investment decision on the Stanley Point berth by the middle of the year.

Mrs Rinehart said on Tuesday she was “delighted” by the state government’s decision.

“This will unlock a suite of growth assets, some of which would have otherwise remained stranded assets, to bring more jobs, revenue and opportunities to West Australians,” she said.

MinRes is currently reliant on Port Hedland’s Utah Point berth to ship iron ore – the only third party export shipping facility at the port and far more expensive to use than other dedicated iron ore berths. Mr Ellison said the new berth could add another 20 million tonnes a year to the company’s iron ore business.

The Stanley Point berth has been in limbo for almost a decade.

It was first conceived at the height of the last iron ore boom as a third-party facility that would give junior explorers a path to market. It was initially earmarked for development by Atlas Iron and Brockman Mining, but the iron ore price crash in 2012 put paid to their multibillion-dollar plans to build a new rail network in the Pilbara and new export facilities at Port Hedland.

Atlas’s nominal access to the rights to the berths was one of the factors that made it a target in a pitched takeover battle in 2018. MinRes, Fortescue Metals and Hancock all bid for the then-struggling iron ore miner, but Hancock emerged as the victor after agreeing to pay Atlas shareholders $390m for the company.

MinRes shares closed up $1.99 on Tuesday at $57.40.

Gina Rinehart and Chris Ellison at a private function for long-serving Hancock staff in December 2021. Picture: Hancock Prospecting.