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ATLAS Iron will today unveil a complete game-changer for the Pilbara region and the iron ore miner, with the launch of a study to develop a new railway.
The Perth-based miner, in a joint venture with QR National, will conduct a feasibility study for the construction of a 600km multi-user railway, at a cost of up to $3.5 billion, to transport ore from the east and southeast Pilbara to Port Hedland Port.
The new rail line would allow the junior miner to bypass dealing with the major miners such as Rio Tinto and BHP Billiton that refuse access to their rail infrastructure.
The study, named the Pilbara Independent Rail Project, is expected to be completed by the end of this year, with first haulage tipped for 2015.
Atlas Iron trucks its ore to port but it needs a rail option to expand beyond 15 million tonnes per annum and to work towards its 46mtpa future target. The miner has been extensively reviewing options, which could have included talking to BHP Billiton or Fortescue Metals Group to access their infrastructure, but The Australian understands that supporting the development of a new rail line is seen as the best solution for the company.
The Australian exclusively revealed last month that QR had filed a notice with the WA Department of Mines on a possible route for the 600km railway that would carry iron ore from a series of proposed mines in the east Pilbara to the export port at Port Hedland.
The proposed development could capture as much as 75 million tonnes a year of iron ore production planned by small and mid-tier groups in the central Pilbara and east Pilbara regions. Brockman Resources could also be one of the main beneficiaries of a multi-user railway.
BHP Billiton and Rio Tinto have strongly opposed third-party access to their Pilbara infrastructure and have had numerous court battles with Andrew Forrest, who built his own rail to service Fortescue's operations.
While BHP and Rio have never allowed anyone to use their railway, Fortescue did a deal with junior BC Iron to allow the miner access to its railway -- but BC Iron had to give half of its project to Mr Forrest's company.
A new multi-user rail line would be a huge boost to juniors in the region that would otherwise find it difficult to get their ore to port. Provision for the construction of spur lines to join the main corridor is likely to be included in the project.
QR National will be the owner and operator of the new proposed railway but Atlas, as the foundation customer, will be a junior partner, with an equity stake of less than 25 per cent in the project.
Atlas has growth plans over the next 18 months to expand from 6mtpa to 12mtpa and then 15mtpa by 2015, which is when it will need to move from trucking its ore to port to using rail. The miner hopes to break through the 40-46mtpa target by 2017-18.
Atlas chairman David Flanagan has previously told The Australian that the thing that would add the most value to the company is if it can demonstrate its infrastructure option.
"The market would start to give us value in our share price for the 46mtpa. I would expect it would be a major re-rating," he said in an interview earlier this year.
Atlas Iron will release its quarterly results tomorrow, and is expected to provide an update on its short-term plans to move from 12mtpa to 15mtpa.
This article first appeared on www.theaustralian.com.au
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