Fortescue finishes Pilbara port expansion

Iron ore powerhouse Fortescue Metals Group has boosted its export capacity to 155 million tonnes a year with the completion of its Pilbara port expansion project.

The $2.4 billion development is critical to the company’s growth plans, and is expected to triple FMG’s production capacity across its operations, the ABC reports.

Construction of its fourth berth at Herb Elliot port in Port Hedland is now finished.

In May the company officially opened its Firetail iron ore mine, with the final stage of its Solomon Hub, the Kings mine is due to come online later this year.

The Solomon Hub will produce around 60 million tonnes per annum, with "Firetail producing 20 million tonnes per annum, while the second stage of the development, the Kings Mine, will produce another 40 million tonnes per annum," FMG chief executive Nev Power said.

Small steps for WA rail plan, says Aurizon

Iron ore producer Atlas Iron has welcomed a new railway in Western Australia’s iron ore Pilbara region, calling it a “fantastic solution”.

But builder of the railway Aurizon alerted it will not make any hasty decisions on the project.

Brockman Mining signed a three year agreement with Aurizon that will see it build and operate rail and port infrastructure for the company’s Marillana and Ophthalmia mines.

Aurizon will operate rail, rolling stock and related infrastructure required by the mine projects and build port facilities.

Brockman Mining signed a supply, infrastructure cooperation agreement in the Pilbara with Flinders mines. It said they will work together on a transport solution that will get their product to market.

Brockman Mining and Flinders mines have signed a supply, infrastructure cooperation agreement in the Pilbara, saying they will work together on a transport solution that will get their product to market.

The freight rail operator’s chief executive Lance Hockridge told ABC’s Inside Business Aurizon needs the backing of a couple of mining companies in order to go ahead with the $10 billion rail network.

Atlas Iron managing director Ken Brinsden agreed and said the project would require assistance from many customers to make it financially feasible, The Australian reported.

“We’ve made no secret that Atlas is not really in a position to justify rail in its own rights, so I would say that if a network like Aurizon is going to be able to get up in the Pilbara then there’s no doubt in my mind it needs multiple customers,” Brinsden said.

“It’s fair to say we’ve got a discussion going on with quite a few people and at the end of the day the Aurizon solution might very well constitute it: a fantastic solution for the Pilbara as a whole.”

Hockridge said the company needs to do more work before starting the project.

“The concept is essentially open access. It would be open to all corners, as opposed to being dedicated to individual miners.” he said.

“We come from a mindset that is a 30 to 40-year business. We’re very much in the early stages of our investigation and I don’t think that there’ll be any resolution of that any time soon.

“We’re focused on our concept and I emphasise again it’s at concept phase and we need to do a good deal more work.

“We’re encouraged by the progress so far but there are self-evidently a whole range of issues that we’ve got to get through before we get to anything which is more definitive.”

Atlas Iron pays an average of $13 a tonne to transport iron ore from the Pilbara mines to Port Hedland.

But Brinsden expects the price to dip to as low as 5c to 6c per tonne per kilometre if the rail lines are built like those on east coast coal networks.

“There’s an opportunity to be on the rail, and rest assured we’re working really hard to look for solutions like that so we can come up with a logical and commercial, more sophisticated infrastructure solution that makes sense for the growth of the business,” Brinsden said.

Aurizon said earlier this month it will slash costs by more than $230 million over the next two years, which will see job cuts and property sales. It said it would move to cut $70 million in labour costs over the next 24 months.

It is not known how many jobs will be affected.

The company has cut hundreds of jobs over the past year, with voluntary redundancies comprising most of it.

BHP cuts port expansion budget

BHP Billiton has cut $US400 million ($AU434 million) from its Pilbara expansion budget, pulling back on its plans for a new blending and rail stockyard at Port Hedland.

The West Australian reports the cutbacks will offset a $US340 million expenditure blowout at its Jimblebar iron ore mine, which is currently under construction.

But BHP – which reports all its financials in US dollars – stressed the project is on budget in Australian dollar terms. The project is now estimated to cost $US3.64 billion.

The company sold a 15 per cent stake in the mine in June to ITOCHU Corporation and Mitsui for $US1.5 billion.

In its production report, BHP yesterday said the south stockyard at Port Hedland was no longer included in the scope of works for the port blending and rail yard facilities project

Total iron ore production increased seven per cent for the 2013 financial year to 170 million wet tonnes, leading the company to lift this year’s guidance to about 207 million tonnes.

It remains unclear if trimming back its plans to build the new stockyard will hamper BHP’s plans to remove productivity bottlenecks which could potentially deliver an extra 20 million tonnes per annum of exports, The West Australian reported.

Brockman and Aurizon sign Pilbara rail deal

Brockman Mining has signed a three year relationship agreement with Aurizon that will see the rail operator develop and operate rail and port infrastructure for the company’s two Pilbara iron ore projects.

Brockman said the binding agreement meant Aurizon would be the exclusive supplier to develop and operate the infrastructure required for its Marillana and Ophthalmia mines under long term agreements to be negotiated for the life of the mine.

Aurizon will operate all rail, rolling stock and related infrastructure required by the mine projects and develop port facilities.

"The relationship agreement provides that the railway may be a new heavy haul railway to be developed by Aurizon (East Pilbara Independent Railway), a new railway developed by a third party, an existing railway operated by a third party, or a combination of these railways (or parts of these railways)," Brockman said in a statement.

Brockman said the agreement would complement and support ongoing efforts to secure access to FMG's rail and port infrastructure, the North West Infrastructure joint venture with Atlas and FerrAus to facilitate construction of a port and an agreement with Tianjin Port Group concerning port facilities at Port Hedland.

Brockman Australia’s chief executive Russell Tipper said the agreement with Aurizon reinforced the company's focus on securing an economic and operationally feasible infrastructure haulage solution for its mines.

"I see Brockman and Aurizon as a logical partnership motivated to advance an infrastructure solution in the East Pilbara that will benefit all juniors," he said.

Image: perthnow.com.au

Iron ore port expansion seeks company proposals

Esperance Port have shortlisted two corporations to provide proposals on the development of a new multi-user iron ore export facility.

Qube Bulk in partnership with Brookfield Infrastructure and the Yilgarn Esperance Solution consortium have both been asked to provide details on the development of the project.

Port chairman Bob McKinnon said both corporations had best addressed project objectives and demonstrated they met stringent evaluation criteria, The West Australian reported.

The criteria included experience in bulk port operations, an understanding of the project, the financial capability and capacity, and design and construction experience.

"The short-listed consortia have significant experience in infrastructure investment as well as designing, financing and operating major projects related to the movement and handling of large volumes of bulk products," McKinnon said.

Earlier this year the West Australian Government gave the go ahead for the new iron ore facility.

The development of a multi-user iron ore export facility at Esperance will underpin the development options for transport of ore from mine to ship.

The port is linked by rail through Kalgoorlie to Leonora. Trucking operations would then use a relatively short section of the unsealed Ulalla Road linking the mine to the fully sealed Goldfields Highway from Wiluna to Leonora.

Fledgling miners in the Yilgarn region of Western Australia have been given a boost by the decision as it will help open up the Yilgarn to further development, with the region currently struggling from a lack of major infrastructure.

The Yilgarn, located between Perth and Kalgoorlie, contains a number of gold deposits, as well as significant reserves of iron ore.

Yilgarn Iron Producers Association CEO David Utting said the Government's decision was a win for miners in the reigon, and would help create “thousands” of new jobs in the sector.

The industry group estimates an extra 10 million tonnes of iron ore production in the Yilgarn would create 1000 direct and 3227 indirect jobs, with royalty contributions also getting a boost.

A market sounding exercise carried out by EPSL found that iron ore production in the region could grow significantly in the next 10-15 years.

A completion date of early 2015 was outlined for the expansion, and studies have suggested an increase of 10-12 million tonnes a year would be viable.

Currently the port has a capacity of 11.5 million tonnes.

Image: perthnow.com.au

Stop fighting and share infrastructure, Barnett tells mining companies

In what comes as a reproach to iron ore companies fighting over rail access in the Pilbara, Colin Barnett said the warring between resource companies was holding projects up more than government red tape.

Barnett said resource companies fighting over sharing infrastructure is one of the biggest hurdles in keeping projects to time and on budget.

Barnett said the Department of State Development spent more time dealing with disputes between resource companies than it did solving regulatory delays, the West Australian reported.

"People talk in the resources industry about frustrations with government delays and approvals and red tape, and I concede there is still more work to be done," he said.

"But the biggest obstacle to timeliness and keeping costs down is disputes and lack of agreement and a lack of sharing infrastructure in the mining and the petroleum sectors. And the companies need to look at themselves – and (the rail access dispute) is an example."

The rebuke by Barnett comes amid revelations that Fortescue Metals is seeking to charge junior Brockman up to $576 million a year to access part of its Pilbara rail line.

Analysts say the price is well above $17.50 to $20/t figure FMG is charging BC Iron for haulage, which also includes port handling prices at Port Hedland.

The junior iron ore explorer is seeking access to FMG’s rail infrastructure in the Pilbara and wants to haul up to 20 million tonnes of iron ore per year from Marillana to a proposed rail spur near Port Hedland.

But Brockman has requested that the Western Australian Economic Regulation Authority step in to set an access price after private negotiations between the companies failed to result in an agreement.

Barnett said the dispute was a commercial matter, but still "concerning".

"Ultimately, Government could introduce legislation I suppose, but I would just appeal to companies to be sensible," he said.

Image: abc.net.au

Iron ore train derails in WA

A freight train carrying iron ore to Esperance Port has derailed, scattering 32 carriages and about 2240 tonnes of the commodity across the tracks.

The line from Kalgoorlie- Boulder to Esperance remains closed after the train derailed 17km north of Salmon Gums last night.

The Aurizon train was carrying iron ore from Cliffs Natural Resources Koolyanobbing operation, north east of Southern Cross, to Esperance for export, when it came off the Brookfield Rail freight network at about 7pm.

Brookfield said no on was injured in the accident.

A joint investigation has been launched between Aurizon and Brookfield to find the cause of the derailment.

Multi-user port in Pilbara receives EPA backing

A multi-user iron ore port in the Pilbara has been given approval by the State’s Environmental Protection Authority.

The port at Cape Preston East, 60km south-west of Dampier, will use a new method to transfer iron ore from shore to ship, removing the need for dredging.

Self-powered barges will move iron ore produced by proponent Iron Ore Holdings to a large transhipment vessel moored about 18km offshore, The West Australian reported.

The EPA imposed eight recommended conditions.

The proposal will now be handed to WA Environment Minister Albert Jacob.

The EPA also recommended for conditional approval a new commercial algae farm near Karratha, proposed by Aurora Algae Pty Ltd.

Image: perthnow.com

Decmil wins Roy Hill contracts

Decmil has been awarded $71 million worth of contracts for Gina Rinehart's Roy Hill iron ore mine.

The two contracts are for the design, civil engineering and construction of rail and port facilities for the miner, as well as the associated infrastructure.

Design has already begun with actual work expected to start in 2014., with onsite delivery subject to the mine obtaining financing.

Decmil described the one as a significant one for the company.

The Roy Hill rail non-process infrastructure buildings and associated services package is a $56.6 million contract for the design and construction of rail terminal buildings including a rolling stock workshop, wheel lathe building, loco washdown, warehouse and lay down areas, as well as other buildings.

The scope of works also includes specialist maintenance equipment, overhead gantry cranes, fuel/lube delivery systems and oily water treatment.

The Roy Hill port non-process infrastructure buildings is a $14.5 million contract for port landside facilities such as belt-splice workshops, storage and workshops areas with overhead cranes and external cold rooms, maintenance and welding bays, and a hydraulic clean room.

The total contract construction and EPC work onsite for the whole Roy Hill mine is expected to exceed $6 billion.

The win is a major one for a contractor as many companies wind down its outsourced work.

Earlier this week BHP took the axe to the workforce at its Peak Downs coal mine, cancelling a $260 million contract with Leightons to cut costs.

Rio wins long running iron ore rail battle

 Fortescue have lost their battle to access Rio Tinto’s iron rail network in the Pilbara.

The Australian iron ore miner had been fighting for access to Rio's Hammersly and Robe River lines.

However the Australian Competition Tribunal’s have ruled that Rio’s Hamersley and Robe rail lines should not be opened up to other users.

In 2010 the long running battle came to a head when the Australian Competition Tribunal rejected Fortescue's push for access to Rio’s rail networks, and allowed the major to retain full access to their own Pilbara rail lines  finding that access to Rio’s Hammersley line “would be contrary to the public interest.”

Fortecue continued in its fight to gain full access to the Pilbara network, and was granted a High Court appeal late in 201.

The Tribunal have yet to release any documentation surrounding their latest ruling, however, Rio Tinto Iron Ore acting chief executive Paul Shannon welcomed the decision.

“This is great news. Rio Tinto runs a highly efficient railway that is fully integrated with our port and mine operations. This would be severely hindered if third parties were allowed to run trains on our rail network, not to mention the knock-on negative effect on the Western Australian and national economies from creating such inefficiencies.”

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