Atlas Iron worried about Utah Point privatisation

Plans to sell the Utah Point shipping terminal at Port Hedland could result in higher fees and put smaller operators at risk, according to Atlas Iron managing director David Flanagan.

Speaking with the West Australian at the Atlas Iron annual meeting yesterday, Flanagan said privatisation of the Utah Point facility would not raise enough cash to assist with debt reduction and make the sale worthwhile.

“I think it’s actually worth much more to the Government if the juniors are filling it with ore and it’s been run cost-effectively and we’re all paying that dividend to the State Government,” he said.

“If someone pays $1 billion for it and they want to make a 5 per cent rate of return, they’ve got to double the charges to the juniors.”

“That will drive us out of business. We would close tomorrow.

“So if you can only pay $150 million for it to then make a rate of return, it’s not worth selling, the Government should keep it.”

In parliament of Thursday acting treasurer John Day said due diligence on the sale had assured government of a successful sales outcome, one which would be “in the public interest”.

Flanagan informed shareholders that Atlas had undergone cost-cutting measures over the past year, which included renegotiation of service contracts with contractors McAleese, Maca and Qube Logistics.

The director said Atlas would continue to generate profits with benchmark iron ore prices above $US47 per tonne.

Iron ore is currently selling around $US49.50, leaving margins slim for the WA junior, especially in light of projections of further descent to the $US40 mark.

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