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ACORNS, as the old saying goes, grow into oaks, so when Dryblower caught first sight of the deal over iron ore port and rail access between the business interests of Gina Rinehart and Chris Ellison he wondered whether he was looking at an oak seedling.

Time will answer that question and it’s fair to say that lots of agreements never amount to much, plus there’s the issue of the Rinehart/Ellison arrangement needing to win WA government approval in a competitive bidding process for the right to create a new export facility in Port Hedland.

Doubts aside there is something deeply significant about two of Australia’s richest people agreeing to investigate a development opportunity and the potential for it to become something much bigger than the current proposal to create a small mutually owned business.

If the Port Hedland study does lead to the creation of a successful new port and rail facility, conditions might have been created for similar transactions between Rinehart and Ellison over other resource opportunities, especially in the red-hot and fast-growing business of battery metals.

That suggestion would probably be rejected by both parties, but it can’t stop Dryblower from imagining what might emerge from a business association between Rinehart and Ellison because both sides bring unique attributes to the table.

The relationship, as it stands today, is very loose with the stock exchange listed company Ellison heads, Mineral Resources, simply entering into an agreement with Rinehart’s master private company, Hancock Prospecting and the iron ore business in which Hancock is the major shareholder, Roy Hill Holdings.

The exact wording of the deal is that the three parties will: “Jointly investigate the development of a new export facility at the port of Port Hedland’s Stanley Point Berth 3 in South West Creek, where Roy Hill would provide services to both Mineral Resources and Hancock for development and operation of the project, including rail haulage and port services”.

The next steps are for the WA government’s Pilbara Ports Authority to allocate capacity and give its approval for the project and for Mineral Resources and Hancock to each make a positive final investment decision following completion of a satisfactory feasibility study.

Technical details are important, but so is the big picture which might evolve from a mutually agreeable joint venture which is the logical evolution of what started with last week’s agreement.

For Mineral Resources there is the potential to achieve the elusive key to unlocking significant value in iron ore deposits stranded in the Pilbara which can theoretically make good money in boom conditions by road haulage but need rail to ride out downturns.

Ellison said the Port Hedland agreement aligned with his strategy of developing pit-to-port solutions for isolated iron ore deposits and expanding the capability of Mineral Resources to be a long-term, low-costs, sustainable supplier of iron ore to international markets.

Unsaid, but something everyone in iron ore knows is that the critical element in success with all bulk mining ventures is solving the complex equation of transport economics.

In simple terms, when it comes to bulks the orebody plays second fiddle to the combination of access to a railway and port with high-speed loading infrastructure.

Trying to run an iron ore operation by running trucks up and down public highways only works in boom conditions, as does the double handling of trans-shipping (loading small barges which are towed out to bulk carriers anchored in deep water).

It’s that background, plus Mineral Resources having its foot on stranded assets, which brought Ellison into a deal with Rinehart and Roy Hill, but it also left answered the question of what else might evolve from an embryonic relationship.

What if, and there are an awful lot of potential what ifs which can be considered, Rinehart finds a business connection with Ellison to her liking? Where else might the two billionaires find wealth value-creating opportunities?

Lithium could be the next natural connection. Ellison has it, Rinehart doesn’t, yet, but she does have a vast holding of land in the lithium rich Pilbara region of WA and the nature of pegmatites, the orebody of lithium, is that they are found across the WA outback, it’s just that no-one has looked closely in the past because there wasn’t much of a market for the lightweight mineral.

Copper, another metal with a fast-growing market as a battery metal, is something that Rinehart wants as seen through her funding of exploration projects in South America, whereas Mineral Resources is yet to reveal whether it has any interest in copper.

The key point in Dryblower’s argument about mutually advantageous deals linking the business interests of Rinehart and Ellison is that once an outsider starts to look at the situation the potential for joint investments grows exponentially.

Ellison is a man full of ideas that come from his background in mine construction, rock crushing and the broader field of resources sector services. Rinehart has been focused on growing the iron ore business started by her father.

Until now, the two have been seen as very separate and very successful business operators, so the fact that they’re prepared to work together in solving a problem of how to get more port access is a pointer to future value creating deals.

Growing an oak takes time, as might the Ellison + Rinehart business connection, but there’s no doubt it’s a situation worth watching.