Gina Rinehart, Mineral Resources’ Chris Ellison strike Pilbara port, rail deal
Article by Stuart McKinnon courtesy of the West Australian.
Mineral Resources managing director Chris Ellison chats with the media after his company’s AGM
WA mining billionaires Gina Rinehart and Chris Ellison will join forces in a landmark deal to develop new port facilities at Port Hedland as each look to expand iron ore exports.
Mr Ellison’s Mineral Resources and Mrs Rinehart’s Hancock Prospecting along with her majority owned Roy Hill confirmed in statements on Monday they had formed an agreement to develop a new iron ore export facility at Stanley Point Berth 3 at South West Creek.
The proposed berth is one of two at South West Creek earmarked for development by the State Government.
Under the terms of the deal, Roy Hill would develop and operate the project, providing rail haulage and port services.
Hancock and MinRes will conduct an expedited study to assess the economic and technical feasibility of the project.
However any development would be subject to extra capacity being allocated to the players involved as well as government approval to build the hotly contested berth and MinRes and Hancock each making final investment decisions to proceed.
MinRes and Hancock are jostling with other Port Hedland users, BHP and Fortescue Metals Group, to expand their export capacities from the constrained harbour.
The Pilbara Ports Authority is in the middle of a capacity review, which seeks to provide port users with an incentive to invest and ship more iron ore but also strike a balance between rival players in the carve-up of additional capacity allocations.
PPA chief executive Roger Johnston told The West Australian in July the harbour was “probably about 100Mt away from full capacity”.
BHP wants capacity to export as much as 330Mt from Port Hedland, Fortescue plans to be able to ship up to 210Mt and Roy Hill is seeking to lift exports to 70Mt.
MinRes last year unveiled ambitious plans to boost its iron ore output from 14Mtpa to 92Mtpa within three to five years, with a focus on securing extra space at South West Creek.
It, along with Mrs Rinehart’s Atlas Iron, are the last Pilbara iron ore players without designated port and rail infrastructure.
Speaking to reporters at the MinRes annual meeting this month, Mr Ellison said the company was still aggressively seeking to lift exports despite the recent slump in iron ore prices,
But he said the company’s focus would be on developing the 30Mtpa Ashburton iron ore hub, which is expected to cost about $2.5 billion and take two years to develop.
The project involves initially developing the Bungaroo South deposit and trucking ore by private haul road to new port facilities at Ashburton which will export ore via a trans-shipping set-up.
MinRes said its agreement with Hancock and Roy Hill aligned with its strategy to unlock stranded deposits in the Pilbara by developing pit-to-port solutions and expanding its capability to be a long-term, low-cost sustainable supplier of iron ore to international markets.
“Haulage solutions are key to unlocking stranded assets in the Pilbara and this agreement will provide a cost-effective solution for MinRes to develop its Pilbara assets,” the company said.
Mr Ellison described the partnership and infrastructure-sharing deal as the first of its kind in the Australian resources industry.
The Pilbara iron ore landscape has traditionally been marked by fierce rivalry among the major players, as evidenced by the three private railway lines which run for hundreds of kilometres almost parallel from mines around Newman to Port Hedland.
If conceived, the tie-up would mark a first for co-operation and infrastructure sharing in the region.
Mrs Rinehart, pictured right, and Mr Ellison have a long working relationship, with Roy Hill calling in MinRes subsidiary Crushing Services International in 2017 to help boost its bottlenecked ore processing operations at its namesake mine site.
Mr Ellison said MinRes’ long-stated strategy was to transition from short-life, high-cost mines to lower-cost, long-life operations underpinned by innovative infrastructure solutions.
“We look forward to working with Hancock, Roy Hill, the PPA and the State Government to progress this project which would help unlock stranded assets in the Pilbara and would create thousands of jobs for West Australians for years to come,” he said.
The agreement comes just days after a trio of record annual profit results for iron ore companies linked to Mrs Rinehart, which came on the back of a soaring iron ore price that hit a record $US233/t in May.
Roy Hill doubled its annual profit to $4.4b while Atlas booked a 150 per cent jump in earnings to $938m and Hancock unveiled an 80 per cent surge to $7.3b.