THE BOURSE WHISPERER: Atlas Iron has entered into a binding Memorandum of Understanding with Australia’s largest rail freight operator QR National to progress the feasibility of an independent railway in the Pilbara region of Western Australia.
The companies envisage the Pilbara Independent Rail project connecting iron ore deposits owned by Atlas and other companies in the East and South-East Pilbara to Port Hedland.
The study is expected to be completed by the end of this calendar year, with first haulage earmarked for as early as 2015.
Pilbara iron ore train
Under the agreement, Atlas and QR National will share the costs of the study and both will contribute resources as required.
“We believe an independent railway offers Atlas a highly attractive means of growing its production to as much as 46 million tonnes per annum, enabling the company to realise the immense value of its one billion-tonne resource inventory and extensive port capacity,” Atlas Iron managing director Ken Brinsden said in the company’s announcement to the Australian Securities Exchange.
“This represents the start of the next leg of Atlas’ remarkable growth journey and we look forward to examining the economic and technical aspects of the proposed project.”
The deal appears to be a good fit for both parties with Atlas the most developed iron ore miner in the country that is not hauling its product by rail and QR National Australia’s leading provider of heavy-haul rail transport and infrastructure.
In the announcement released to the market by Atlas QR National executive vice president strategy and business development Ken Lewsey said his company and Atlas had been working informally on the proposal since 2011.
“QR National is delighted to take this work forward to the next step with the signing of this agreement with Atlas Iron,” Lewsey said.
“The Pilbara Independent Railway is an opportunity for QR National to apply our significant expertise in constructing and operating multi-user coal supply chains in Queensland to the benefit of independent miners in the Pilbara iron ore region.
“We are currently the largest haulier of iron ore in WA outside the Pilbara and through this project we have the potential to provide that service to a broad range of customers, including Atlas Iron.”
Both QR National and Atlas have flagged their interest in speaking with other parties interested in becoming a customer on the network.
“The potential development of an independent Pilbara rail network could represent a paradigm shift for the progressive development of the Pilbara, breaking open long-standing barriers to new entrants to the iron ore industry,” Brinsden said.
Disclaimer: The Roadhouse holds shares in Atlas Iron