Pilbara Rail Proposal welcomed by State Government but no state funding

Atlas Iron and QR National’s bid for a common rail line in the Pilbara has been welcomed by the Western Australian state government but won’t receive any state funding due it being a private project.

The proposed railway has been informally worked on since 2011 and will link mines in Western Australia’s Pilbara region to Port Hedland but required a state agreement to go ahead.

Atlas and QR National are currently examining the possible construction of the estimated $3.5 billion railway which has been described as a game changer for the iron ore industry.

Premier Colin Barnett said that “... the state government would be, in principle, in support of this to be able to have a common user rail system that services different companies, different mines... (But) we wouldn’t fund it – it’s a private project.”

The costs of the study will be shared between Atlas and QR National and a potential development agreement would likely involve Atlas being a foundation customer of the railway.

“Both companies have reached a position where a formal agreement to further explore the opportunity is appropriate in taking it to the next stage,” stated Ken Lewsey, QR National’s Executive Vice President of Strategy and Business Development.

“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,” said Ken Brinsden, Atlas Iron Managing Director.

Atlas said rail haulage would form part of its strategy to grow production from 15 million tonnes per annum (mtpa) to as much as 46 mtpa.

Mr Brinsden said the company had examined all of its possible rail options, and said the agreement with QR was of one of the best outcomes for shareholders.

“We believe an independent railway offers Atlas a highly attractive means of growing its production to as much as 46Mtpa, enabling the company to realise the immense value of its one billion-tonne resource inventory and extensive port capacity,” Mr Brinsden said.

“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.”

Version 1.0 | 09/05/2012