August 4, 2008
August 4th (Mineweb) – The North West Iron Ore Alliance has further outlined its case for the establishment of third party infrastructure access in the Pilbara, today announcing it has submitted responses to the recent draft recommendations from both the Pilbara Rail Access Interdepartmental Committee (PRAIC) and the National Competition Council (NCC).
The Alliance announced today (Monday) that it intended to play an active role in shaping the framework for a third party access regime by participating in the PRAIC and NCC consultation processes, and remained strongly committed to working towards a constructive solution with other stakeholders in the Pilbara.
Independent Chair of the North West Alliance, Ms Megan Anwyl, said access to existing infrastructure remained a fundamental necessity to the formation of a sustainable, viable and successful junior iron ore industry in the Pilbara.
“We believe that BHP Billiton and Rio Tinto have a legal obligation to allow rail haulage to third parties under their various State Agreements, and that this would lead to a healthy diversification of the iron ore industry in the Pilbara and better social and economic outcomes for its residents and the nation as a whole,” she said.
“If fair and equitable infrastructure access is not granted, some mine sites would not be financially viable, or production could be severely limited due to the environmental, social, financial and potential licensing restrictions relative to the trucking of iron ore,” Ms Anwyl continued. “Further, the State Government has a clear policy preference towards rail over road transport.”
“The four members of the North West Iron Ore Alliance – Atlas Iron, BC Iron, Brockman Resources and Ferraus – therefore have an obligation to their shareholders to negotiate a workable solution for the transportation and shipment of their ore through the Pilbara,” she commented. “We have been very encouraged by the draft PRAIC regime and NCC recommendation, and look forward to providing further input towards the final outcomes through the responses we have submitted.”
Ms Anwyl said one of the key PRAIC recommendations the Alliance had made was to support the need for the appointment of a strong Regulator to ensure a timely, effective and equitable access regime.
“It is important that the interests of all parties are balanced, and that there is an independent body to ensure that this balance is maintained,” she said. “The North West Iron Ore Alliance therefore supports the need for a strong Regulator who would be responsible not only for approving such factors as the pricing and costing of the rail haulage regime, as but also for key issues such as capacity and service level principles, safety principles and capacity modelling principles.”
The North West Iron Ore Alliance was formed in 2007 to support the development of a junior iron ore sector in the Pilbara. The member companies – Atlas Iron, BC Iron, Brockman Resources and FerrAus – have agreed to cooperate on issues such as infrastructure development and access, statutory approvals and community development.
Collectively the members of the North West Iron Ore Alliance have the potential to deliver over 50 million tonnes of iron ore per annum by 2014, generating approximately $165 million in State royalties per annum.
August 4, 2008
August 4th (The Age) – POLITICAL intrigue and rising resources nationalism has raised fresh doubts over Rio Tinto’s grip on its $US6 billion ($A6.46 billion) Simandou iron ore project in Guinea.
Rio has portrayed the proposed development of the huge iron ore deposit as a Pilbara in the making.
And because of its importance as a growth project, it is a key plank in Rio’s defence against BHP Billiton’s $170 billion takeover bid.
But a rattled Rio has revealed that it has received correspondence from Guinean President Lansana Conte purporting to rescind the Simandou mining concession.
Along with its partner in the project, the World Bank’s International Finance Corporation, Rio is studying the issues raised in the correspondence.
Rio said it was “confident that its arrangements are in all respects in conformity with Guinean laws and that it has complied with its obligations”.
It said it had negotiated and executed the mining concession in “full transparency with the Guinean Government”.
Rio’s potential loss of Simandou came as President Conte sacked Secretary-General Mamady Sam Soumah. State TV said Mr Soumah would be replaced by Alpha Ibrahima Keira, the president’s son-in-law.
It was Mr Soumah who first raised tenure concerns for Rio over Simandou in May when he said the Government would be reconsidering the concession because of irregularities in the original agreement. Just as ominous, Guinea’s latest threat to Rio’s Simandou ownership follows the return to Beijing of a Chinese trade delegation offering billions of dollars of investment in Guinea in return for Chinese ownership of resource projects.
There is long-running unease among foreign resource companies in Guinea because of a special committee set up to renegotiate all mining agreements, ostensibly to capture a bigger share of the boom in commodity prices.
Even so, Guinea’s Mines Minister, Ahmed Kante, said early last week that Rio’s Simandou iron ore mine was on track and would benefit Guinea and the company.
The question over Simandou ownership could not come at a worse time for Rio. In May, Rio called on the market to start ascribing some value for the project in valuations of the company — an effort to close the widening gap between the imputed value of BHP’s 3.4-for-1 conditional scrip bid and Rio’s share price.
But shortly after Rio’s call to the market, the first query on Simandou’s mining concession from the Guinean Government surfaced. Somewhat ironically, it was BHP managing director Marius Kloppers who some time later warned about getting too excited too early about projects subject to high levels of sovereign risk. He used BHP’s bauxite-alumina project plans in Guinea as an example.
Rio has spent or committed to spend $US300 million on Simandou.
August 4, 2008
August 4th (Reuters) – Brazilian iron ore miner Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research) has ordered a dozen of the largest class of ore carriers from a Chinese shipbuilder for $1.6 billion, aiming to boost business with fast-growing Asian customers.
Vale, the world’s largest iron ore miner, expects the huge vessels to reduce shipping costs and make its ore more competitive with nearer Australian and Indian ore for the fast-growing Chinese steel industry, already the world’s largest.
“Looking at the expansion projects we have and (what) other players are doing, we don’t see the level (of ore demand) will be down for the next 2-3 years,” Eduardo Bartolomeo, Vale’s executive director for logistics, told reporters.
Vale said it ordered 12 very large ore carriers from Jiangsu Rongsheng Heavy Industries Co Ltd, each with a capacity of 400,000 deadweight tonnes. Delivery of the first is expected in early 2011 and the order is due to be completed by 2012.
The carrier programme adds to Vale’s previously announced global investment programme of $59 billion for 2008-12, as it aims to boost iron ore output by 50 percent to 450 million tonnes by 2013.
Vale has said it planned to ship more than 100 million tonnes of iron ore to China in 2008 under term contracts, a rise of 10 percent from 2007.
China’s crude steel output this year is forecast to rise about 10 percent to 550 million tonnes.
“So what we are doing is to find that option that gets iron ore closer. What we are doing is to stimulate steelmakers to build larger ships,” Bartolomeo told a media briefing, adding that Vale would outsource the operation of the fleet.
Asian steel mills’ negotiations with ore miners on annual term iron ore prices in 2008 stalled over the proposed inclusion of a freight premium sought by the Australian miners to reflect the higher shipping costs to China for Brazilian ore.
Bartolomeo said the large vessels would help Vale, which shed its sea transport operations in 2001, to address logistics shortcomings and better compete with global rivals such as BHP Billiton (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research).
The Australian companies received higher price increases than Vale in annual iron ore supply contracts with Asian steel mills for 2008.
“We’re trying to correct it — not the premium, but the freight rates,” Bartolomeo said. “I’m not happy with the freight levels. I don’t think they represent the actual cost of transportation.”
The Baltic Exchange chief sea freight index .BADI for global raw materials trade soared to a record 11,793 points in May, although it has since eased to 8,280 on Friday.
Vale, formerly Companhia Vale do Rio Doce (CVRD), said the new vessels would be part of a Brazil-Asia shuttle service with 18 very large ore carriers able to haul a combined total of 7.1 million deadweight tonnes.
The fleet will be able to carry an estimated 30.2 million tonnes of iron ore per year from Brazil to Asia, equivalent to 31 percent of the company’s shipments to China in 2007, Vale said.