A major milestone has been reached on the West Pilbara Iron Ore Project (WPIOP) in Western Australia, with the signing of an infrastructure framework agreement between between the key stakeholders and rail operator, Aurizon.
The finalisation of the agreement represents the first major milestone for the WPIOP since the $1.4 billion acquisition of Aquila Resources by Baosteel and Aurizon was completed in July this year.
The first stage of the project involves development of a new deep-water port at Anketell and a 280 kilometre railway to support at least 40 million tonnes per annum throughput from eight mining areas.
The infrastructure could be expanded in the future to accommodate additional tonnage from both foundation customers and other miners without access to rail and port infrastructure. The Western Australian Government estimates that Anketell has a potential export capacity of up to 350 million tonnes per annum.
“AMCI has been invested in this project since its inception a decade ago and we’re pleased past issues are behind us,” said Mr Hans Mende, President of AMCI. “The agreement brings together parties that can genuinely underpin delivery of one of the most exciting resource projects on the globe. We’re committed to making this greenfield iron ore project a commercial reality and helping establish a new phase of economic investment in Australia.”
Mr Kimok Yun, Senior Vice President of Raw Materials department of POSCO said: “POSCO considers the delivery of rail and port infrastructure is a key component of facilitating the development of the Pilbara project. We are pleased to discuss the development of the rail and port infrastructure with such capable companies. All four parties are heading in the same direction and we look forward to working together to progress the project.”
The WPIOP is being developed by the Australian Premium Iron Joint Venture (APIJV), a 50/50 joint venture between Aquila (Baosteel 85%, Aurizon 15%) and AMCI (IO), which in turn is 51/49 owned by AMCI and POSCO.
The project remains well positioned with key Western Australian State and Federal environmental approvals granted for the mine, rail and port elements of the project. Aurizon, Baosteel, AMCI and POSCO will continue to work closely with government and regulatory agencies to finalise remaining approvals and regulatory requirements including a Rail State Agreement and Port Lease.
“Aurizon is delighted to have secured the agreement of Baosteel, AMCI and POSCO in the IFA to support the infrastructure requirements for the West Pilbara project,” Aurizon Managing Director and CEO Lance Hockridge said. “These companies are global leaders in the resources and the steel sector, bringing the demand and scale required to sustain such a major infrastructure investment.
“Aurizon’s job now is to deliver a commercially-attractive and scalable infrastructure solution for Baosteel, AMCI and POSCO. We know that the creation of world-class rail and port export infrastructure is critical to driving globally-competitive exports and economic wealth for the country.”
Under the terms of the IFA, Baosteel, AMCI and POSCO have provided Aurizon with a period of exclusivity to develop an infrastructure solution for WPIOP. The existing minimum 12-month period of exclusivity has been extended until up to January 2016, subject to Aurizon delivering an acceptable base tariff (+/- 15%) by the applicable milestone date (currently anticipated at October 2015). If Aurizon does not deliver an acceptable base tariff by the applicable milestone date, or a commercial agreement cannot be finalised by the expiry of the exclusivity period, then Baosteel, AMCI and POSCO have the right to terminate the IFA and seek other options to progress the WPIOP.