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New rail plan to boost Pilbara iron ore miners

Updated Wednesday, 7 May, 2014

AURIZON’S plan to build a multi-user rail line through the Pilbara could benefit iron ore miners such as Fortescue Metals, Flinders Mines and Iron Ore Holdings.

The three companies have iron ore projects in the west Pilbara region of WA, where rail operator Aurizon intends to link Aquila Resource's deposit to the proposed Anketell Port, near Cape Lambert.

Yesterday, Chinese steelmaker Baosteel and Aurizon announced a plan to kickstart the stalled $10 billion West Pilbara Iron Ore port, rail and mine project with a $1.42 billion takeover of its major stakeholder Aquila.

While Aurizon and Baosteel are yet to release maps detailing the proposed rail line, Citi Research shows miners in the west Pilbara region are likely to take advantage of a new rail line.

“Depending on the agreed corridor, it is possible the second stage of this infrastructure project could provide rail access to mines currently owned by Flinders Mines, Fortescue and Iron Ore Holdings,” Citi researchers said.

However, the benefits could come at the expense of east Pilbara-focused companies Atlas Iron and Brockman Resources which are still waiting for a rail solution.

Talks between Brockman and Fortescue over rail access have stalled and Citi says it now appears that Aurizon management is no longer confident a new rail project in the east Pilbara will ever be economic.

“We doubt the economics of their previously proposed Pilbara Independent Rail Project are as attractive today compared to when first proposed,” Citi said.