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Juniors join forces, addressing Pilbara infrastructure issues

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Junior miners Brockman Mining and Flinders mines have signed a supply, infrastructure cooperation agreement in the Pilbara, saying they will work together on a transport solution that will get their product to market.

On Wednesday Australian Mining reported Brockman had signed a three year agreement with Aurizon that will see the rail operator develop and operate rail and port infrastructure for the company’s two Pilbara iron ore projects.

Aurizon will operate all rail, rolling stock and related infrastructure required by the mine projects and develop port facilities.

The two deals add to the mounting battle over transport infrastructure in the Pilbara.

Brockman has previously attempted to gain access to Fortescue Metals Group’s railway using third party access laws but according to The West Australian the bid has been bogged down by Western Australia’s regulatory process, forcing the miner to look at alternatives.

But according to WA Premier Colin Barnett the fight over rail access is holding projects up more than government red tape.

Barnett has previously said resource companies fighting over sharing infrastructure is one of the biggest hurdles in keeping projects to time and on budget.

He said the Department of State Development spent more time dealing with disputes between resource companies than it did solving regulatory delays.

BHP Billiton and Rio Tinto’s railways in the region were built before WA introduced third party access laws.

Fortescue is attempting to sell down its stake in its railway, with some expecting Atlas Iron to negotiate a deal to access the infrastructure to accommodate the growth of its projects in the region.

Investors’ calls for Fortescue to reduce its $US10 billion debt are fuelling the company’s move to offload its minority interest in its port and rail assets which are expected to deliver $US3 billion to the company.

The sale, which was expected to be finalised by June 30, has been pushed to the September quarter.

When Brockman asked for access to its Pilbara rail line, the Fortescue owned TPI gave a floor cost of $73.4 million and a ceiling cost of $575.6 million.

Adding to the infrastructure debate in the region is Gina Rinehart’s Roy Hill Holdings, proposing to build its own railway rather than purchase access to someone else’s.

Brockman CEO Russell Tipper said today’s memorandum of understanding with Flinders is a step forward.

"The potential aggregation of tonnages ensures a critical mass that could further enhance the economic viability of any proposed shared infrastructure solutions for junior iron ore miners in the Pilbara," he said.

Flinders executive chairman Robert Kennedy said while the deal is non-binding, its completion will benefit both companies.

"It is Flinders' intention to work with Brockman towards a binding terms sheet that aggregates the Flinders product with the Brockman product," he said in a statement.

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