Monsters of Rock: Rinehart is all dressed up to rock Pilbara iron ore expansion
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It’s no secret Gina Rinehart’s move on Atlas Iron a few years ago has been a good marriage for both, giving Hancock Prospecting a portfolio of close to shovel ready iron ore resources to plunder with the capital backing the junior didn’t have when it was a listed company.
With solutions for port space and infrastructure now cleared up with a new capacity expansion from the WA Government at Port Hedland, an avenue is opening up for Rinehart to expand the production base of her solely owned iron ore assets should the market allow.
While the bulk of Rinehart’s wealth currently comes from her 70% shareholding and monster dividends from 60Mtpa exporter Roy Hill, high iron ore prices have made the previously vulnerable Atlas a handy signing.
Atlas generated NPAT of $938 million in FY2021. They won’t be that high this year, but the extra cash has provided a sensational base for expanding the business.
To that end Atlas is getting to the business end of planning for its McPhee Creek iron ore mine, a greenfield development around 30km north of Nullagine.
A public environmental review has been kicked off by WA’s EPA, due to close on August 22. The highest level of review under the state’s enviro laws, a positive outcome and Atlas plans to begin construction this year at McPhee Creek with a view to mining in 2023.
It will produce up to 14Mtpa over 15 years to 2038, a not insignificant contribution to WA’s famous iron ore sector.
That comes at a time when the majors are struggling to increase their production levels as supply chains and labour issues hamper developments and blowout construction budgets.
They have largely focused on incremental and replacement capacity in recent years with a focus on quality and improving the sliding grade profile of their products to capture prices closer to ore above the benchmark 62% Fe index.
Rinehart, Australia’s richest person, is keen to keep growth on the agenda at her various businesses.
Alongside McPhee Creek Atlas is also studying the feasibility of developing the Ridley magnetite deposit and a joint venture on the Mt Bevan magnetite project near Kalgoorlie with Hawthorn Resources (ASX:HAW) and Legacy Iron Ore (ASX:LCY) as well as the 20Mtpa Mulga Downs mine owned independently by Hancock.
The news has come on a day of weakness in mining markets, with falling commodity prices seeing all the big miners struggle.
The materials index tumbled 2.77% and Singapore iron ore futures dropped 3.99% to US$108.40 to hit a three week low.