QR on track for huge iron ore deal in WA

A heads of agreement involves the haulage of 8 million tones per annum (mtpa) of magnetite and 3 mtpa of direct shipping ore over a distance of 300 kilometres from mine to port.
The deal encompasses bulk haulage transport operations both on the new 85 km spur line to be built from Karara to Tilley Siding, near Morawa, and on the existing Morawa-Geraldton narrow gauge railway line.
While no contract prices have been revealed, the deal will reportedly be worth about $150 million a year to QR.
The Karara project is located 500km north-east of Perth and 225km of Geraldton. It is the Mid West region’s largest resources project and is being developed as an integrated iron ore project under a 50/50 joint venture between Gindalbie Metals and Chinese steel and iron ore company, Ansteel.
Gindalbie’s managing director, Garret Dixon, said QRF was selected on the basis of its strong presence in Western Australia through its business Australian Railroad Group (ARG) and its significant experience in operating and maintaining bulk freight haulage services.
AGR, which QR acquired in 2006, is reportedly the largest haulier of iron ore in Australia outside the Pilbara region.
“This is potentially one of the largest individual long-term contracts which will be awarded for the Karara Project, with a value of several hundreds of millions of dollars over the initial 10-year period,” Dixon said.
“Under this contract we will secure the transport of our iron ore products initially through Geraldton and then to Oakajee Port when it becomes available.
“We are very pleased to have on board one of the largest and most experienced bulk rail freight operators in the country. We have now established a strong framework agreement and a relationship that will form a key part of the Karara project development and operations for many years into the future.”
QRF executive general manager Ken Lewsey said Karara is a significant project for WA.
“It represents the first phase of developing the Mid West as the state’s second iron ore province and, as the first of the foundational projects for Oakajee to come on stream, will help drive the delivery of Oakajee infrastructure,” Lewsey said.
Gindalbie reportedly announced last week that it had secured a US$1.2b, 12-year loan facility from the China Development Bank and Bank of China.
Construction commenced at Karara last year and is progressing on schedule.