Atlas Iron shares took a whacking yesterday after the Western Australian government indicated potential buyers of the junior miner may not be able to develop valuable export infrastructure in Port Hedland in the Pilbara.
Shares in Atlas, which jumped by more than 60% in the past week after companies controlled by Gina Rinehart and Andrew Forrest took large stakes in response to a the all paper (3.2 cents a share) takeover bid by ASX-listed Mineral Resources, fell steeply on Thursday coming out of a brief trading halt.
The shares fell sharply before ending the day off 17% at 3.7 cents, against 4.4 cents the day before (which was above the prices paid by Fortescue and Gina Rinehart’s group).
That halt was to allow the company to digest the news from the WA government about Port Hedland which Atlas immediately rejected.
The upshot of the advice from the government is that Atlas does not have a priority right to develop new berths with export capacity of 50 million tonnes a year at Port Hedland. Some analysts reckon that could be the asset Fortescue, the Rinehart companies and Mineral Resources are after.
Atlas understood it had first priority to develop Stanley Point Berths 3 and 4 adjacent to Roy Hill’s (the Rinehart controlled export mine in the Pilbara) existing berths by way of its 63% stake in the North West Infrastructure (NWI) joint venture with Chinese-controlled explorer Brockman Mining.
Its holding in NWI has been touted as offering an additional 30 million tonne-a-year port capacity to any prospective bidder of Atlas. Atlas is already processing and shipping manganese and lithium on behalf of other miners through its port facilities.
However, WA Transport Minister Rita Saffioti has written to Atlas stating the Stanley Point Berths 3 and 4 are set aside for junior miners and that the Pilbara Ports Authority would assess any application by NWI to develop the berths in accordance with the PPA’s standard port development process.
“Atlas considers that this position is contrary to the previous stated policy of the Western Australian government and is considering its position with respect to this notice,” the company said in a statement to the ASX yesterday.
The ministerial advice means any group taking control of Atlas would not necessarily have immediate and automatic claims to develop the new berths given they are reserved for small miners and that the NWI group does not have reserved rights over the new berths.
MinRes also noted last Friday in a statement that Atlas’ 13 million tonnes a year of allocated capacity at Utah Point was reserved for junior miners (such as in lithium), suggesting Fortescue and and the Rinehart mine will find it hard to get hold of this extra tonnage because of their existing port capacity and scale (Fortescue ships around 170 million tonnes a year through the port and Roy hill is building to its capacity of 55 million tonnes).
