Australian iron ore miner Gindalbie Metals has announced that it has secured a $900 million rail haulage agreement with Australia's largest rail freight company QR National for the miner's joint venture Karara iron ore project in Western Australia.
Under the terms of the deal, QR will transport 10 million metric tons per annum of hematite and magnetite ore from Karara over 10 years starting from January 2012. The deal will generate about $900 million in revenue for QR, which will also invest more than $200 million in new locomotives, wagons and upgraded administration and maintenance facilities at the Narngulu East Facility near Geraldton. Once ramp-up is completed, the rail haulage services provided by QR will involve four trains per day with 100 wagons per train. The Karara project is a joint venture between Gindalbie Metals and Chinese steelmaker Ansteel through their jointly owned company Karara Mining.
The deal is subject to rail access agreements with rail owner Westnet, agreement with Karara Mining's security trustee and Karara obtaining the consent of its financiers to the final form of the agreement. Karara and QR National Freight have also signed a separate relationship agreement to work together on any future expansions.
Gindalbie's managing director Tim Netscher said the signing of a long-term commercial agreement with QR represented a major milestone for the Karara Project, locking in the ore haulage component of the logistics chain. Mr. Netscher commented, "Work on the Karara Project is moving very rapidly with approximately 1,300 people currently working on the construction of the processing plant, mining operations and all of the supporting infrastructure such as the rail spur, high voltage power line, water pipeline and Geraldton port."
Karara Mining recently commenced railing and shipping operations for hematite ore under an initial sales agreement with Sinosteel Midwest Corporation, a subsidiary of China's Sinosteel Corporation, as part of a trial mining exercise. More than 100,000 metric tons of direct shipping ore has so far been hauled by QR National Freight and since May haulage has exceeded the 60,000 tonnes per month target.