Resources and mining companies dominating the headlines this past week include Rio agreeing to give up its legal right to a Pilbara water supply, Aquila is granted an injunction against Vale, QR National inks a deal to construct the Wiggins Island Rail Project and Oil Search confirms it is in talks with potential joint venture partners.
And we speak with Metallica Director John Haley about how the deal with Rio really came about.
Rio water for waiver dealRio Tinto Limited
(ASX:RIO) has agreed to give up its legal right to a Pilbara water supply in return for a government waiver on secondary iron ore processing obligations. The deal allows the West Australian government to defer a planned desalination plant for the region, saving $370 million. Rio will develop its own water supply from the Bungaroo Valley for around $300 million.
Metallica's deal with RioRecent media reports claim Metallica Minerals Limited
(ASX:MLM) received a cold call from Rio Tinto asking if it wanted to pick up the Stockdale-Glenaladale mineral sands project in Victoria's East Gippsland area. In 2008 Rio chief Tom Albanese ranked the project as one of Rio's top exploration chances around the world.
Speaking with the Finance News Network, Metallica Director John Haley says there's a bit more detail to it than reported.
"One of our mineral sands and limestone managers was at a conference and he was talking with a number of people who had mineral sands projects. One of them happened to be a Rio representative who mentioned this project and the fact that they were looking at offloading it because it didn't meet their criteria of size."
Mr Haley said the negotiations then began, and the process was relatively straight forward.
"We probably got in reasonably early as we understand... We put forward a proposal... and [Rio] said our offer, with a bit of tweaking was basically acceptable. We may have just made a good first offer that didn't require much amendment in order to meet their criteria."
Now Metallica has a one year option period to evaluate the project.
"We have to spend some money on the evaluation... We're going through now an evaluation process on all fronts... before the larger payment is due to Rio in a year's time."
Aquila and Vale Eagle Downs disputeThe Queensland Supreme Court has granted Aquila Resources Limited
(ASX:AQA) an injunction barring Brazilian miner Vale from holding a meeting to vote on whether to start construction at Eagle Downs. A feasibility study was completed in May, but Aquila believes the study wasn't bankable, as it lacks infrastructure access, making it near impossible to get project financing. A "no" vote from Aquila, under the terms of the agreement, would entitle Vale to buy out its stake in Eagle Downs for half the market price. This is one of a series of disputes between the two companies.
Wiggins Island Rail ProjectQR National Limited
(ASX:QRN) has inked a deal to construct the $900 million Wiggins Island Rail Project to a new export terminal at Gladstone with a consortium of coal companies including Wesfarmers Limited
(ASX:WES) Curragh, Cockatoo Coal Limited
(ASX:COK), Bandanna Energy Limited
(ASX:BND) and Aquila Resources Limited
(ASX:AQA) and Northern Energy Corporation Limited
(ASX:NEC). Construction is set to begin early 2012 and planned for completion by March 2015. The project supports the initial 27 million tonnes per annum of coal to the proposed Wiggins Island Coal Export Terminal at Gladstone.
Oil Search JV talksOil Search Limited
(ASX:OSH) has confirmed it is in talks with potential joint venture partners for its liquefied natural gas project in Papua New Guinea. Executive general manager, Phil Caldwell, says the company has already had a series of discussions with prospective partners about the opportunity and potential deal structures. Any potential deal would only be likely to surface after the results of its seismic interpretation of the project have been completed, expected to be by the end of 2012. The oil and gas field explorer is targeting first production from the project in 2014.
Resources NewsThe Australian economy will require $2 trillion in investment if it is to take full advantage of the mining boom driven by urban industrialisation in emerging markets, according to a study by ANZ and Port Jackson Partners. The study pictures the economy built on the mining sector, and warns politicians not to dampen the commodities boom.
Melissa Beaumont Lee
