Spate of mergers in line for junior ore producers

The Age

Friday September 25, 2009

By MATHEW MURPHY

THE proliferation of junior iron ore producers in Western Australia€™s Pilbara region makes consolidation inevitable, according to BC Iron, which is ramping up to become the next iron ore exporter early next year.BC Iron managing director Mike Young said the group had a strong cash position and had been eyeing off potential acquisitions, although nothing had materialised.So far, Atlas Iron€™s friendly $65 million all-scrip purchase of Warwick Resources has been the extent of consolidation. But just this month China Railway Materials agreed to invest in two junior iron ore developers, injecting $27.2 million in United Minerals and $12.6 million in FerrAus.Access to infrastructure, including rail access, is the main driver towards consolidation as the juniors are unable to fund large-scale production.BC€™s start-up operation at Nullagine in the Pilbara began surface mining last week, and the company expects production to begin in April.BC has been one of the more fortunate juniors, having struck a deal with Andrew Forrest€™s Fortescue Metals Group, which is its 50 per cent joint-venture partner in its Nullagine project.BC Iron shares finished unchanged yesterday at $1.18.This reporter visited the Nullagine project courtesy of BC Iron.

© 2009 The Age

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