FMG sale won't affect $190m deal: BCI
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Iron ore producer BC Iron says its $190 million deal with Fortescue Metals to boost output to six million tonnes will not be affected by any sale of Fortescue's infrastructure assets.
Fortescue Metals Group said earlier in the week it was in negotiations with potential investors in Fortescue subsidiary The Pilbara Infrastructure, which owns the miner's rail and port assets.
BC Iron chief executive Mike Young said the talks could be a precursor to more third party access to infrastructure assets in the iron ore rich Pilbara region of Western Australia, but investors would have to wait and see.
"The FMG deal won't affect us because we've got contracts with FMG," Mr Young told a mining lunch in Perth on Tuesday.
He said last week's $190 million deal with joint venture partner Fortescue was "watertight".
Under the deal, BC Iron will take an additional 25 per cent stake in the Nullagine mine project in the Pilbara, bringing its stake to 75 per cent as it increases output to six million tonnes per annum next year.
"That's all I know, that's all I care about," Mr Young said.
"Will it help the others, possibly. We'll have to wait and see."
He said BC Iron had been criticised over its partnership with Fortescue but the company had achieved iron ore exports in 2011.
Mr Young also pointed to a substantial lift in the company's share price after the most recent deal was announced to the market.
Fortescue chief executive Nev Power has said any infrastructure sale would take place at full and fair market value and on the basis that the current efficiency of infrastructure and mining operations are not affected.
Mr Young added that under the $190 million deal any excess capacity could be sold on the spot market.
In the wake of recent iron ore price volatility, the company was keeping an eye on potential overseas joint venture partners in countries such as Brazil.
"Even when prices went down in September we were always at or above margin," he said.
The Nullagine mine project is forecast to have a life of around seven years and BC Iron's total costs are around $60 to $65 per tonne.