Takeover target Atlas says Australia port rights hinge on state ruling

Takeover target Atlas says Australia port rights hinge on state ruling

Thu, 28/06/2018 - 10:01
0 comments
Port Hedland

Doubt over access to Australia's biggest iron ore export facility have clouded the takeover battle for Atlas Iron. Photo: Port Hedland Port Authority

Port rights at the heart of a takeover tussle for Atlas Iron could be worth nothing to a successful buyer unless the Western Australian state government changes its policy on those rights, the junior iron ore miner says.

The comments came after world no.4 iron ore miner Fortescue Metals Group raised questions about a $390 million takeover bid for Atlas from a unit of billionaire Gina Rinehart's Hancock Prospecting.

Both Hancock and Fortescue, controlled by fellow billionaire Andrew Forrest, covet Atlas' rights at Australia's biggest iron ore port, Port Hedland, given limited opportunities for expansion. Hancock majority-owns the Roy Hill iron ore mine.

Fortescue has built up a near 20 per cent stake in Atlas, enough to block Hancock's Redstone Corp from taking full control of the small miner, and said on Tuesday it was still assessing its "strategic options regarding our shareholding in Atlas".

Atlas holds the port rights through a joint venture of three junior miners called North West Infrastructure, which was given priority nine years ago to develop two berths with capacity of 50 million tonnes a year at Port Hedland.

Atlas said the state had taken exclusivity away from North West Infrastructure to develop the two berths but still wants the port capacity to be set aside for junior miners, which would rule out Hancock or Fortescue.

However, it also pointed to comments in the media from WA premier Mark McGowan indicating that the state "has not ruled out a compromise on its 'junior miner' policy if an iron ore major emerges as an owner of Atlas."

Atlas made the comments in response to questions raised by Fortescue on Tuesday seeking clarification about the status of North West Infrastructure.

Fortescue has also asked Australia's Takeovers Panel to delay Hancock unit Redstone's bid for Atlas until it fixes what it alleged were "misleading statements and material omissions" in the bidder's statement.

Redstone has since updated its bidder's statement saying it might not be able to carry out its intentions for Atlas if it fails to win 100 percent ownership.

It also said that if it did take over Atlas it would review the need for further port capacity and would back the Atlas board seeking approval from the state for a port development, "should a business case be proven and funding be available".