Berths behind battle for Atlas Iron

In April, fellow third-tier producer Mineral Resources (MR) launched a A$280M, all-scrip takeover offer for Atlas, another junior that has been struggling with poor prices for lower grade ore. The Atlas board recommended the deal, but some unhappy shareholders caused it to stall.
Just as MR was flagging a revised bid in early June, Andrew Forrest’s Fortescue Metals Group (FMG) acquired rights to a 19.6% holding in Atlas through an FMG subsidiary, effectively blocking MR. However, within a matter of days Gina Rinehart’s Hancock Prospecting (Roy Hill Mining) had bought a similar stake, thus snookering MR and FMG, and, shortly afterwards, lodged a full takeover offer of A$390M in cash. The Atlas board has urged shareholders to accept the Rinehart bid, but Forrest has stated his intention to retain his stake.
 
Atlas, which closed mines in May and October last year, and now has only one operational site, at Mount Webber (due to close in 2022), would not seem an attractive target – except that it has loading rights for 15 Mtpa through Port Hedland’s Utah Point Common User Facility, and, via membership of the (dormant) North West Infrastructure consortium, rights to a prospective 31.5 Mtpa at the still-to-be-developed South West Creek (SWC) project in the port.
 
SWC was originally reserved by the Western Australian Government for up-and-coming miners, but FMG and Hancock both believe this position is ultimately negotiable. Slated at 50 Mtpa capacity, SWC is adjacent to FMG’s and Hancock’s 70%-owned Roy Hill Mining export terminals.