Feasibility study of Wonarah project rail link

By Jennifer Perry

Minemakers general manager projects development, Neville Bergin told Rail Express that the rail link is appealing to Minemakers because, we see it as a great opportunity to significantly reduce one of the main cost inputs in our operating costs.
Rail haulage is cheaper than road by a factor of somewhere around four or five times, so the potential impact could be a reduction of 30 per cent of our logistics costs.
The construction of a standard gauge rail spur line from near Tennant Creek to the mine site would likely result in considerable cost savings by removing the road haulage and re-handling aspects and, subject to market demand, could allow considerable expansion of production.
The feasibility study will be managed by ATEC with appropriate input from Minemakers, with Stage One of the study completed by May 31st this year. Subject to Stage One outcomes, Stage Two is planned to be a more detailed assessment in preparation for a formal submission to Governments for an exclusive mandate to build and operate the rail link.
When asked if he expects a positive outcome from Stage One of the MoU, Bergin said that until Minemakers has a good understanding of what the capital costs might be and also what ATECs funding structure might be, its hard for us or for them to know what fee they might charge for the use of the rail service and therefore, if it is a net benefit to us and if so by how much?
Should the financial study prove positive, the two parties would aim for construction of the rail link within the shortest practical time and ATEC would go on to manage approvals, funding and construction. Additionally, Minemakers would have the right, but not the obligation, to subscribe for up to 25 per cent in the entity.
If everything falls into place, for starters, a positive outcome to Stage One, and then Stage Two follows, construction might begin in 2012 and be completed in 2013, Bergin said.
He also said that the impact of the global financial crisis on the availability of funding remains to be seen.
The appetite for investments in infrastructure may have abated a bit, but then again, were talking two years time and the world could be a different place.
The terms of contract for haulage of Minemakers freight would be a key aspect of proving the financial viability of the Wonarah rail corridor.