$55bn Iron Boomerang project still picking up speed

An ambitious plan to link Western Australia’s iron ore with Queensland’s coal via an inland rail link, is still being considered with the project’s chief spruiker this week lobbying Asian steelmakers for support. The Australian newspaper reports that Shane Condon, a Brisbane-based businessman, will visit China, Japan and South Korea over the coming days to drum up support for a pre-feasibility study into the project which could cost about $55bn. The plan involves linking Port Hedland, on the Pilbara coast of northwest Australia, with the Queensland ports of Gladstone and Mackay via a $3bn-plus, heavy-duty rail line. Free-trade industrial business parks would be built on either end, with iron and steel makers expected to want to set up steel and iron production facilities on both ends. Organisers hope to see about six high-tech blast furnaces built, which would be fed by WA’s iron ore and Queensland’s coal. The rail line would carry full loads of iron ore west and full loads of coal east, with the emphasis on avoiding empty ships. China has already begun moving some of its inland steel production to deep-sea ports on the coast to minimise transport costs. The project’s financial advisor, ANZ chief economist Saul Eslake, told Lloyd’s List DCN that the focus at the moment was on assessing whether there was enough support for the idea from steelmakers and government. &#8220There has been strong interest from the Queensland government and the idea has been referred to the Federal Government taskforce,&#8221 Mr Eslake said. He said that while it might require some government underwriting, it was essentially a privately-funded project because the users would be the ones to see the benefits. Mr Condon will meet representatives from Baosteel, China’s biggest steel-producer, and Hyundai in Beijing over the next few days to gauge their interest in the idea. He will also meet with staff from South Korea’s Posco and Japan’s Nippon Steel. The idea was first proposed 30 years ago, but had not progressed until a consortium of engineers, economists and resource experts &#8211 self titled the Australian EW Rail and Industrial Smelting Parks Project &#8211 formed to examine the concept. Mr Eslake said the east-west link would add value to Australia’s two biggest exports, after many years of exporting the raw product elsewhere only to see overseas producers benefit. He said Australia had not fully exploited its wealth of resources. Construction, depending on government approval and the support of steelmakers, could begin in early 2009.

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