Switch from road to rail eats into solid Midwest profits

<p>Midwest Corporation has recorded a $2.1m profit in its first year of iron ore shipments from the port of Geraldton, despite the additional expenses associated with a transition to rail haulage.</p> <p>The junior miner shipped 744,000 tonnes of iron ore fines from the port to China in 2006, netting the company $33m in sales revenue for the 2006 calendar year.</p> <p>The Western Australian Government requires all iron ore mines within 200 km of an operational rail line to use the rail haulage instead of transporting product by truck.</p> <p>Mt Gibson’s 3mtpa Tallering Peak and Midwest’s 1mtpa Koolanooka mines are the two operating mines subject to the directive.</p> <p>Midwest recorded earnings before taxes, depreciation and amortisation (EBTDA) of $9.4m for the year, which does not include a $1.2m loss incurred when it terminated a truck haulage contract.</p> <p>Midwest has also downgraded the life of its truck receival assets at the Port of Geraldton, losing $2.3m, because of the early shift to rail.</p> <p>The company’s chief Bryan Oliver said the extra costs had stemmed from the transition to road and rail and high infrastructure expenses.</p> <p>Midwest plans to ramp up its Koolanooka mine to 2mtpa by 2008.</p> <br />