Genesee & Wyoming Australia has signed a rail haulage agreement with a subsidiary of WPG Resources Ltd to transport 3.3 million tons per year of hematite iron ore from WPG’s Peculiar Knob mine in South Australia.
GWA plans to operate unit trains of iron ore from a rail siding near Wirrida, South Australia, located on the recently acquired Tarcoola to Darwin rail line, to a new bulk export facility in Port Pirie, South Australia.
The haulage service is expected to start in the second quarter of 2012 and continue for a minimum of five years, and it may be extended depending on the development of certain nearby iron ore deposits.
To provide the rail haulage service, GWA has entered into a locomotive purchase agreement to acquire nine new, 4,400-horsepower locomotives and will make certain other rolling stock and facilities investments of approximately A$67 million (US$72 million).
When the iron ore mine is shipping at full capacity, GWA expects the new contract to generate total annual revenues of approximately A$50 million (US$54 million).
Both of these transactions are contingent upon the satisfaction of certain conditions precedent, including WPG obtaining final approval of two permits from the Government of South Australia related to the development of the mine and port infrastructure.
It is currently expected that these two permits will be obtained by July 2011.
John C. Hellmann, President and CEO of GWI commented:
“We are pleased to be expanding our iron ore business in South Australia and look forward to providing WPG with the safest and most reliable service in the Australian rail industry.
“In the past three months, we have now announced orders for a total of 16 high horsepower locomotives in Australia, which is reflective of both our service commitment to existing customers and the expansion of our business with new mining customers.
“Australia remains a priority for GWI’s investment strategy, and we are engaged in several other potential new projects.”
