Major Miners Handing Out Contracts in the Pilbara

Australian iron ore miners Rio Tinto ( ASX:RIO,NYSE:RIO,LSE:RIO) and Fortescue Metals Group (ASX:FMG) have been busily improving their train networks, awarding rail maintenance and construction contracts to third parties for infrastructure assets linking their mines to ports.

Fortescue is reported to have lined up NRW Holdings (ASX:NWH) as its preferred contractor to work on rail linkages and infrastructure at its Eliwana project, while Rio Tinto has awarded Downer Group (ASX:DOW) a five-year contract for rail renewal.

Both companies committed to spending big in 2018, launching mine-replacement projects in the Pilbara region of Western Australia intended to maintain their positions as iron ore majors.

According to Downer, the company had already been working with Rio Tinto providing track construction services as well as tire management across its iron ore assets.

“This new work will see us set a target of 35 per cent local content, including partnerships with local business to develop a Pilbara rail workshop facility as well as the delivery of rail training to improve the skills and capability of local suppliers,” said Mark Mackay, Downer’s executive general manager of infrastructure projects.

As Downer continues to work with Rio Tinto it will be kept busy, as the company operates a 1,700-kilometer network of rail connecting 16 iron ore mines to four port terminals, with haulage handled by autonomous robot trains.

Fortescue’s contract, reportedly going to NRW, is for the delivery of stage-one earthworks, roadworks and drainage works at the Eliwana iron ore project, which Fortescue committed to in May last year.

The Eliwana project will require another 143 kilometers of rail to connect the new operation to Fortescue’s existing 620-kilometer network of rail linking its operations in the region.

On the ASX on Wednesday (January 9), Fortescue Metals was down 1.83 percent, trading at AU$4.57, while Rio Tinto was up 0.39 percent at AU$80.34.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.