Australian miners BC Iron and Fortescue Metals Group (FMG) have announced they are planning a joint venture to develop the Nullagine Iron Ore Project in East Pilbara, Western Australia.

FMG subsidiary firm The Pilbara Infrastructure will provide rail haulage, port handling and ship loading to the BC Iron-owned mine.

The firms will establish a joint venture for developing the project based on an ongoing feasibility study, expected to be complete by the end of June.

BC Iron managing director Mike Young said the agreement was an important step for the continued development of the junior iron ore sector in the Pilbara region.

“The joint venture and the rail haulage and port services agreements overcome the critical infrastructure barriers to iron ore production,” Young said.

Production is expected to start in early 2010 with an initial capacity of about 1.5 million tonnes a year, which is expected to rise to five million after rail and port infrastructure improvements, the company said.

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By GlobalData

BC Iron and FMG subsidiary Chichester Metals will invest about A$10m each in the project with the rest of the costs covered through external financing.

The project’s resource comprises a high-quality, direct shipping ore of 51Mt grading at 57% iron with ultra-low phosphorous.

The average operating costs of the mine are expected to be between A$40 and A$45 per tonne free on board over its lifetime.