Aurizon Holdings has set up a project hub in Perth to work on iron ore rail and port for the West Pilbara project, but is wary of commercial hurdles.
CEO Lance Hockridge spoke at the first annual meeting in Perth yesterday, telling shareholders Aurizon had already invested $400 million in WA and built up a workforce of 1000.
Aurizon is known for its role as Queensland Rail with coal haulage, and presently transports iron ore for the Karrara project, owned by Gindalbie Metals.
Aurizon participated in the $1.4 billion Baosteel takeover of Aquila Resources in order to take a lead role in development of transport for the West Pilbara project, which requires a new port at Ankatell, near Cape Lambert.
“Clearly there is a lot of work to be done and we are focussed as a team to ensure this is done comprehensively and aligned to our business partners,” Hockridge told shareholders.
However, iron ore prices have plunged to new lows and will probably continue to fall with a global supply glut, which could hamper plans for development in WA.
Iron ore is presently trading around $75 per tonne,
The West Australian reported Hockridge did not expand upon the “commercial hurdles” the company faced, but did thank state government departments for “their assistance with progressing this proposal”.
Aurizon has also recently announced intentions to buy back five per cent of their issued share capital, which is approximately 107 million shares.
“The buy-back reflects Aurizon's strong balance sheet and highlights our ability to return capital to shareholders, while also maintaining the flexibility to fund appropriate growth projects and our commitment to our current BBB+/Baa1 credit ratings,” Hockridge said.
The buyback will commence within the next 12 months, according to a company statement, although the timing and number of shares bought will depend on price and market conditions.
Any shares bought in the buyback will be cancelled.
Aurizon was publically listed in 2010, and is trading at $4.76, down slightly after a 15c jump yesterday morning.