Mineral Resources (ASX:MIN) share price jumps on rail agreement

The miner released an update today on a port and rail agreement in Western Australia.

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Shares in mining services company Mineral Resources Ltd (ASX: MIN) charged higher today and finished 3.35% in the green at $44.99 apiece.

Investors responded positively after the company announced it has entered into a port and rail agreement with Hancock Prospecting Ltd and Roy Hill Holdings Ltd.

Here are the details.

Pilbara ports

Under the agreement, Mineral Resources and Hancock will jointly investigate the development of a new iron ore export facility at Port Hedland’s Stanley Point Berth 3 in South West Creek, Western Australia.

Roy Hill is set to provide services to both companies for “development and operation of the project, including rail haulage and port services”.

According to the company, the project aligns with its strategy to unlock stranded deposits in the Pilbara by developing pit-to-port solutions and expanding its capability to be a low-cost international iron ore supplier.

Mineral Resources and Hancock will form a joint venture to seek to obtain necessary approvals and agreements with the Pilbara Ports Authority (PPA). If successful, the pair will develop and operate the iron ore export facility at Port Hedland’s Stanley Point Berth 3.

The project is subject to a number of contingencies, including a grant by the PPA and both companies agreeing to take a final investment decision to proceed.

Investors can expect more updates as the project works through its milestones, according to the announcement.

What’s the purpose?

According to Mineral Resources, the project gives the company a port and rail haulage solution to deliver ore mined
from its deposits to Port Hedland.

It notes that “haulage solutions are key to unlocking stranded assets in the Pilbara and this agreement will provide a cost-effective solution for [the company] to develop its Pilbara assets”.

Hence the move is undoubtedly a strategic one for Mineral Resources to continue developing its interests in the Pilbara region.

Commenting on the agreement, Mineral Resources managing director Chris Ellison said:

We are pleased to have entered into the Port and Rail Agreement with Hancock and Roy Hill. This partnership and
infrastructure sharing is the first of its kind in the Australian resources industry and would enable significant value to be unlocked for MRL in a sustainable manner.

Ellison continued:

Our long-stated strategy is to transition from short-life, high-cost mines to lower-cost, long-life operations underpinned by innovative infrastructure solutions. Developing our stranded assets will provide additional growth for MRL’s unique mining services build-own-operate model.

Mineral Resources share price snapshot

The Mineral Resources share price has gained 41% in the past 12 months and has lifted 20% this year to date.

It has climbed 17% in the past month alone and is flying in the past week as well, after gaining another 9%.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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