The West

Chris Ellison. Picture: Simon Santi/The West Australian.
Chris Ellison. Picture: Simon Santi/The West Australian.

Mineral Resources is thought to have begun the process of striking a peace deal with Aquila Resources suitor Baosteel over a restructured West Pilbara iron ore development, a day after snaring a 12.8 per cent stake in the $1.4 billion takeover target.

MinRes managing director Chris Ellison is also understood to have met Aquila boss Tony Poli in the past two days to spell out his vision for a slimmed-down and fast-tracked development of West Pilbara, which remains the biggest undeveloped iron ore project in the Pilbara outside Gina Rinehart's under-construction Roy Hill venture.

However, it remains unclear in what form MinRes wants to join the West Pilbara consortium, which already includes Aquila (50 per cent), AMCI (25.5 per cent) and Posco (24.5 per cent).

Mr Ellison was not talking yesterday but in a statement said MinRes had devised a business case for a "fit for purpose total mine-to-port development plan", including ore processing, mine-related infrastructure "as well as the supply chain through to shiploading".

As _WestBusiness _revealed yesterday, MinRes has been in talks with Aquila for several months about joining the West Pilbara project as Mr Ellison tries to secure a bigger and longer-life project to replace his company's collection of lucrative but short-life deposits.

MinRes was jolted into drastic action by Baosteel and Aurizon's hostile bid for Aquila five weeks ago and on Wednesday bought out the target's third-biggest shareholder, M&G, for $3.75 a share. The buyout compared with Baosteel-Aurizon's $3.40 bid price, which has long been regarded as too low to ensure the suitors would prevail.

Aquila shares yesterday fell 7¢ to $3.54 as investors realised MinRes was not interested in bidding but also bet that Baosteel and Aurizon were unlikely to lift their offer towards $4.

While Aurizon now appears to be frozen out by MinRes' sudden arrival and intention to take over as West Pilbara's infrastructure provider, Baosteel may be comfortable with the Ellison company's involvement if it delivers a faster and cheaper development of the iron ore project.

Baosteel is already a customer of MinRes' iron ore business.

Aquila is expected to release its target statement, with Grant Samuel's independent expert report on the Baosteel-Aurizon $3.40 bid, early next week.

The West Australian

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