Aquila Resources and AMCI’s $A7.4 billion West Pilbara iron ore project, comprising a mine, rail and port, had stalled due to budget disputes when Aquila’s major shareholder Baosteel teamed up with rail provider Aurizon Holdings for a $1.4 billion bid in May.

Baosteel expressed frustration over the project deadlock and pledged to develop the project quickly, fending off a rival bid from Mineral Resources in the process.

BC Iron managing director Morgan Ball told MiningNews.net yesterday that the company was already in discussions with IOH when the Baosteel/Aurizon bid for Aquila became public.

“It certainly didn’t discourage me – if anything it encouraged me that the West Pilbara was going to be a pretty interesting place in the next few years and having a seat at the table with a good resource and our own infrastructure solution puts you in a pretty strong position to consider all your options,” he said.

The attraction for BC is the Buckland South project, a proposed 8 million tonne per annum operation.

The project’s $744 million capital costs meant that IOH already planned to introduce a partner.

“It would be a very tough task for Iron Ore Holdings to fund this on our own,” IOH managing director Alwyn Vorster said yesterday.

Vorster highlighted the interest there is in the Pilbara, revealing yesterday that the company had spoken to around 30 parties over the past six months.

“We’ve rejected most of those approaches as not workable,” he said.

Even a proposed joint venture with BC was dismissed after the two parties couldn’t agree on terms.

Ball said once the takeover was complete, BC would sit down and assess the options for Buckland.

“Our view is that we’re very comfortable they’ve run a good feasibility process, but by the same token, if we get successfully through this deal, we will take a fresh pair of eyes – and BC Iron eyes – looking at Buckland as a development,” he told MNN.

After losing the battle for the WPIOP, potential involvement by MinRes in the Buckland South development could be a logical fit and Ball described the company yesterday as “the best operators going around”

IOH and MinRes are already partners in the Iron Valley mine, due to start production in the current quarter.

IOH already has all the necessary approvals required to build a 20Mtpa port at Cape Preston for Buckland shipping.

Ball said Cape Preston was interesting, but the company would be looking at all options, including Anketell, the proposed WPIOP port.

“There are a number of options in the West Pilbara at the moment, with Aurizon and Baosteel and Anketell, Cape Preston … so I think it would be fair to say we’d take a fresh look at all those options to try and identify the best value for the shareholder,” he said.

“And that would hopefully mean a reduction in capital and it could also potentially mean introducing another party to the mix as well.

“We think it’s a really interesting asset and we think that it will be developed but we have an open mind as to how that development may play out in the coming months.

“We believe the West Pilbara has some really interesting options for iron ore production.

RBC Capital Markets analyst Chris Drew said the IOH takeover made strategic sense to BC.

“On balance, while the deal is earnings dilutive and looks set to impact dividend paying capabilities, we are comfortable with the strategic logic,” he wrote in a research note.

“We also believe the transaction offers some strategic value through getting involved in discussions around development of the West Pilbara.

“With this mix of positives and negatives, we believe the transaction is ultimately neutral for BCI.”

RBC maintained a sector perform rating for BC with a $3.80 price target.

After dropping nearly 10% yesterday, BC shares were up 2.3% to $3.06 this morning.

IOH shares were half a cent lower at $1.32.