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Fortescue Open to Rail Talks With Atlas Iron, Forrest Says

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May 3 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, said it’s open to talks with Atlas Iron Ltd. to co-operate on rail haulage after the smaller rival announced a study to build its own track.

“If we’re invited to have a look at a proposal, we would certainly be honored to receive that invitation and take it very seriously,” Andrew Forrest, chairman of the Perth-based company, said today after a meeting in Sydney. “We have a railway line in the vicinity.”

Atlas and haulage company QR National Ltd. last month signed an initial accord to consider building the railroad in northern Australia’s Pilbara region, which Macquarie Group Ltd. estimates may cost $1.5 billion. Producers including Fortescue and Atlas are boosting ore output and expanding ports and rail to meet growing demand in China, the biggest consumer.

Fortescue declined 0.9 percent to A$5.60 at the close of trading in Sydney, while Atlas fell 3.6 percent.

Fortescue, which is doubling its main line to Port Hedland as part of an $8.4 billion expansion to nearly triple output to 155 million metric tons, may benefit from swapping rail and port capacity with Atlas, Macquarie said in an April 27 report.

“Should they build another huge railway line when there’s already an independent operator - by all means, that’s the market place,” said Forrest. “But there’s certainly an existing rail and an existing port.”

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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