Atlas Iron and QR National launched on Thursday the $3.5-billion Pilbara railway through the start of a feasibility study to build the 600-kilometre multi-user rail link to transport iron ore from the east and southeast Pilbara to shipment facilities at Port Hedland.

Atlas needs the railway due to its hike in iron ore holdings in the last few months following its buy-in of smaller miners such as FerrAus and Giralia Resources.

Atlas presently uses trucks to transport iron ore to Port Hedland. With the development of a rail link, Atlas would increase its iron ore production to 40 million from 6 million tonnes a year.

The planned multi-user rail link would not only benefit Atlas but other smaller miners such as Brockman Resources and Flinders Mines.

Although the feasibility study is a joint effort, QR would be the owner and operator of the rail line and Atlas will be its junior partner with an equity stake of less than 25 per cent in the venture.

Pilbara is now the world's most import ore province, but being landlocked, infrastructure and access to port is important to the area. The large miners, BHP Billiton, Rio Tinto and Fortescue Metals, have their exclusive railways to Pilbara ports, and only Fortescue has made available to other miners on a limited basis its rail transport link at a very high price. It allowed BC Iron to use its railway but got in exchange more than half of BC's Nullagine project.

Hancock Prospecting, owned by billionaire Gina Rinehart, is constructing a railway that would link its Roy Hill mine to Port Hedland.

The feasibility study targets to be operational by 2015. QR has identified a possible route for the rail link and informed the Western Australia Department of Mines of the route.

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