BHP Billiton Ltd. (BHP) and Atlas Iron Ltd. (AGO.AU) have started discussions about co-operating on iron ore haulage and port access in Australia's Pilbara region, in a move that could open up BHP's proprietary rail network for the first time.

Third-party access to the Pilbara's miner-owned rail networks--built by BHP and Rio Tinto Ltd. (RIO) over the past 30 years and by junior rival Fortescue Metals Group Ltd. (FMG.AU) since 2006--could dramatically reduce export bottlenecks in the region, which produces around a third of the world's seaborne iron ore.

The two companies said they entered a memorandum of understanding to deliver an "integrated transport solution" at Port Hedland, a port in the eastern Pilbara where BHP is currently the main exporter.

In a statement, Atlas and BHP said: "Atlas Iron and BHP Billiton Iron Ore have agreed to consider point-to-point rail haulage on BHP Billiton's declared Goldsworthy line to the junction of BHP Billiton's Newman rail line."

Atlas and two other members of the North West Iron Ore Alliance infrastructure group--Brockman Resources Ltd. (BRM.AU) and Ferraus Ltd. (FRS.AU)--have 50 million tons a year of capacity at Port Hedland, making it harder for BHP to increase its own movements of iron ore through the port.

-By David Fickling, Dow Jones Newswires; +61 2 8272 4689; david.fickling@dowjones.com
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