The proposed Pilbara Independent Rail project, which is reportedly set to cost up to $A3.5 billion and span a length of 600km, is targeting first haulage by 2015 with the FS due for completion later this year.

It would connect iron deposits owned by Atlas and other companies in the region to Port Hedland.

The standard-gauge railway would be designed to be expanded progressively in line with shipping allocations at Port Hedland port and would initially be connected to stockpiling facilities, which would be developed concurrently with the rail.

Both parties will share the costs of the study and contribute resources as required with a final development decision subject to board approvals.

The agreement envisages Atlas would be a foundation customer and contemplates Atlas being a junior equity partner.

Atlas intends to use rail haulage as part of its strategy to grow production to as much as 46 million tonnes per annum from 15 Mtpa.

“This represents the start of the next leg of Atlas’ remarkable growth journey and we look forward to examining the economic and technical aspects of the proposed project,” Atlas managing director Ken Brinsden said in a statement.

Atlas is also reportedly in discussions with other rail owners such as Gina Rinehart’s Hancock Prospecting, about accessing existing lines at commercially negotiated rates.

QR National executive vice-president strategy and business development Ken Lewsey said both parties had been working informally on the proposal since 2011 and welcomed further discussions with other players interested in becoming a customer of the network.

He said the group had been encouraged by discussions to date with the Western Australian Government.

Australia’s largest rail freight company, in 2010-11 QR National transported more than 240Mt of freight, including coal, iron ore, other minerals, agricultural products and general freight.

It also operates and manages the 2300km Central Queensland coal network that links mines to coal ports at Bowen, Mackay and Gladstone.

Shares in Atlas Iron were unchanged in morning trade on $A2.85.