Dow Jones reported that Australia's Crosslands Resources Limited is in talks with natural gas producers for a considerable supply deal needed to fuel the proposed expansion of its Jack Hills iron ore mine in Western Australia state.

Mr Andrew Caruso CEO of Crosslands told Dow Jones Newswires that Crosslands has non binding term sheets with two major gas suppliers and aims to finalize a deal by mid 2011.

The Jack Hills expansion project in the mid-west region is a foundation customer for the AUD 4 billion Oakajee port and rail development, which is due to begin construction in the second half of next year.

Mr Caruso said that Crosslands plans to produce around 30 million tonnes of iron ore from the expansion and will need up to 57 tera joules of gas per day to fuel a mine processing facility.

He added that "The company has talked to four or five major gas suppliers, including the Woodside Petroleum Limited operated North West Shelf venture, BHP Billiton Limited's Macedon and Chevron Corporation's Gorgon project."

Jack Hills contains estimated resources of 3.2 billion tonnes of iron ore, with most of the ore needing to be concentrated prior to export. Crosslands has received strong interest from steel mills in China, Japan and Korea over the Jack Hills expansion. The Oakajee project has been dogged in recent months by speculation of delays and possible ownership changes.

In September 2010, Murchison rejected media reports that Mitsubishi was set to walk away from the joint venture, saying the reports had no substance. Separately, Mitsubishi also denied talk of any problem.

But Western Australian Premier Mr Colin Barnett has said the mine rail port project may need a revised ownership structure to enhance its ability to raise funds.

Some analysts said that the state may encourage Chinese infrastructure companies to participate in the project to speed up development.

(Sourced from www.dowjones.com)