A billionaire family from New Zealand is poised to sign a State Agreement with the WA Government that will pave the way for a $5 billion iron ore project in the Pilbara.

More than 3000 jobs would be created during construction and 9000 workers would be recruited during production if Todd Corporation, one of New Zealand’s biggest private companies, pressed the button on the Balla Balla project.

The project ultimately involves building a six million to 10 million-tonne-a-year iron ore mine near Whim Creek, between Port Hedland and Karratha. Before that, a 160km railway would link stranded iron ore deposits to a new port.

Industry observers believe development of the principal Balla Balla deposit, which comprises difficult-to-process magnetite ore, would require iron ore prices to continue outpacing forecasts of $US50 a tonne. Iron ore was trading at $US80.41 on Friday.

However, the State Government believes the jewel in the project is the railway and port, which could unlock billions of tonnes of haematite iron ore deposits further inland which now have no way of getting to market.

Todd Corporation, which counts the Balla Balla deposit in a vast investment portfolio spanning energy, minerals and health care, has been building its Pilbara resource base for years. Last year it took over iron ore hopeful Rutila Resources and has secured a majority stake in Flinders Mines.

Shares in Flinders Mines surged 12 per cent on Friday as news of the State Agreement leaked.

The owners of neighbouring deposits hope other miners will be able to use the railway, breaking the transport stranglehold enjoyed by BHP Billiton, Rio Tinto and Fortescue Metals Group.

State Development Minister Bill Marmion yesterday welcomed the step as “great news for the Pilbara”.

“(It) will provide a huge boost for the region in terms of jobs and confidence,” Mr Marmion said.

“This project shows that there is still great interest and investment opportunities in the WA resources sector and the Barnett Government is best placed to facilitate opportunities such as this.”