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Fortescue goes its own way

01 Mar 2007

On February 8 construction work commenced on another iron ore line into the Chichester Ranges from Port Hedland, Western Australia. Fortescue Metals Group is building the 260 km line to link its port facilities at Anderson Point to its Pilbara mines at a total cost of around A$3?5bn. The decision to build the new infrastructure follows a lengthy legal battle between Fortescue and BHP Billiton over access to the latter's existing lines from the Pilbara mines to Port Hedland. BHP has long insisted that the railway constituted part of the mining production process, and as such the lines should not be subject to on-rail competition under Part III of the Trade Practices Act. However on December 18, a Federal Court judged that the rail infrastructure was not integral to the production process. BHP is appealing against the decision (RG 2.07 p66). Fortescue's own line is scheduled to open in March 2008. The company has already begun negotiating with smaller miners over third party access. The firm believes up to 15 million tonnes/year of export capacity may ultimately be available. n