Ore lines face open access threat
WITH THEIR own discrete networks of heavy-haul iron ore lines in Western Australia, BHP Billiton and Rio Tinto have expressed deep concern over a Federal Court ruling on December 18 that could see the opening up of their railways for use by rival mining companies.
Fortescue Metals Group had sought a ruling under Part III of the Trade Practices Act that BHP was obliged to negotiate access contracts for other companies to share its principal export route from Newman to Port Hedland. The idea was that Fortescue could build a link from its proposed mines in the Chichester Ranges to BHP's existing line, and pay a toll to BHP for the rest of the route.
Newcomers have sought several times to avoid the cost of building their own lines in the Pilbara, but up to now the incumbents have successfully argued that their lines are part of the iron ore production process. This time, the Federal Court ruled that BHP's Mount Newman and Goldsworthy railways were not part of the production process, seriously undermining that defence.
On its own, the ruling does not provide access. Separate proceedings are in progress before the Australian Competition Tribunal which will determine whether the Pilbara iron ore railways should be 'declared' under Part IIIa of the act as assets that the owner must open up to facilitate on-rail competition. Fortescue initiated the ACT proceedings after a recommendation by the National Competition Council that the Mount Newman line should be declared was effectively blocked by Peter Costello, the Federal Treasurer (RG 7.06 p384). Public hearings are expected later this year.
BHP executive director Chris Lynch said the company was 'extremely disappointed' by the Federal Court decision, 'which threatened the further growth of one of Australia's critical export industries'. But he did not close the door altogether. 'We have been actively engaged in discussions with the WA state government about developing a revised iron ore haulage regime based on BHP Billiton's current obligations under the Rail Transport Agreement', he said. 'It is our understanding that the state plans to complete this process by the middle of 2007'.