fortescue puts high price on rail access

Fortescue wants to charge Brockman Mining up to $576 million a year to haul iron ore on its rail line, the first indication of how much miners may have to pay for rail access.

Brockman is the first miner to test a state code that requires Fortescue's port and rail arm, The Pilbara Infrastructure (TPI), to let other miners use its rail line.

Without access to the Fortescue railway, miners including Brockman, Atlas Iron and Flinders Mines may have to build their own infrastructure, a costly undertaking that would require raising billions of dollars.

Brockman wants to export up to 20 million tonnes of iron ore a year for 20 years, starting in 2016.

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In response to Brockman's application to the Western Australia Economic Regulation Authority, TPI proposed a floor price of $73.4 million and a ceiling price of $575.6 million a year, TPI said.

It did not reveal whether those prices were based on only hauling Brockman's 20 million tonnes of ore or would include volumes from Fortescue, which would take the total to 175 million tonnes a year.

Officials from Brockman were not immediately available for comment. Fortescue declined to elaborate on the TPI filing.

At 20 million tonnes a year, the proposal suggests a transport rate if between $3.67 and $28.80 per tonne, much higher than analysts' expectations.

At 175 million tonnes a year, the proposed rate would be between $0.42 and $3.29 per tonne, roughly in line an estimate by Credit Suisse analyst Matthew Hope.

"This is potentially a new battlefront for Fortescue," Mr Hope said.


Read more: http://www.canberratimes.com.au/business/mining-and-resources/fortescue-puts-high-price-on-rail-access-20130531-2nfng.html#ixzz2Up1qqSdP