Mineral Council won't be happy!
Mining lobby tells Swan to reject third party rail
Ray Brindal | September 24, 2008
NATIONAL industry lobby group Minerals Council of Australia has urged Treasurer Wayne Swan to reject an application for access by third parties to privately owned rail infrastructure in the Pilbara region of northwest Western Australia.
The National Competition Council handed its recommendation on the issue to Mr Swan on August 29. He has 60 days to rule on the matter, or it will be deemed that he has decided not to declare the railways open.
The NCC's final recommendation is confidential, but a draft recommendation issued in June found that Fortescue Metals Group should be given access to Rio Tinto's Hamersley and Robe River rail lines and BHP Billiton's Goldsworthy line.
The Mineral Council's chief executive Mitchell Hooke told Dow Jones Newswires that the Treasurer should reject the application as it was unfair and would send a powerful negative message to all future investors. Allowing access to Rio's and BHP's railways to haul iron ore to port from mines would be akin to socialising private assets, he said.
"This would be a socialisation of competitive privately owned infrastructure," Mr Hooke said.
"There's a clear differentiation between privatising public monopolies and an attempt to try and socialise privately owned and operated infrastructure."
The issue for Australia was whether the regulator should be able to instruct a company to make available its private infrastructure to a competitor, Mr Hooke said.
"Who's going to invest? It's a major disincentive to investment," he said.
BHP and Rio built, owned and operated these rail lines, which date from the 1960s and had evolved into some of the most technologically advanced minerals industry infrastructure in the world and had never been in public hands, he said.
The bid to gain access was not about competition or about a potential haulage agreement, but was rather "about erosion of competitiveness" through regulatory intervention, he said.
Nor should any decision by Mr Swan hinge on any argument about barriers preventing other rail lines being built, according to Mr Hooke.
Fortescue announced on July 21 that it had achieved project completion on the first stage of its integrated iron ore mine, rail and port project in the Pilbara.
Earthworks for the 260km railway started in November 2006 and the first loaded train to port rolled in April 2008.
Clearly, no barriers existed to other exporters building rail lines, Mr Hooke said.
He called on the Government to resolve this "ludicrous situation".
"This is about whether the regulator says that somebody can put their railway wagons on somebody else's private rail," he said.
Fortescue is not a member of the Minerals Council, but BHP and Rio are.
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