china contracts not finished yet

Dow Jones report via Kitco Base Metals


MELBOURNE -(Dow Jones)- Global miner BHP Billiton (BHP.AU) said Tuesday that it still hasn't settled a "critical" amount of iron ore contracts with steel makers.

"Once we reach a critical mass (of contracts) we'll make a comment," Chief Executive Chip Goodyear told reporters on a conference call.

Goodyear said he didn't know when that will be.

Goodyear welcomed a decision by Australian Treasurer Peter Costello barring junior iron ore company Fortescue Metals Group Ltd. (FMG.AU) from accessing BHP's Pilbara rail line in Australia's north west.

BHP's Pilbara iron ore operations are operating at full capacity as it ramps up iron ore production to meet surging Asian demand by boosting mine and rail capacity, he said.

Treasurer Costello's decision was "the right decision" for both BHP and its customers, Goodyear said.

"When you have multi-user systems, it's slow, it's difficult," he added.

BHP is open to hauling iron ore for smaller companies on its rail line and is in talks with the Western Australian state government about a state-based access regime, Goodyear said.

"The difference between allowing someone to put their equipment on our rail line is quite different to the idea we will contract to move their product for them," he said, adding the company's main concern is maintaining the integrity of its multibillion dollar rail infrastructure.

"One of the critical things to understand is this isn't your grandfather's rail system, this is a very technologically complex system," Goodyear said.

-By Matt Chambers, Dow Jones Newswires; 61-3-9671-4343; matt.chambers@ dowjones.com