Fortescue Metals Group has invited the iron ore arms of BHP Billiton and Rio Tinto to work together on establishing a formal rail agreement, following Treasurer Wayne Swan’s decision to open three Pilbara rail lines to third parties.
Mr Swan has officially declared the Hamersley and Robe railway lines, owned by Rio Tinto, and the Goldsworthy railway line, owned by BHP Billiton, open under the Trade Practices Act, following recommendations from the National Competition Council.
The move, based on an application by Fortescue Metals Group subsidiary Pilbara Infrastructure, will open the rail lines to third-party access for 20 years from November 19, 2008.
FMG executive director Graeme Rowley said in an announcement that the Treasurer’s decision provided an unambiguous signal that the companies should share their infrastructure.
“The ability to utilise and expand rather than duplicate existing infrastructure is even more important given the current upheaval in world financial markets,” he said.
Mr Rowley said an agreement would reduce the expansion costs of all three companies, as well as enabling smaller miners and State and Federal Governments to generate untapped revenue from previously stranded deposits.
North West Iron Ore Alliance chair Megan Anwyl agreed, saying the Treasurer’s decision represented a major fillip for juniors and for diversification of the Pilbara iron ore sector.
“The junior’s right to negotiate rail access, and their right to arbitration before the Australian Competition and Consumer Commission if commercial terms and conditions cannot be agreed, is fundamental to the development of a diverse and competitive iron ore industry in the Pilbara,” she said.
“The Alliance members would not have to rely on this declaration if the owners of the tree rail lines honoured their obligations to provide rail haulage of ore to third parties under the relevant State Agreements.”
The sentiment was echoed by Atlas Iron, one of the Iron Ore Alliance members, which said the use of BHP’s Goldsworthy rail line, which bisects its Pardoo Iron Ore project, would support lower operating costs and higher sustainability.
The company expects to commence the haulage of iron ore from the project to Port Hedland using road trains within the next two weeks.
“This is the right decision for Australia,” he said.
“Lower costs, fewer barriers to entry and a reduced environmental impact will lead to a more sustainable and globally competitive industry. We look forward to working with BHP to establish a solution as soon as possible.”
Atlas Iron shares were down 3 cents, or 4.84 per cent to 59 cents, while FMG shares were up 11 cents, or 3.93 per cent to $2.91 at close of trade today.
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