www.era.wa.gov.au/cproot/7020/2/20081015%20Public%20Submission%20-%20United%20Minerals%20Corporation%20NL.pdf
Overpayment Rules
&
Costing Principles
by
UNITED MINERALS CORPORATION NL
However, there are some fundamental factors with regard to the grade quality, and low cost
of Pilbara producers in relation to global supply that suggest that price reductions will not
result in mine closures, namely:
• The Asian markets are of such volume and growing from low per capita levels of steel
consumption that there is and will be a significant Asian base load requirement even
during downturns,
• The Chinese and Indian ores are low grade and the Pilbara ores are of the highest
grade,
• Australia is the closest supplier and has a freight rate advantage,
• The Pilbara producers are in the lowest quartile of production cost of global producers
and low cost producers generally survive the bottoms of commodity pricing cycles
especially if they are in proximity to major consumers
Page 1
Page 2
The Pilbara Infrastructure (TPI) Rail
Part 5 Instruments submission
for the proposed
Overpayment Rules
&
Costing Principles
by
UNITED MINERALS CORPORATION NL
Level 14, BGC Centre
28 The Esplanade, Perth
Western Australia 6000
Postal address:
GPO Box 2580 Perth
Western Australia 6001
Telephone: (08) 9481 0911
Facsimile: (08) 9481 0922
1 October 2008
Page 3
United Minerals Corporation - ERA Submission – Overpayment Rules & Costing Principles 2
Table of Contents
Executive Summary................................................................................................................. 3
1. Introduction....................................................................................................................... 5
2. Cost of Greenfield Railways ............................................................................................. 5
3. Stranding Risk .................................................................................................................. 6
4. Route Sections ................................................................................................................. 7
5. Economic Life of Assets ................................................................................................... 8
6. Major Periodic Maintenance and Depreciation................................................................. 9
7. Other Issues ..................................................................................................................... 9
Page 4
United Minerals Corporation - ERA Submission – Overpayment Rules & Costing Principles 3
Executive Summary
United Minerals Corporation NL (United Minerals) is making this submission to the Economic
Regulation Authority of Western Australia (Authority) regarding the Costing Principles and
Over-payment Rules proposed by The Pilbara Infrastructure Pty Ltd (TPI) under the Rail
Access Code 2000 regarding the terms of third party access to the TPI Railway in the
Pilbara.
United Minerals is supportive of the State, TPI and TPI’s parent, Fortescue Metals Group
(FMG), to provide rail access to third parties and is prepared to meet its fair share of the cost
in achieving such access if it were to seek access inside the Code. It is well recognised that
TPI below rail facilities potentially offer the most cost effective method of delivering ore
transport services to the eastern Pilbara. In accordance with other rail Access Regimes such
access should be on fair terms to both parties similar to the Authorities Determination for
WestNet Rail (WestNet) treating the rail as a stand-alone business.
Cost of a Greenfields Railway
TPI is proposing that the Authority accept their actual costs as the infrastructure is in effect a
greenfield railway. However, United Minerals suggest that the below rail component was
constructed in a manner to meet FMG financial and market contractual obligations. Such
construction was not necessarily with modern equivalent assets (MEA) which would have
had longer lead times reducing major periodic maintenance (MPM). Accordingly United
Minerals requests that the Authority consider the Costing Principles, Over-payment Rules
and the Weighted Average Cost of Capital (WACC) reflect the efficient costs of a stand-alone
railway and these costs are estimated from a building block approach. United Minerals is of
the view the railway has been constructed not as MEA nor represents efficient cost and is
proposing that the Authority consider that the approach to MPM, unit rates, design, project
management, and finance charges be similar to that of the WestNet Determination
- Forums
- ASX - By Stock
- UMC
- the pilbara infrastructure tpi 1st october
the pilbara infrastructure tpi 1st october
- There are more pages in this discussion • 2 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)