latest brr update, page-86

Moz,

I'm here. Great outcome today which places even more pressure on Swan to declare the rail assets.

I pinched some of what I said back in June as follows:

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BHP/RIO are also losing the patience of the WA government. Its bad for business to get on the wrong side of government. Another ball in the air re give and take between the majors and Gov is the RIO JV dispute re CAZ,

Big risk for Swan on a rejection is the politics. Labour made a big fuss about infastructure delays during the election and are keen to look like they are acting to get it resolved. The business sector also knows that full access is sensible and to not provide it would smack of favoritism.

The Government has also ignored the Productivity Commission previously re Labours intention to prop up the car industry (sorry, I mean unions) and took the ACCC advice over a much bigger and powerful government department re Fuel Watch. This is a strong and dangerous trend if they also reject the NCC recomendation for declaration.

Its bad for business to get on the wrong side of bureaucrats. They would face a mass exodus of staff from these core institutions, which they will need if they ever come up with a sensible idea. Even more likely, is that the plebs will start leaking damaging information to the journalists as they did on the Fuel Watch scheme.

My guess: He will declare the asset, but for political/personal reasons. Swan will want to one-up Costello and make the decision his predecessor didnt have the guts to. Therea a 49% chance that he lacks the spine and takes one of the other options. A fence sitter I am.

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Its not unconstitutional for Swan to ignore the High Court, but the politics of doing so is very hard to handle. The deterioration in markets since my June post leads me to be very confident Swan will declare. Juniors no longer have the capacity to finance their own rail system independent of BHP/RIO (but in conjunction with a specialist rail company) and FMG cannot carry all the burden. Swan will declare.

Your discussion should, IMO, now extend to wether it will be a state regime or a national regime (I've already indicated my preference for a national one). State access regime is well past first draft stage and thus is likely to get up. Big risk is the existing provisions within the draft to limit the tonnage to less than 5mtpa per junior (from memory). Its better than a poke in the eye, but not enough for BRM. The intent of such a policy position is that if you have more than 5mtpa, you are big enough to amalgamate with other such juniors and develop a fourth rail system in the Pilbara. I have perviously posted that BRM's resource (if saleable) could easily provide the foundation for a fourth railway. BRM has indicated it prefers to share access with the existing majors. I'm not sure that will be feasible for 25-30mtpa. The economics of it suggests to me that sharing is superior (ie dual rails are more efficient than single ones etc etc). Not sure about the politics of it though. A national regulator would look at the economics. Not sure about a state regulator.

Anyway, these are for future discussion. Today should be about paying tribute to the High Court!!!