Minister puts WA rail talks on trackFont Size: Decrease Increase Print Page: Print Jennifer Hewett, National affairs correspondent | April 26, 2008 FEDERAL Resources Minister Martin Ferguson has bluntly warned BHP Billiton and Rio Tinto to negotiate with Fortescue Metals Group over access to their Pilbara rail networks.
In its firmest statement yet, the federal Government has demanded that the bitterly disputed issue be resolved by negotiation rather than through the courts.
Fortescue's battle for access to the others' established networks is now being fought out in the High Court and the Australian Competition Tribunal.
Mr Ferguson's comments will be welcomed by Fortescue Metals Group and its chairman Andrew Forrest, but greeted with dismay by BHP and Rio.
BHP and Rio have strongly opposed Fortescue's argument for third-party access to their rail facilities.
The two mega-miners say it would inevitably disrupt their tight production lines and timetables, which they insist are already running at full capacity.
But Mr Ferguson told The Weekend Australian that the argument was all about excess capacity being made available to other players at a commercial rate.
"The only way to progress this is by requiring the parties to sit down and negotiate principles which go to haulage at a commercial rate," he said.
Mr Ferguson partly blamed the state government for the delay in settling the issue.
"It's the responsibility of the Western Australian Government to actually force the companies to pursue this in a realistic way," the Minister said.
Mr Ferguson's comments on haulage -- ore from other companies being carried on Rio or BHP trains -- are more modest than FMG's initial request for access to the tracks for its own trains.
But even this middle position has been vehemently resisted by BHP and Rio, on the basis that haulage would interfere with scheduling and their capacity to deliver.
Mr Ferguson said the movement of Australian iron ore was probably the best logistics operation in the world.
"The last thing we should do is entertain any system that interrupts a highly efficient movement of freight," he said.
But he is clearly sceptical of the view that nothing can be done to improve access over time.
"It's not for me to go to the details of their capacity, but to deal with the principle and the requirement that the parties actually negotiate commercial outcomes that provide for the movement of iron ore from other companies on condition they do not interfere with the efficient operations of the current system," he said.
BHP Billiton and Rio Tinto argue that meeting this last condition is impossible, even if they do build extra capacity.
Mr Ferguson said he understood what BHP, Rio and FMG were saying.
"I'm not agreeing with any of them putting that position," he said. "Only time will prove, along with proper commercial negotiations, if there is excess capacity."
He also suggested that in future, new players might have to put in place some additional capacity to meet new commercial arrangements. But he said it was still a question of how the companies negotiated the issue.
"With excess capacity, for example, if there is a slot and you can't move your freight in accordance with that slot requirement, you lose the opportunity," he said.
"In that sense, it's no different to slots in and out of airports."
BHP Billiton and Rio Tinto are certain to disagree with that analysis. They also question why Fortescue is pursuing its case, given that it is building its own rail line in the Pilbara, anyway.
But FMG is still keen to promote the idea of a double track, to increase flexibility and make it easier for trains to pass.
It also insists that its stance will benefit the state and the country, by opening up a wide range of iron ore deposits currently stranded without access to infrastructure.
Mr Ferguson said the shortage of labour had led major iron ore companies into the development of driverless trains.
He said the shortage was one of the most serious issues confronting the resources and energy sector at the moment, and had raised the cost of investment.
He also dismissed a widespead fear in the mining industry that the new Government's industrial relations changes could reduce efficiency and workplace harmony.
"I think the industrial relations pressures in the mining industry at the moment are related to supply and demand of labour," he said.
"I don't think the union input will have much impact."
FMG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)