FMG loses railway challenge

Hong Kong-based Brockman Mining has scored another legal victory in its long-running battle to gain access to railways built by Fortescue Metals Group’s infrastructure subsidiary.

In the Supreme Court today, an appeal bench comprising justices Buss, Murphy and Beech rejected an appeal by FMG subsidiary The Pilbara Infrastructure (TPI).

The Court of Appeal upheld an earlier ruling by Justice Edelman, who found that Brockman’s application for access to TPI’s railway was valid and complied with the requirements of the Railways (Access) Code 2000 (WA).

Brockman’s original application, lodged in 2013, was for haulage of up to 20 million tonnes per annum of iron ore from its Marillana project in the Pilbara.

This was the first application for third-party access over TPI’s railway under the access code and involved Brockman constructing a rail spur from its Marillana project to the TPI railway.

FMG chief executive Nev Power said today the iron ore miner would consider its options for a further appeal.

He said Brockman was yet to demonstrate it has the financial and management capability to carry on the proposed rail operations or that FMG had the capacity on its railway to accommodate their requirements.

“In the current economic climate, we consider it highly unlikely that they will be able to do so,” Mr Power said.

Brockman director Colin Paterson said the company wanted the legal dispute settled before it started spending more money on Marillana.

He added that Brockman would need to finalise an agreement over infrastructure access before it could hope to obtain funding for the mine development.

“We’ve been looking at other options in case we lost access,” Mr Paterson said.

These included talking to Mineral Resources about using its proposed Bulk Ore Transport System, which involves construction of an elevated railway to Port Hedland.

“That comes right past our door,” he said.

Brockman had $HK72 million ($A13 million) in cash at the end of December, according to its latest quarterly report.

Mr Paterson said Brockman had mostly been undertaking in-house studies on the project, in order to minimise its cash outflow.

If and when legal challenges to Brockman’s application are settled, it still needs to finalise commercial terms with TPI over access to the railway.

In August 2013, WA's Economic Regulation Authority ruled that TPI must start negotiations with Brockman for third-party access to the railway.

The ERA also published floor and ceiling rates for access.