The Federal Court has made a ruling that could open up the Pilbara rail lines of BHP Billiton to third party access, a move the giant says will work against the national interest and threaten exports.
The Federal Court has made a ruling that could open up the Pilbara rail lines of BHP Billiton to third party access, a move the giant says will work against the national interest and threaten exports.
The Federal Court has ruled that BHP Billiton's Mt Newman and Goldsworthy iron ore rail lines are not part of the company's production processes.
Instead, the rail lines are "services", as defined under the Trade Practices Act, which paves the way for the rail lines to potentially be declared open to third-party access, allowing other mines to transport ore on BHP's rail tracks.
BHP Billiton executive director and group president of carbon steel materials Chris Lynch said he was "extremely" disappointed with the decision and that it would threaten the growth of one of Australia's critical export industries.
"It is important to remember that this decision has much broader implications beyond BHP Billiton," he said.
"Open access to dedicated rail infrastructure would compromise the efficient production of iron ore and cause delays in future investment decisions, making Australian producers less reliable."
The Federal Court action was brought by the National Competition Council and Fortescue Metals Group Ltd.
Fortescue is seeking access to BHP's railways to allow development of the Mindy Mindy iron ore deposit, but BHP had argued the railways are part of the production process and cannot be open to third parties.
Fortescue chief operating officer Graeme Rowley welcomed the court's decision and questioned BHP Billiton's claims that it was not in the national interest.
"I just find it enormously difficult to see how improving the ability for Australia to export iron ore and improve its overall volume is against the national interest," he told a press conference this afternoon.
"The ruling marks the beginning of a new phase for the Pilbara that will see the opening up of infrastructure and will result in new exploration, new mining companies, new exporters and new jobs."
BHP Billiton said it is reviewing the Federal Court judgment and would consider its options regarding an appeal.
"We will use all available legal avenues to protect the investments of our shareholders and joint-venture partners and the integrity of our production process," Mr Lynch said.
The Federal Court ruling does not automatically enable a third party to run its trains on BHP Billiton's Pilbara iron ore rail lines.
Separate proceedings underway in the Australian Competition Tribunal will determine the broader question of whether the rail lines should be declared open to third-party access under the Trade Practices Act.
Fortescue Metals initiated the tribunal proceedings in June after the federal Treasurer Peter Costello earlier declined to follow a National Competition Council recommendation that the Mt Newman rail line be declared open to third-party access.
"We would be making an application under sound commercial principles, this isn't a request for a free ride on BHP's rail," Mr Rowley said today.
"They would be standard commercial arrangements, one's that would be negotiated and would not in any way impact their ability to transport their ore.
"All we are asking is to use their permanent way, the rail, we'd run our own rolling stock and go to our own port."
"More importantly you have to look at what is happening to Australia's share of China's booming iron ore market, it is not growing," Mr Rowley said.
"So if you are going to improve issues for Australia, you have to be at least holding your market share or expanding it."
For his part, State Treasurer Eric Ripper said the ruling was an important step in defining the rights of stakeholders in industry, and the government would continue to develop in parallel a State-based iron ore haulage regime capable of certification under the trade practices act.
"This involves extensive discussions with BHP Billiton and other key stakeholders. The Government intends to expedite this process so that such a regime is completed by mid-2007. The regime will be applied to all Pilbara iron ore railways," he said.
Mr Ripper said the government would consider the detail of the decision and any resulting appeals.
It is expected that a full hearing of the Australian Competition Tribunal, including expert opinion, will be conducted during the second half of 2007.
The Mt Newman and Goldsworthy rail lines are in the Pilbara region of Western Australia and transport more than 100 million tonnes of iron ore each year to Port Hedland for blending, processing and shipping.
The Pilbara iron ore operations provide annual export income in excess of $5.5 billion and employ more than 7,000 people.