THE idea of the Pilbara’s largest miners sharing rail infrastructure looks all but dead and buried, with Fortescue Metals Group failing in its six-year battle to access Rio Tinto’s lines.
The Australian Competition Tribunal ruled this week the state’s third-largest iron ore miner had no reason to access the global giant’s rail lines because “the tribunal was not satisfied ... that it would be uneconomical for anyone to develop another facility”.
While Fortescue has expressed its disappointment, it can hardly argue the point given it has constructed its own rail line while the saga has unfolded - and subsequently become profitable.
Fortescue’s view was that third-party access would help smaller miners develop deposits without duplicating expensive and unnecessary rail infrastructure.
Its point has, in part, been proven by many a project failing to get off the ground and those still in development ticking along slowly with funding challenges and lower commodity prices.
Gina Rinehart’s Roy Hill iron ore project has begun construction on its rail line to Port Hedland to become the third player with its own private line in the same corridor as Fortescue and BHP Billiton.
The miner has maintained the project is large enough to sustain its own rail line and argued it is not feasible to share infrastructure because of incompatible equipment between miners.
But its prolonged effort to drum up investment for the costly infrastructure does show the challenges miners have in building their own lines.
Atlas Iron and Brockman Resources could be the fourth to duplicate a rail route to Port Hedland. They are working with QR National to explore building a line passing Atlas’ McPhee Creek, Mt Dove, Mt Webber and Wodinga projects with the potential for it to stretch down to its tenements in the south-east Pilbara.
If the line is extended south it will pass Brockman’s Marillana project but also other miners such as Mineral Resources and fledgling player Dynasty Metals. A viability study is still under way but the project could be more realistic if more than one miner were to fund it.
Conversely, the Australian Premium Iron Joint Venture - a venture between Aquila Resources and American Metals and Coal International - has gone quiet on its ambitious plan for a 160-kilometre rail line from its West Pilbara Iron Ore Project.
A 2008 feasibility study pitched the cost of the 25 million tonnes per annum mine development and rail line at $4 billion.
Fortescue chief executive Nev Power said it was “regrettable” the tribunal did not see the merits in allowing third-party access.
Fortescue maintains it is “assessing its options” in terms of appealing against the decision and will continue to advocate third-party access - even on its own infrastructure.
But, given that companies forging ahead with developments appear to have their own plans and the previous urgency to construct has largely fallen away, such an appeal could see Fortescue tied up for another six years.
