Fortescue Metals Group has won a groundbreaking draft agreement from the National Competition Council that it be given access to the Mt Newman railway to transport iron ore in the Pilbara.
Fortescue Metals Group has won a groundbreaking draft agreement from the National Competition Council that it be given access to the Mt Newman railway to transport iron ore in the Pilbara.
Fortescue is seeking access to 295km of the railway line to transport ore from the Mindy Mindy deposit to Port Hedland which is held in a joint venture with Consolidated Minerals.
The BHP Billiton-dominated Mount Newman Joint Venture operates the railway which services its existing mines..
The NCC said it had "reached the preliminary view" that the service meets each of the declaration criteria set out in the Trade Practices Act.
"The council's draft recommendation is that the service be declared for a period of 20 years," the draft recommendation stated.
However, the NCC did not recommend opening a second rail service sought by Fortescue, BHPB's Mt Goldsworthy line, declaring that railway was part of the production process.
Below is Fortescue's media release:
FORTESCUE WELCOMES NATIONAL COMPETITION COUNCIL RECOMMENDATION REPORT TO OPEN PILBARA IRON ORE ACCESS
Fortescue Metals Group Ltd ("Fortescue") ASX code: "FMG"; today welcomed the draft recommendation report by the National Competition Council ("NCC") that the service provided by the BHP Billiton Ltd ("BHPB") Mount Newman railway line should be declared for 20 years.
Should the Federal Government accept the NCC's recommendation it would establish a legal right of access for Fortescue and others in the Pilbara to BHPB's Mount Newman railway line.
Declaring it the right and best decision for future development of the Pilbara's iron ore deposits, Fortescue's Executive Director of Operations, Mr Graeme Rowley expressed his hope that BHPB would accept the findings of the report and be prepared to undertake commercial negotiations in good faith with Fortescue and other parties that have iron ore interests within the Pilbara.
Mr Rowley highlighted that Fortescue's declaration request for the Mt Newman line was made in regards to Fortescue's prospective iron ore deposit at Mindy Mindy that is held within a Joint Venture with Consolidated Minerals Ltd. This deposit is located some 60 kilometres to the south west of Fortescue's wholly owned deposits within the Chichester Range for which Fortescue is going to build its own "open access" rail line to Port Hedland.
"Whilst this decision does not effect Fortescue's firm intention to build its own railway from Anderson Point at Port Hedland to our Chichester Range deposits, it will certainly add greatly to freeing up the Pilbara's stranded minerals resources," Mr Rowley stated. Mr Rowley noted that Fortescue had a tenement portfolio of over 18,000 square kilometres stretching over the Western, Central and Eastern Pilbara region and access to third party rail networks would be very useful for planning and expansion in the future.
"The BHP Billiton line runs right past the Mindy Mindy tenement area and it makes absolute commercial sense to access this line". Mr Rowley further noted that BHPB had entered into obligations within its long standing State Agreement to provide transport services to third parties.
The NCC declaration has been made in accordance with Part IIIA of the Trade Practices Act 1974, which establishes a legal right for third parties to share the use of certain infrastructure services on reasonable terms and conditions.
"The decision paves the way to significantly open up access to the richest mineral resource region in Australia which rates as one of the world's greatest iron ore provinces," Mr Rowley said.
"It provides enormous economic opportunities and will unleash a number of stranded mining resources in the Pilbara, allowing Australia to further capitalise on the global resources boom.
The NCC rejected BHPB's and Rio Tinto's submissions which sought to prevent other companies gaining access to the existing BHPB railway line.
"Hopefully all parties will now accept the inevitability that the Pilbara will be opened up with a transport and logistics system available to all. It is commercially and practically sensible that the old concept of a transport barrier to entry be overhauled. I believe such an outcome accords with the stated desire of both the respective Federal and State Governments to improve the level of available infrastructure throughout Australia. I trust that this is recognised and that there are no further impediments created by pursuing legal challenges and processes," Mr Rowley added.
