25/06/2009 - 00:00

Port synergies to develop after JV

25/06/2009 - 00:00

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A PILBARA Port Authority governing the massive export centres of the north-west should one of the results of the proposed iron joint venture between BHP Billiton and Rio Tinto, according to the state opposition.

Port synergies to develop after JV

A PILBARA Port Authority governing the massive export centres of the north-west should be one of the results of the proposed iron joint venture between BHP Billiton and Rio Tinto, according to the state opposition.

Opposition strategic infrastructure spokesperson Alannah MacTiernan claimed the move would allow the ports to take advantage of the same sorts of synergies that BHP and Rio Tinto were attempting to take advantage of with their own merger.

The iron ore ports, especially Port Hedland, have faced severe congestion issues as a result of the expansion of production in the region - one of the key reasons for the BHP-Rio Tinto merger is seen as reducing the risk and cost of port operations.

Ms MacTiernan said as part of the potential changes to the Pilbara iron ore operations, the state should seek to renegotiate agreements which provide for the companies to be represented on the port boards, something she claims is a quirk of history and doesn't happen on other port boards.

The iron ore majors are not the only companies with board representation. Last year, FMG was also allowed to have a representative.

BHP has its shipping superintendent Roger Richardson on the Port Hedland Port Authority board. A fellow director is former Fortescue metals Group chief operating officer Alan Watling.

Mike Spreadborough, general manager coastal operations of Rio Tinto subsidiary Pilbara Iron, was the company's nominee to the Dampier Port Authority, according to its annual report. Woodside's nominee was its general manager marine Lisa Hamilton. Cape Lambert does not have its own authority.

The ports of Dampier and Port Hedland are individually most likely in the top 30 ports in the world by way of tonnage.

Amalgamating them would create an entity that, in combined tonnage terms, would most likely sit within the top 10 ports of the world by tonnage, possibly within the top four.

According to their annual reports, Dampier's port handled 133.9 million tonnes while Port Hedland had 130.7mt. Cape Lambert is thought to handle around 80mt.

Combined trade from the major Pilbara ports would be about 340mt. In comparison, in 2006, Shanghai had trade amounting to 537mt, Singapore 448mt and Rotterdam 378mt.

Below is the state government's response:

Transport Minister Simon O'Brien has rejected calls from the Opposition for the State Government to consider merging the separate Pilbara region port authorities into one entity.

"A single port authority is not being considered at this time," Mr O'Brien said.

The Minister also rejected calls from Opposition Strategic Infrastructure spokesperson Alannah MacTiernan for Rio Tinto and BHP Billiton representatives to be kicked off the Pilbara region port authority boards, labelling her claims of conflict of interest as unjustified.

"The former Labor government Ms MacTiernan was a part of and had eight years to examine this issue; they obviously did not believe it warranted reviewing. I am of the same opinion," he said.

"I believe the current arrangements work well and the State Government is happy for Rio Tinto and BHP representatives to continue to lend their expertise and experience to the port authority boards."

Pilbara region port authority boards comprise representatives from BHP Billiton, Rio Tinto, Fortescue Metals Group and Woodside.

 

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