27/10/2008 - 15:15

Swan declares Pilbara rail lines open

27/10/2008 - 15:15


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In a major upset to BHP Billiton and Rio Tinto, Treasurer Wayne Swan has declared the iron ore giants' Pilbara rail lines open for a period of 20 years.

In a major upset to BHP Billiton and Rio Tinto, Treasurer Wayne Swan has declared the iron ore giants' Pilbara rail lines open for a period of 20 years.

Mr Swan's ruling means junior miners have the right to run their own locomotives and rolling stock on the big iron ore miners' existing rail lines, subject to negotiating commercial agreements.

His declaration follows a trip to the Pilbara over the weekend.

In a statement, Mr Swan decided to uphold the National Competition Council's recommendation to open the Robe River, Goldsworthy and Hamersley rail lines.

"On consideration of the evidence presented, the NCC determined that all relevant matters for declaration are satisfied and therefore recommended the services be declared," Mr Swan said in a statement.

"I accept the NCC's recommendations and I am declaring the services above for a period of 20 years commencing on 19 November 2008.

"Some parties raised concerns regarding the potential costs arising from third party access.

"However, on balance I consider that these are outweighed by a range of benefits, including increased competition, avoiding inefficient duplication of facilities and reducing further adverse impacts on native title rights and the environment."

Additionally, Mr Swan added that the declaration only provides a third party with recourse to binding arbitration before the Australian Competition and Consumer Commission, if it's unable to agree with the service provider on access terms and conditions.

The Treasurer's decision is a massive win for Fortescue Metals Group Ltd, which first launched it bid to declare the rail lines open in 2004.

Fortescue executive director operations Graeme Rowley said the decision is great news for Australia's export revenue and the economic and social dividends it will provide.

"We are now looking forward to negotiating commercial access terms with Rio Tinto and BHP Billiton rather than wasting more money on costly legal appeals," Mr Rowley said. .

In a statement, Rio Tinto Iron Ore chief executive Sam Walsh said the company was "very disappointed" by the decision.

He reiterated that the decision could result in a revenue loss to the national economy of up to $30 billion.

"This is a cost the nation can ill-afford at this time of economic uncertainty," Mr Walsh said.

"Rio Tinto is considering its options, but is likely to take the matter to the Australian Competition Tribunal for a review of the decision."

BHP Billiton president of iron ore Ian Ashby said providing third party access to the company's rail operations would compromise the efficiency of its integrated mine, port and rail operations.

"The efficient delivery of iron ore to our customer's should not be compromised through allowing other companies to put their rail cars on our tracks, creating potential delays or disruption to our operations," Mr Ashby said in a statement.

The North West Iron Ore Alliance, a collection of junior explorers in the Pilbara region, welcomed the decision, adding that this course of action wouldn't be required if BHP and Rio honoured state agreements.

"Were BHP and Rio to honour state agreement obligations to haul third party ore, this probably wouldn't be necessary," North West Alliance independent chair Megan Anwyl said.

The alliance includes Atlas Iron Ltd, Brockman Resources Ltd, BC Iron Ltd and FerrAus Ltd.

However, Minerals Council of Australia chief executive Mitchell Hooke said the disappointing decision was at odds with the fundamental premise in commerce of the freedom to choose who you do business with.

Fortescue Metals first took action in 2004 to gain access to BHP Billiton's Mt Newman rail line in the Pilbara to service its Mindy Mindy iron ore deposit.

Fortescue Metals was forced to initiate legal action in 2006 after the then treasurer, Peter Costello, declined to follow a NCC recommendation that the Mt Newman railway be declared open to third-party access.

The High Court in September dismissed an appeal by BHP Billiton that access party access to some of its railway lines should not be allowed because they are part of the iron ore production process.

Fortescue Metals expanded its focus in November 2007 after it lodged an application with the NCC seeking to declare Rio Tinto's entire rail network and BHP Billiton's Goldsworthy rail line open to third party users.



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