2ndUPDATE: Australian Tribunal Grants Access To Robe Rail To 2018

30th Jun 2010 14:37

(Adds Rio Tinto comment) By Cynthia Koons and David Fickling Of DOW JONES NEWSWIRES SYDNEY (Dow Jones)--Australia's competition courts handed down a split decision Wednesday, granting Fortescue Metals Group Ltd. (FMG.AU) access to two rail networks in the Pilbara iron-ore mining region operated by its larger rivals, BHP Billiton Ltd. (BHP) and Rio Tinto Ltd. (RIO.AU), but denying access to two others. "We're pleased with the outcome in some regards, because it's proven you can get lines declared," meaning third-party access could be granted on BHP and Rio's lines, a spokesman for Fortescue Metals said Wednesday. The tribunal ruled Fortescue should have access to Rio's Robe and BHP's Goldsworthy lines but not Rio's Hamersley or BHP's Mt. Newman lines. Fortescue said it would appeal the Hamersley and Mt. Newman decisions, indicating the fight for rail line access is far from over. The two big miners, who plan to team up to establish a multibillion-dollar Pilbara joint venture, have argued that granting multiple users access would disrupt their huge integrated mine, rail and port operations and discourage investment in expansions of the systems. The decision by the tribunal to grant access to third parties to some of their rail lines could potentially have an impact on the efficiencies the pair are seeking to extract from their proposed joint venture, which remains subject to approval by competition regulators and shareholders. Fortescue, which has in the interim built its own railway alongside the Mt. Newman line to service its Chichester iron ore project, has argued that the lack of access to infrastructure has been a barrier to the development of iron ore deposits held by junior miners. In the tribunal's decision Wednesday, it found the costs associated with allowing access to the Mt. Newman and Hamersley lines were "so great that access would be contrary to the public interest," due to the current intensity of use and the high potential additional demand from third parties. The tribunal said the Goldsworthy and Robe lines carry less ore for the owners and third-party demand is far less, so the costs associated with allowing access to those lines would not outweigh the benefits. For its part, BHP welcomed the rejection of access to the Mt. Newman line but said it was disappointed the tribunal granted access to the group's Goldsworthy rail line, sayings its rail infrastructure is "fundamental" to its integrated iron ore operations. "It is not in the public interest that our business or customers should be disadvantaged through the increased inefficiencies and costs that will result from other companies operating their trains on our rail lines," Ian Ashby, president of iron ore at BHP, said in a statement. BHP said it will review the decision to grant access to the Goldsworthy line and that it is entitled to appeal it through the Federal Court of Australia. Rio Tinto said it was pleased access to Hamersley, it's principal link in the Pilbara, was denied to third parties. "We have always been strongly of the view that our integrated operations would be severely disrupted if we were required to allow third parties to operate trains on our rail system," said Rio Tinto Iron Ore Chief Executive Sam Walsh. The tribunal granted access to Rio's Robe network, which links mines to the port of Cape Lambert, for the 10 years to Nov. 29, 2018, a reduction from the 20 years offered in a prior ruling from the Treasurer's office. Overall, Rio Tinto said that, "the decision is a significant one, covering many complex issues, and Rio Tinto is now considering it in detail." -By Cynthia Koons and David Fickling, Dow Jones Newswires; +61 2 8272 4691; [email protected] (Alex Wilson in Melbourne and Devon Maylie in London contributed to this report.) (END) Dow Jones Newswires June 30, 2010 09:37 ET (13:37 GMT)