Premier Colin Barnett must make third party access to the Pilbara railways of BHP Billiton and Rio Tinto a condition of any relaxation of their respective state agreements, the North West Iron Ore Alliance said today.
Premier Colin Barnett must make third party access to the Pilbara railways of BHP Billiton and Rio Tinto a condition of any relaxation of their respective state agreements, the North West Iron Ore Alliance said today.
The alliance, which represents emerging iron ore miners in the Pilbara, was responding to WA Business News' report that the government's planned revision of the state agreements to enable the mining giants to share their Pilbara infrastructure would not also beef up their existing third party access obligations.
The mooted revisions will remove restrictions preventing BHP and Rio from using other parties ports or rails to export ore from their own projects subject to state agreements.
The revisions were flagged in June under a related deal that will see BHP and Rio pay full royalty rates on future iron ore production and a one-off $350 million payment to facilitate the pair's proposed $120 billion Pilbara iron ore joint venture.
With the joint venture all but certain to lapse because of competition hurdles, the miners are expected to utilise the relaxed terms of the state agreements to garner some of the expected $10 billion in savings by sharing some of their Pilbara port and rail facilities.
The government expects to finalise the proposed legislative changes to the agreements by the end of the year.
Mr Barnett this week conceded to WA Business News that the proposed revisions to the state agreements would not include beefed up third-party rail access provisions, though the existing third party obligations would be retained and he still wanted to encourage access for junior miners.
"It is not formally part of the negotiations but I would like to see that happen," he said.
As the state agreements currently stand, BHP and Rio must offer to carry third party ore on commercial terms as long as it will not unfairly impact on their own activities.
Yet they have successfully stymied all past attempts at gaining such access, largely on the grounds that their networks lack the capacity to accommodate other users.
Alliance chairman Ian Campbell today said the WA government must take direct and urgent action to ensure BHP Billiton and Rio provide the state's emerging iron ore miners with haulage access to a Pilbara rail solution.
Mr Campbell said this should include taking all necessary steps including legislative amendments to enshrine the rail haulage access rights of the emerging home-grown iron ore companies.
He said the Alliance shareholders were simply calling for "a fair go, not a free ride" and were willing to pay a fair and reasonable price for effective rail haulage arrangements.
"A defined tonnage of reserved capacity needs to be guaranteed so the majors meet the obligations laid down in the State Agreement Acts."
He said direct intervention was required by government as speculation grows the proposed joint venture will be superseded by a "Plan B" which will effectively allow them to share infrastructure to the exclusion of others.
"Plan B actually looks worse than the joint venture and would be a disaster for the development of the next generation of iron ore companies in the Pilbara," he said.
"It would simply embed a de-facto monopoly which is seeking to assume sovereignty over the entire Pilbara. They simply don't want to allow any room for WA's home-grown companies to have a chance."
"If capacity is not quarantined on the existing lines the WA companies will have to build their own rail networks, which is not only commercially inefficient but will turn the region into a patchwork quilt of criss-crossing rail tracks."
The ineffectiveness of Rio and BHP's existing third party haulage obligations has left other mine proponents no choice but to build their own port and rail infrastructure.
Consequently, there could soon be an extra four major iron ore railways in the region, in addition to the five existing networks operated by BHP, Rio and Fortescue Metals Group.
When Hancock Prospecting completes its planned Roy Hill railway over the next three years, there will be three major lines running parallel to Port Hedland for the best part of 200 km.
Similarly, there could be another three major conduits running in parallel from the central Pilbara for most of the way to Cape Lambert and Anketell Point, once Fortescue develops its $3.2 billion Solomon project.
