THE Western Australian Government says it would rather see infrastructure shared than have three railways leading into Port Hedland from the State’s rich Pilbara region, as is currently planned.
As it stands, giant miner BHP Billiton’s 630-kilometre iron ore rail system, which snakes from its Pilbara mines to Port Hedland, is the only line in the area.
However, two other iron ore proponents – the Hope Downs iron ore project and Andrew Forrest’s Fortescue Metals Group project – are planning railways, both adjacent to BHPB’s line.
Although both are also seeking to access BHPB’s line to service their proposed Pilbara iron ore projects, this is considered a longer route.
State Development Minister Clive Brown told WA Business News that, from the State’s point of view, three railways were not ideal.
“There is no question about that, it is certainly not the best option. The best option is to have sharing of rail infrastructure,” Mr Brown said.
But he acknowledged that, where a rail system was operating at full capacity, new infrastructure could be required.
The BHPB line has recently undergone expansion to meet surging Chinese demand.
Mr Brown said that, while it was not for the Government to get involved in commercial transactions, it had encouraged the parties to look at common-user infrastructure.
However, so far there hadn’t been an enormous willingness from the parties to reach common user agreements, according to Mr Brown.
“One would hope that common sense will prevail and that appropriate commercial terms will be able to be worked out between different providers of rail so that there can be common user infrastructure,” Mr Brown said.
While both FMG and Hope Downs are understood not to have formerly discussed possible synergies, both say they envisage only one line being constructed.
The issue could be forced to a head soon.
Pressing Hope Downs is a December 31 deadline set in accordance with the project’s 1992 State Agreement, under which the owners must submit their development proposal.
The project has lagged since a dispute began between the project owners – Gina Rhinehart’s Hancock Prospecting and South African iron ore major Kumba Resources.
However, a decision from the resulting arbitration is understood to be imminent, which may allow the owners to proceed with development.
Meanwhile FMG, although less advanced than Hope Downs, recently signed a State agreement with the Government for the development of its $1.4 billion railway and port facilities.
It has also signed a deal with a Chinese company to build the railway, which it promotes as open access.
