AUSTRALIA: Fortescue Metals is a step closer to gaining access to the Pilbara railway networks owned by rival mining groups BHP Billiton and Rio Tinto. In mid-June the National Competition Council recommended that the Robe River, Hamersley and Goldsworthy rail lines should be opened up, in order to boost competition in mineral exports.
NCC has once again rejected arguments from BHP and Rio Tinto that open access would be against the public interest. But as with its previous recommendations, NCC has left the final decision to Federal Treasurer Wayne Swan; he has until August 29 to decide whether to support NCC's recommendation to grant FMG a 20-year access agreement.
Rio Tinto Iron Ore warned that throwing the Pilbara rail infrastructure open to third parties would put future investment at risk and rapidly erode national wealth. Its CEO Sam Walsh said that the NCC appeared to be lining Australia up for a 'massive exercise in value destruction' that could cost the country A$30bn over 20 years.
Fortescue will need additional rail capacity to serve extra mines as it expands its Pilbara operation. On June 17 Executive Director Graeme Rowley said FMG was on the verge of reaching 'project completion' for its initial production rate of 500 000 tonnes a week (RG 7.08 p425), and suggested that the company was now looking at increasing production up to 160 million tonnes a year.
Rowley told the Australian Financial Review 'We'd always talked about 110 million tonnes because it's a comfortable double [of the 55 m tonnes for the first phase] but if we put in a new dumper, we may as well put in two at the same time.' FMG is looking to build two extra wharves at its Herb Elliott Port rather than one - 'a lot of these issues are about economies of scale', he explained.
