PERTH (miningweekly.com) – Iron-ore miner Fortescue Metals said on Thursday that it was consulting with its legal council after the Western Australian Economic Regulatory Authority (ERA) scrapped its floor to ceiling costs on a section of its Pilbara railways.
Fellow iron-ore miner Brockman Mining was aiming to gain access to Fortescue’s rail infrastructure, operated by subsidiary The Pilbara Infrastructure (TPI), to haul some 20-million tonnes a year of hematite iron-ore product from the Marillana project to Port Hedland, starting in 2016.
TPI has argued that there was no surplus capacity on the rail infrastructure to accommodate Brockman, prompting ERA to back Brockman’s wish for negotiations.
The regulatory body on Thursday scrapped TPI’s subsequent floor and ceiling cost proposal, which had placed at a floor price of A$73-million and a ceiling price of A$576-million.
The ERA replaced the proposed pricing with its own floor to ceiling costs, saying TPI could charge between A$84.7-million and A$316.9-million a year for access to the rail infrastructure.
Fortescue told shareholders on Thursday that the ERA determination did not trigger negotiations for access under the Railway Code 2000, adding that the Code provided that a railway owner was not required to negotiate until applicants met certain requirements, including gaining the financial resources and managerial capability to carry on the proposed operation, and that there was sufficient capacity on the route to accommodate the access proposal.
Fortescue said that Brockman has failed to satisfy these requirements.
“Fortescue is proudly the only Pilbara iron-ore producer that provides third-party access to its infrastructure, having shipped in excess of 11-million tonnes of iron-ore for third parties,” said Fortescue CEO Nev Power.
He noted, however, that the company and its shareholders were not obligated or required under any agreement or legislation to subsidise or risk wrap third-party projects that were uneconomic.
He added that the company was currently in negotiations with a number of other third-parties relating to port and rail infrastructure access.