Dealing with third-party access for mining companies
CAPE TOWN (miningweekly.com) – Companies that invest in major projects, which rely on railways and ports for the export of product, are increasingly having to accommodate third parties at those assets.
They also had to sharpen up their tariff formulations so that they did not get caught short, global law firm Baker & McKenzie partner Jo Daniels stated on Wednesday.
She told an Australian Trade Commission briefing at the Mining Indaba that many governments were requiring third parties to access the railway and port from day one.
“We’re used to having one project sponsor that would do the entire pit-to-port project. What is changing is that common user access has become the norm.”
Governments were now indicating that they would not give a company a concession to develop a project unless third-party access was allowed.
Daniels said companies were developing innovative ways of dealing with this requirement, but it needed great coordination.
“People are developing contractual access regimes that are built into documents before they reach financial close.”
She further noted that the coordination of the supply chain could be problematic if there were different financing arrangements and different owners for different steps of a project – for the mine and for infrastructure, such as ports and rail.
“Remote operational control centres have representatives from different aspects of the supply chain. That obliges people to think about what’s best for the whole supply chain, instead of just rail for instance. “
Setting tariffs without proper planning could be very dangerous, she warned.
“Fixed tariffs, for example, for hauling coal from mid-Africa to the port, is hugely risky for the project sponsor, as capital costs are not known at the time.”
Daniels suggested that tariffs had to be based on meticulous formulas which would run from day one of operations, even though the contract might have been signed years before.
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