UPDATE 1-Brockman puts heat on Fortescue to haul its iron ore

Wed May 15, 2013 8:07pm EDT

* Pressure on Fortescue amid talks to sell rail stake

* Could pave way for Atlas, Flinders Mines rail access

* First test of state rail access rules, pricing (Adds Brockman comments, details)

MELBOURNE, May 16 (Reuters) - Brockman Mining Ltd said on Thursday it has applied for access to Fortescue Metals Group's iron ore rail line, a move crucial to the Chinese firm's efforts to start producing iron ore.

Rail access is the biggest hurdle to aspiring iron ore producers in Western Australia, and if Brockman is successful in its bid it could open the way for others, like Atlas Mining and Flinders Mines, to open new mines without having to build multi-billion dollar rail lines.

The proposal steps up pressure on Fortescue to open up access to its rail lines just as the world no.4 iron ore miner is in talks to sell a stake in its port and rail unit, The Pilbara Infrastructure (TPI), to help pay down debt.

Brockman wants to discuss terms with TPI to haul up to 20 million tonnes of iron ore a year for 20 years, starting in 2016, in the first test of state rules that require TPI to offer access to rival miners at regulated rates.

Fortescue has long said it wanted to give other smaller miners access to its rail line, after having failed in its own efforts to force mega miners Rio Tinto and BHP Billiton to open their rail lines.

However miners like Atlas and Brockman, which was taken over by Hong Kong-based limousine company Wah Nam International last year, have been unable to agree on terms with Fortescue up to now.

"We've been pursuing commercial negotiations with parties for some time without success," Brockman Australia's CEO Russell Tipper said in an interview released to the Australian stock exchange.

With Brockman's application to the state regulator, an independent umpire will be brought in to help reach an agreement.

"The state-based process that we are pursuing is not about litigation; it's about negotiating fair terms with the railway owner," Tipper said.

Brockman only wants to use the rail lines and plans to hire a haulage operator, possibly Aurizon Holdings, to run trains on the network. It already has port access at Port Hedland, the biggest iron ore export port in Australia.

Tipper said Brockman would continue to pursue all possible rail options, including an ongoing study with Atlas and Aurizon to build a new rail line in the iron ore-rich Pilbara.

"We're certainly looking at strategic investment partners to come in and help us fund the mine development. However, we won't be able to conclude those discussions until we have a firm rail solution," he said.

(Reporting by Sonali Paul; Editing by Richard Pullin)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.