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UPDATE 1-Australia's Fortescue told to enter talks with Brockman on rail access
August 14, 2013 / 7:26 AM / in 4 years

UPDATE 1-Australia's Fortescue told to enter talks with Brockman on rail access

* Regulator rejects Fortescue arguments against access

* Brockman awaits ruling on Fortescue’s access price range (Adds Brockman comment, detail)

MELBOURNE, Aug 14 (Reuters) - Fortescue Metals Group’s attempt to avoid being forced to open its rail line to aspiring iron ore producer Brockman Mining was blocked by an Australian state regulator on Wednesday.

The Western Australian Economic Regulation Authority rejected Fortescue’s argument that it should not have to talk to Brockman as the Hong Kong-based firm has not provided evidence it would be able to fund an iron ore mine.

The watchdog also rejected Fortescue’s arguments that giving access to Brockman could interfere with its own shipments and that there would not be enough space to grant access to other iron ore producers who are talking to Fortescue, such as Atlas Iron and Flinders Mines.

“The Authority approves the commencement of negotiations with respect to the Access Proposal,” the regulator said in a decision published on its web site.

Brockman is the first miner to test a state code that requires Fortescue’s port and rail arm, The Pilbara Infrastructure (TPI), to let other miners use its rail line.

Rail access is the biggest hurdle to aspiring iron ore producers in Western Australia, where giants Rio Tinto and BHP Billiton have blocked access to their rail lines and Fortescue has stalled opening its multi-billion dollar railway.

Brockman, controlled by Hong Kong-based limousine company Wah Nam International, welcomed the decision, and is now awaiting the regulator’s ruling on Fortescue’s proposed floor and ceiling price for access, due within the next 30 days.

“This is another important step forward in supporting junior miners to gain access to existing Pilbara infrastructure,” said Brockman external affairs manager Michelle Manook.

Fortescue’s TPI arm was not immediately available for comment.

Fortescue is currently trying to sell a minority stake in TPI for around $3 billion to help pay down debt, hoping to seal a deal by the end of September, but only if it gets a big enough price.

Reporting by Sonali Paul; Editing by Muralikumar Anantharaman and Joseph Radford

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