Court Backs Fortescue Bid for Rail Line Access


Drilling is under way at Brockman Resources' Marillana
iron ore project, located less than 3 km away from BHP
Billiton's Mt. Newman rail line. (Photo courtesy of
Brockman Resources)
Australia’s High Court ruled in late September 2008 that Fortescue Metals should not be barred from use of BHP Billiton’s Mt. Newman rail line to transport iron ore in Western Australia’s Pilbara region. A separate decision from a proceeding in the Australian Competition Tribunal is required before Fortescue would be able to negotiate terms of access to the rail line. The Competition Tribunal is expected to consider the issue in March or April 2009.

BHP Billiton has argued that its rail lines are an integral part of its production process and should not be open to thirdparty access. Following the High Court decision, BHP Billiton President of Iron Ore, Ian Ashby said, “We believe our West Australian integrated mine, rail and port operations are among the most efficient in the world. In the current fiscal year alone, these operations are expected to deliver 137 million mt of iron ore to customers all over the world and are running at full capacity. We continue to believe there are better, more efficient solutions available, including rail haulage and other commercial arrangements, such as mine gate sales.”

Fortescue’s Executive Director–Operations, Graeme Rowley, welcomed the High Court decision, saying, “It has been a long-running saga and an unnecessary waste of significant time and money that could have easily been avoided if BHPB Iron Ore had simply agreed to negotiate rail access on commercial terms.” Fortescue began shipping iron ore from its Cloudbreak mine in the Pilbara in May 2008, using a rail line built by the company to serve the mine.

The North West Iron Ore Alliance, composed of four junior companies holding iron ore deposits in the Pilbara, also hailed the High Court decision, saying it paved the way for junior iron ore producers to negotiate access to the railway systems of BHP Billiton and Rio Tinto. The alliance includes Brockman Resources, Atlas Iron, BC Iron and FerrAus.

Managing Director of Brockman Resources, Wayne Richards, said the High Court’s decision has the potential to greatly increase the profitability and probability of project development of Brockman’s flagship Marillana iron ore project by providing the company with the opportunity to negotiate access to key rail infrastructure necessary to transport iron ore from Marillana to the port at Port Hedland.

The Marillana orebody lies within 3 km of BHP Billiton’s Mt. Newman rail line. “The High Court decision provides a clear definition that the Pilbara railway lines are not deemed a part of a production process,” Richards said. “This is a very important step in building a framework for third-party access to the Pilbara infrastructure.”

Brockman is currently completing a definitive feasibility study for Stage 1 development at Marillana, including a processing plant and infrastructure to support an initial production rate of 2 million mt/y, with mining expected to begin in late 2009.

As featured in Womp 08 Vol 9 - www.womp-int.com