Pilbara iron ore rail battle heats up

Fortescue has won its High Court appeal over access to Rio Tinto and BHP’s iron ore rail networks in the Pilbara.

The Australian iron ore miner had been fighting for access to Rio’s Hammersly and Robe River lines, as well as BHP’s Goldsworthy and Mount Newman networks.

In 2010 the long running battle came to a head when the Australian Competition Tribunal rejected Fortescue’s push for access to BHP and Rio rail networks, and allowed the two major miners to retain full access to their own Pilbara rail lines.

The Tribunal rejected the application by Fortescue Metals and a group of junior miners to gain access to the rail lines, finding that access by these miners to Rio’s Hammersley lines and BHP’s Newman rails “would be contrary to the public interest.”

The Tribunal’s inquiry found that the actual costs in providing access had the potential of dwarfing whatever benefits might exist from avoiding duplication of lines.

However, despite this the Tribunal did find in favour of the applicants for access in regards Rio’s Robe River railway and BHP’s Goldsworthy line.

Fortecue continued in its fight to gain full access to the Pilbara network, and was granted a High Court appeal late last year.

In its appeal FMG made technical arguments about the court’s interpretation of the law.

The High Court has now found that the Tribunal’s decision was not legal, according to the ABC.

This has now allowed Fortescue to again pursue access to the Pilbara rail lines.

Graham Short, from AMEC, explained there is still some way to go before a decision on access is reached.

“There’s obviously still further negotiations to be conducted and, as I understand it, it would still need to go through various tests so that it would be considered by the Australian Competition Tribunal.”

Rio Tinto came out against the decision, however it did note that it was “pleased to note that the High Court accepted its formulation of the proper test for the threshold question of whether a facility can be economically duplicated.

“The Minister and the Tribunal both applied the wrong test in determining this threshold issue, and the Tribunal will be bound to adopt the test Rio Tinto argued for on any reconsideration.”
Rio went on to add that its “integrated operations in the Pilbara would be severely impacted if third parties were permitted to run trains on the system. As the Tribunal noted, the potential disruption and diseconomy costs would dwarf whatever benefits might exist in permitting third party access”.