Swan rules on Pilbara lines access

Fortescue Metals Group Ltd is looking forward to negotiating access to railways owned by BHP Billiton Ltd and Rio Tinto Ltd after the federal government declared they should be opened to third parties.
Treasurer Wayne Swan said on Monday the Hamersley and Robe railway lines owned by Rio Tinto and the Goldsworthy railway line owned by BHP Billiton in Western Australia's Pilbara region should be opened to third-party access.

The decision follows a recommendation by the National Competition Council (NCC) that
the three separate railways be opened up to third parties to improve competition in
the haulage market for the metal.
Mr Swan accepted the advice.
"I accept the NCC's recommendations and I am declaring the services (as recommended)
... for a period of 20 years commencing on 19 November, 2008," Mr Swan said in a
statement.
Fortescue welcomed Monday's decision, saying economic, social and environmental
arguments for third party access were "compelling".
Fortescue and smaller iron ore companies are seeking access to the railways to allow
them to export the steel making commodity without building expensive infrastructure.
Mr Swan said the declaration did not automatically provide a right of access.
But it allows third parties recourse to arbitration if they are unable to agree with
the service provider on access terms and conditions.
This binding arbitration would be conducted before the Australian Competition and
Consumer Commission (ACCC), which has the power to impose access terms and
conditions, or refuse access if it finds that the service providers cannot be
appropriately compensated.
Fortescue executive director operations Graeme Rowley said the company looked
forward to negotiating commercial access terms with the mining giants, "rather than
wasting more money on costly legal appeals".
"BHP Billiton and Rio Tinto continue to enjoy significant taxpayer subsidies as part
of their undertaking to the state government to allow access to the rail line," Mr
Rowley said.
"The time has come for us now to all work together."
Rio Tinto iron ore chief executive Sam Walsh said the company was "disappointed" by
the decision and would likely take the matter to the Australian Competition Tribunal
for review.
"Far from producing a clear benefit to Australia, the decision brings a significant
risk of revenue loss to the national economy, resulting in a present-value cost to
GDP of up to $30 billion," Mr Walsh said in a statement.
But Mr Rowley said the decision would boost Australia's export revenue.
BHP Billiton president of iron ore Ian Ashby said providing third party access to
the company's rail operations would compromise the efficiency of its integrated
mine, port and rail operations.
"The efficient delivery of iron ore to our customer's should not be compromised
through allowing other companies to put their rail cars on our tracks, creating
potential delays or disruption to our operations," Mr Ashby said in a statement.
Minerals Council of Australia chief executive Mitchell Hooke said the decision was
disappointing and "at odds with the fundamental premise in commerce of the freedom
to choose" who you do business with.
The council vowed to seek amendments to sections of the Trade Practices Act, under
which the rail lines have been declared, limiting "the circumstances in which one
business is required by law to make its facilities available to another".
The decision was welcomed by the North West Iron Ore Alliance, a lobby group for
junior iron ore firms in the Pilbara including Atlas Iron Ltd, which commenced
mining last Monday, and explorers BC Iron Ltd and FerrAus Ltd.
Alliance spokeswoman Megan Anwyl said Fortescue's course of action would not have
been required if BHP Billiton and Rio Tinto had honoured state agreement obligations
to haul third party ore.
Fortescue first took action to gain access to BHP Billiton's Mt Newman rail line to
service its Mindy Mindy iron ore deposit in 2004.