Murchison and Midwest eye `northern rail route’ to Oakajee

<p>Murchison Metals and Midwest Corp will seek to build a 440 km direct standard gauge rail link running southwest from their respective Jack Hills and Weld Range iron ore projects to the proposed port at Oakajee, the companies said this week.</p> <p>A duplicate narrow-gauge southern link via Mullewa and Pindar was rejected for the project, which is crucial for the projected 25m tonnes a year second stage of Jack Hills now under feasibility study.</p> <p>The decision was based on consulting engineer Maunsell’s assessment of rail infrastructure options as part of the Northern Infrastructure Feasibility Study, which has gained Western Australian Government backing.</p> <p>Murchison revealed on June 27 the formation of an infrastructure consortium with Posco, Mitsubishi and Toll to present an infrastructure proposal to build, own and operate the new railway and port.</p> <p>&#8220A northern rail route has an estimated line capital cost of $530m, which compares favourably with the southern route capital cost of $1.1bn,&#8221 Murchison said yesterday. </p> <p>&#8220Line distance and substantial construction challenges account for a substantial portion of the adverse cost differential of the southern route.</p> <p>&#8220Additionally, the cost of locomotives and rolling stock for a standard gauge line would cost 60% more on a southern route, as compared to the preferred northern route from Jack Hills and Weld Range to Oakajee.&#8221</p> <br />

Chinese rail firm buys Yilgarn Infrastructure stake

<p>Along with buying stakes in Australian iron ore mines, north Asian companies are increasingly investing in related infrastructure projects, especially in Western Australa’s mid west region.</p> <p>South Korea’s Posco and Japan’s Mitsubishi are already involved the Oakajee port and rail project.</p> <p>And now China Railway Materials Commercial Corp (CRM), a major Chinese rail infrastructure provider, will invest in unlisted public firm and major Oakajee player Yilgarn Infrastructure and hold a 20% stake in it, <em>China Daily</em> reported yesterday (Wednesday, December 20).</p> <p>"This is not only a good investment for CRM, but also a good project for China because China can secure access to iron ore resources in that region," Yilgarn chairman John Saunders was quoted as saying.</p> <p>"By getting involved in the infrastructure building, China can achieve low iron ore transport costs from the mines to the port and will have very competitive iron ore prices." </p> <p>Mr Saunders said China National Overseas Engineering Corp and China Harbour Engineering Co Ltd would possibly be involved respectively in building the rail network and the port.</p> <br />

Corrigan set for comeback: report

<p>Ex-Patrick Corp boss Chris Corrigan is set to make a comeback to the industry, taking on Toll Holdings via a $250m joint-venture deal with DP World, the <em> Australian </em> reported today (Thursday, December 21).</p> <p>The new entity would operate as &#8220a bolt-on business to the ports&#8221, putting it in direct competition with Toll’s proposed Infrastructure Co, comprising Patrick and Pacific National, to be headed by long-time Toll man Mark Rownsthorn, the paper said.</p> <p>DP World would not comment when contacted by <em>Lloyd’s List DCN</em> . A spokeswoman did say a comment would likely be made early in the new year.</p> <p>Mr Corrigan was overseas and unavailable for comment. </p> <p>DP World’s landside logistics concern, P&#38O Trans Australia, is rumoured to be part of the joint-venture deal. </p> <p>It’s understood that DP World will spin-off its landside logistics assets to bring the Australian business in line with its global stevedoring network.</p> <p>The <em>Australian</em> report said equity subscribers included private equity outfit Kaplan Equity, headed by Sam Kaplan, and KFM Diversified Infrastructure and Logistics Fund. </p> <p>Mr Corrigan is the chair of the fund’s investment advisory committee.</p> <p>The new entity would be headed by Mr Corrigan, who would be joined by ex-Patrick executives, the paper said. </p> <p>Rumours surrounding Mr Corrigan’s return to transport have circulated since he pocketed around $130m in cash and Toll shares after the successful buyout of Patrick Corp.</p> <p>Patrick chairman Peter Scanlon walked away from the deal with close to $377m. </p> <br />

Labor names infrastructure targets&semicolan govt blames states

<p>A Labor-led government would &#8220roll up its sleeves&#8221 to address pressing infrastructure issues, leader Kevin Rudd said yesterday (Tuesday, 19 December).</p> <p>While shy on naming an actual funding figure for infrastructure upgrades, Mr Rudd said investment would be more than the Federal Government’s current $5.5bn commitment.</p> <p>Projects on Mr Rudd’s agenda include developing the M7 to F3 motorway and working on ways to fast-track the Penrith rail link in Sydney, and upgrading the Ipswich motorway and Townsville Port access road in Queensland.</p> <p>&#8220When it comes to road, when it comes to rail, Mr Howard’s approach is to blame the states,&#8221 Mr Rudd said.</p> <p>&#8220My approach is let’s work with the NSW Government on strategies to fix infrastructure problems.&#8221</p> <p>Transport minister Mark Vaile said Mr Rudd’s comments on infrastructure for capital cities were an &#8220extraordinary&#8221 admission that the Labor states had completely mismanaged transport infrastructure in Australia’s major capital cities. </p> <p>&#8220Incredibly, much of what Mr Rudd identified [yesterday&#93 as priority areas are already being actioned through Auslink highlighting a complete lack of understanding of the program’s aims and objectives,&#8221 he said.</p> <p>&#8220The Australian Government is currently working with the states to develop urban corridor strategies, which will guide future investment decisions in Sydney, Brisbane, Melbourne, Adelaide and Perth.&#8221</p> <p>The operations of the Westlink M7 motorway in Sydney’s west had exceeded performance targets, said Mr Vaile, proving it an &#8220outstanding&#8221 example of a successful public-private partnership project.</p> <p>Projects on the NSW Road Transport Association’s wishlist include a tunnel from the M4 to Port Botany, widening the M5, developing a four-lane highway from Sydney to Brisbane, and a north-south motorway through the western suburbs of Sydney.</p> <p>A link between the F3 freeway and the M2 motorway &#8211 a proposal that has been shelved for three years &#8211 was also on marked as significant.</p> <p>The Sydney Chamber of Commerce welcomed Labor’s announcement. </p> <p>Mr Rudd’s plan to establish a national infrastructure fund was recognition that Sydney needed more investment to fund future growth, SCC executive director Patricia Forsythe said.</p> <p>&#8220Sydney is the major hub in the national supply chain &#8211 development of our freight network is a top priority for business,&#8221 she said.</p> <p>Mrs Forsythe said that in order for the nation to develop further, governments needed to overcome the fear of being labeled &#8220Sydney-centric&#8221.</p> <p>&#8220This issue of how we fund investment and growth in major cities is a debate worth having.&#8221</p> <br />

Vaile hails MSIC progress but admits shortfalls

<p>While 57,000 Maritime Security Identification Card applicants made the October 27 cut-off, 9,000 &#8220late applications&#8221 were still being processed, federal transport minister Mark Vaile said yesterday (Tuesday, December 20). </p> <p>Congratulating the Australian maritime industry, Mr Vaile said: "Introducing the MSIC has been a tremendous success for both the maritime industry and the Government.</p> <p>"More than 57,000 maritime industry workers submitted their MSIC applications before the October 27, deadline, and the Government has approved over 56,000 MSICs for issue by issuing bodies. </p> <p>&#8220An additional 9,000 late applications are being processed as promptly as possible.</p> <p>"As a transitional measure, the Department of Transport and Regional Services will provide temporary passes to those who applied for their MSIC before October 27, but have not yet received it.</p> <p>"Given the number of people affected by this project, the Government is working with port authorities to ease the transition for those who may have missed the news about the need to have an MSIC.&#8221</p> <p>Mr Vaile’s statement came as industry concern mounted in the two weeks before the January 1 implementation.</p> <p>Industry and the Government will need to work closely throughout most of January to get all outstanding applications through &#8220the system&#8221, the Victorian Transport Association has asserted, and to arm as many wharf workers as possible with the real thing to maintain&#8224port productivity.</p> <p>The VTA was also concerned the lag between applying for a replacement card and having a new card reissued would render &#8224workers effectively unemployable in wharf cartage.</p> <p>The association has called for a practical way for ID and&#8224access to be maintained in &#8220bone fide&#8221 MSIC replacement circumstances, while maintaining the integrity of the regime, and the security considerations &#8224of port facility operators such as Patrick and DP World.</p> <p>"This is going to be a continuing problem," VTA spokesman Neil Chambers said, "although how large the problem will be is difficult to gauge. &#8220</p> <br />

Ripper seeks state negotiated settlement to Pilbara rail dispute

<p>Western Australian deputy premier, treasurer and state development minister Eric Ripper has made a plea for a political solution to the Pilbara rail legal confrontation.</p> <p>"I think it would be good to have rail access issues resolved in the Pilbara," Mr Ripper said yesterday (Monday, December 18).</p> <p>"Probably the best way forward is the rail haulage negotiations that are taking place, together with the state government and the companies."</p> <p>In a ruling yesterday, seen in some quarters as having implications for any private infrastructure, the Federal Court ruled that Fortescue Metals Group had a legal right to negotiate a commercial agreement with BHP Billiton on its Pilbara rail lines after deciding they were not part of the iron ore mining process.</p> <p>An appeal to the full Federal Court must be lodged within three weeks on the ruling, which relates Part IIIA of the Trade Practices Act.</p> <p>That deals with competition and infrastructure access.</p> <p>Rio Tinto’s Pilbara rail links are also a Fortescue target, with Fortescue government relations manager Julian Tapp telling the <em>Australian</em> : "When we look at developing the west Pilbara, we will be looking at Rio’s railways."</p> <br />

Toll, SCT await east-west rail decision

<p>Toll Holdings is waiting on the Australian Consumer and Competition Commission to make a decision known on the east-west rail starter’s kit &#8211 for which it has sought a waiver.</p> <p>SCT Logistics is Toll’s preferred bidder for the rail starter’s kit.</p> <p>In a release to market last week, the ACCC was clear. Despite its plans, Toll would hand over a starter kit of rail assets on the east-west route, under an agreement reached in its Patrick buy-out, which would see it divest access slots on the line, terminals at both ends, and 12 locomotives.</p> <p>SCT chief Geoff Smith said the best case scenario would be an answer, one way or the other. He was hopeful of an answer before Christmas.</p> <p>&#8220Worst case scenario is we’re none the wiser and it stalls basically,&#8221 he told <em>Lloyd’s List DCN</em> .</p> <p>&#8220So long as we conclude the transaction and it doesn’t get overturned by the ACCC or Toll’s desire to have all of the undertaking extinguished, what it will do for us is make us a far stronger, far larger competitor. </p> <p>&#8220It will complement the new fleet we have coming on board.&#8221</p> <br />

Government to raise competition issue on Toll move

<p>The Federal Government was weighing up its response to Toll Holdings’s move to split the company, a spokesman for federal transport minister Mark Vaile told <em>Lloyd’s List DCN</em> yesterday (Monday, December 18) </p> <p>&#8220The proposed restructure of Toll Holdings is a commercial decision by the company’s board of directors,&#8221 the spokesman said. </p> <p>&#8220However, the Australian Government is concerned to ensure that it does not lessen competition and access to key infrastructure.</p> <p>&#8220The related request for a variation to certain undertakings related to the Patrick acquisition earlier in 2006 potentially raises competition issues.</p> <p>&#8220Any variation to the undertakings is a matter for the Australian Competition and Consumer Commission.</p> <p>&#8220The ACCC is currently conducting market inquiries to determine whether to accept or reject the proposed variation.</p> <p>&#8220The Department of Transport and Regional Services is currently preparing a submission to the ACCC.&#8221</p> <p>An ACCC spokeswoman this week said there was no official comment from chairman Graeme Samuel.</p> <p>Last week Mr Samuel had said: &#8220The ACCC has not yet formed a view in relation to the proposed variation and will make its decision following market inquiries.</p> <p>&#8220In particular, if market inquiries do not raise any issues of concern to the ACCC in relation to Toll’s obligation to divest a 50% interest in Pacific National, the ACCC would look favourably on such a waiver."</p> <br />

Australian supply chains not linked to global standards: study

<p>Australia’s freight transport infrastructure requires a more coordinated and integrated approach, a study from the Australian Industry Group has found.</p> <p>Further, given Australia’s distance from major global markets, the country’s transport infrastructure system needs to be at the forefront of global efficiency &#8211 a standard the present system falls short of, particularly on the rail freight network and at intermodal connections.</p> <p>The study, <em>Linking Australia with Global Supply Chains</em> , found there were significant pockets of dissatisfaction with most freight transport modes across manufacturing industries and states.</p> <p>Ai Group chief executive Heather Ridout said the growing importance of transport and logistics operations to manufacturing competitiveness, highlighted the need for further action.</p> <p>&#8220The report found that inefficiencies in Australia’s freight transport system have contributed to increases in the general transport costs for two thirds of manufacturers in the past two years,&#8221 Mrs Ridout said.</p> <p>&#8220Transport and logistics costs are a considerable proportion of total manufacturing costs. Currently, they are equal to more than half of general administration costs and are more than marketing costs.&#8221</p> <p>The study found that outsourcing transport and logistics activities to specialist operators could result in substantial cost savings.</p> <p>&#8220Australia’s transport system also appears to compare favourably with some other industrialised economies, particularly those suffering from widespread road and rail congestion,&#8221 Mrs Ridout said.</p> <p>The study was based on a survey of 710 Australian manufacturers.</p> <br />

BHP raises national interest again after Pilbara rail access judgment

<p>A Federal Court setback prompted BHP Billiton today (Monday, December 18) to reiterate its warning that unfettered access to its 100m tonnes a year Pilbara rail system would harm growth in iron ore exports.</p> <p>The Federal Court ruled that BHP Billiton’s Mt Newman and Goldsworthy iron ore rail lines were not part of the company’s production process. </p> <p>BHP Billiton is reviewing judgment in a case the company brought itself to define the term &#8220process&#8221, and will consider its options with regards to an appeal.</p> <p>A company spokeswoman said the judgment was surprising, but agreed it was made on a fairly narrow point.</p> <p>Chris Lynch, BHP Billiton executive director and group president carbon steel materials, said he was &#8220extremely disappointed with the decision, which threatened the further growth of one of Australia’s critical export industries.</p> <p>"It is important to remember that this decision has much broader implications beyond BHP Billiton,&#8221 he said. </p> <p>&#8220Open access to dedicated rail infrastructure would compromise the efficient production of iron ore and cause delays in future investment decisions, making Australian producers less reliable.</p> <p>"We will use all available legal avenues to protect the investments of our shareholders and joint venture partners and the integrity of our production process."</p> <p>The Federal Court ruling does not automatically enable a third party to run its trains on BHP Billiton’s Pilbara iron ore rail lines to Port hedland, BHP said. </p> <p>Separate proceedings underway in the Australian Competition Tribunal will now determine the broader question of whether the rail lines should be &#8220declared&#8221 pursuant to Part IIIA of the Trade Practices Act.</p> <p>Fortescue Metals Group initiated the tribunal proceedings in June after federal treasurer Peter Costello had declined to follow a National Competition Council recommendation that the Mt Newman rail line be declared. </p> <p>It was about this time that BHP made its initial warning about export growth and the national interest possibly being impinged.</p> <p>It was expected that a full hearing of the facts, including expert opinion, would be conducted during the second half of 2007, BHP said.</p> <p>Mr Lynch also said there was a sensible alternative that would provide a workable approach to infrastructure access, without significantly impacting BHP Billiton’s iron ore production process.</p> <p>"We have been actively engaged in discussions with the WA State Government about developing a revised iron ore haulage regime based on BHP Billiton’s current obligations under the Rail Transport Agreement,&#8221 he said. </p> <p>&#8220It is our understanding that the state plans to complete this process by the middle of 2007."</p> <br />