BHP raises national interest again after Pilbara rail access judgment

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. 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. 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. A company spokeswoman said the judgment was surprising, but agreed it was made on a fairly narrow point. 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. "It is important to remember that this decision has much broader implications beyond BHP Billiton,&#8221 he said. &#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. "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." 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. 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. 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. It was about this time that BHP made its initial warning about export growth and the national interest possibly being impinged. It was expected that a full hearing of the facts, including expert opinion, would be conducted during the second half of 2007, BHP said. 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. "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. &#8220It is our understanding that the state plans to complete this process by the middle of 2007."

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