BHP-Rio deal proof that shared tracks the answer: Fortescue

<p>BHP Billiton’s attempted takeover of Rio Tinto was proof that the world’s biggest mining giant knew how essential shared infrastructure would be, Fortescue Metals Group executive director Graeme Rowley said.</p> <p>In an interview with Informa Australia, which owns <em>Lloyd’s List DCN</em> , Mr Rowley said Fortescue would bring world’s best practice to Pilbara rail operations, despite BHP’s repeated claims that third party access would hurt iron ore exports.</p> <p>BHP last week formalised a $165bn offer for Rio Tinto, which has been rejected by the Rio board.</p> <p>Mr Rowley said shared infrastructure would reduce production costs, not complicate them as BHP suggested.</p> <p>&#8220All we’ve got to do here is look at BHP’s overtures to Rio &#8211 they clearly recognise the value and cost savings of a rationalised infrastructure,&#8221 Mr Rowley said.</p> <p>But BHP scored a small victory last week when federal resources minister Martin Ferguson indicated he would review Trade Practices Act legislation that governed third party rail access, particularly in relation to the public interest provisions.</p> <p>Fortescue has won several legal bids that would force BHP to share its Mount Newman rail line, but political interference means the dispute is still unresolved.</p> <p>Mr Ferguson promised to find a framework that guaranteed investment by BHP and Fortescue, but only if it maintained the Pilbara’s efficient iron ore haulage.</p> <p>The claim raised eyebrows at Fortescue, which said the present environment clearly had not deterred BHP from investing, given BHP’s launching of the second biggest deal in corporate history last week.</p> <p>Fortescue’s head of government relations, Julian Tapp, said the Trade Practices Act already dictated the need for arrangements to be in the public interest.</p> <p>Mr Rowley said booming demand from China meant the efficiencies Fortescue could offer would be ideal.</p> <p>&#8220It [China’s boom&#93 hasn’t happened in my lifetime or my parent’s lifetime &#8211 it’s an amazing, fundamental change to the industrial and commercial framework of the world,&#8221 Mr Rowley said.</p> <p>Fortescue would operate 840 ore wagons each with 40-tonne axle limits, he said. </p> <p>&#8220The difference between a 37-tonne axle load and 40 is about 3m tonnes a year so it’s not to be sneezed at,&#8221 he said.</p> <p>Mr Rowley said Fortescue had always said it would open its infrastructure to third parties. </p> <p>Read more about Fortescue’s response to the proposed BHP-Rio alliance and its plans for the Pilbara, including the looming Federal Government interference in infrastructure, in your printed copy of <em>Lloyd’s List DCN</em> , out Thursday.</p> <script type="text/javascript" src="/content/LLDCN/audio/common.js"></script> <table width="66%" border="0"> <tr> <td width="28"></td> <td width="442"><a href="/rn/"></a></td> </tr> <tr> <td><img src="/content/LLDCN/audio/soundicon.gif" width="26" height="25" /></td> <td>Full interview with Fortescue executive director Graeme Rowley.<br /> <a href="/informaoz/LLDCN/audio/default.htm?WT.mc_id=P08M06EX1" onclick="return openPlayer(‘/informaoz/LLDCN/audio/default.htm?WT.mc_id=P08M06EX1’,”,600,200)" class="listen">Listen</a></td> </tr> </table> <p>&nbsp</p> <p>&nbsp</p> <p></p> <br />