Infrastructure sharing could cost $43bn: Rio Tinto report

<p>Iron ore operations in Western Australia would be severely undermined by plans to introduce third party access to rail infrastructure, a study commissioned by Rio Tinto Iron Ore has found.</p> <p>The report, undertaken by consultants Port Jackson Partners, suggests that any decision to open access to other parties could mean losses of up to $43bn in export revenues and $13bn in capital investments over the next 20 years.</p> <p>Submissions for a Federal Government decision on whether to grant such access closed last month, with a decision expected by May 22.</p> <p>Rio said the capacity of iron ore producers to meet global demand would be severely restricted if third parties were given access to integrated single user rail infrastructure owned by existing companies.</p> <p>Leading the push for access to the rail is Fortescue Metals and its 50:50 joint-venture partner Consolidated Minerals, who say the viability of its Mindy Mindy iron ore project relies on access to rail currently used to transport BHP’s iron ore. </p> <p>Mindy Mindy, a small-scale iron ore deposit 60km north west of Newman, is in some parts as close as 15km from Rio and BHP’s operations in the Yandicoogina-Marillana (&#8220Yandi&#8221) channel iron ore deposit.</p> <p>Rio Iron Ore chief executive Sam Walsh said opening up access would prolong negotiations and slow the production of iron ore.</p> <p>&#8220It is imperative that the decision makers fully appreciate the very large negative impact of a multi-user rail access recommendation by the National Competition Council,&#8221 Mr Walsh said.</p> <p>In announcing Rio’s overall performance, chief executive Leigh Clifford said the coming year would see continued expansion of its iron ore operations.</p> <p>&#8220In iron ore alone, we have embarked on our largest development project in Rio Tinto’s existence with nearly $3bn committed to mine, rail and port expansion in Western Australia to meet strong demand principally from China,&#8221 Mr Clifford said. </p> <p>The company is in its second successive year of record profits, with underlying earnings of almost $6.8bn in 2005, up 118% from 2004.</p> <p>Cash flow was 85% higher at $10.9bn, with a record $3.4bn in capital expenditure this year expected to increase to $4.1bn in 2006. </p> <br />