Brockman applies for access to Pilbara railway
Andrew Forrest's long campaign for open railways in the Pilbara has come full circle, with a junior iron ore company boldly asking West Australian regulators to grant it access to the railway owned by Mr Forrest's Fortescue Metals.
In what observers have called an aggressive corporate move, Brockman Mining has applied for access to the railway through WA's Economic Regulation Authority, citing a 13-year-old law that has not before been used in this way.
The move will complicate the sale process Fortescue has been running for more than six months. The iron ore exporter has been negotiating the sale of a stake in its rail assets with haulage companies and wealth funds.
Brockman had been a participant in those negotiations, but failed to strike a rail access deal with Fortescue, and many observers believe Atlas Iron is close to winning rail access as part of a deal involving at least one other party.
Fortescue's railway is vulnerable to such an ambush because it was built after rules were introduced in WA in 2000 to create a process for third parties to access to new railways.
Other Pilbara railways owned by BHP Billiton and Rio Tinto are not vulnerable because they were built before the rule was introduced, and those companies reject third-party access to their railways given export infrastructure in the Pilbara is much rarer and more expensive than the iron ore itself.
Brockman chief executive Russell Tipper said the move would not come as a surprise to Fortescue, and nor should it be philosophically troubling for a company that fought through the courts for access to the railways of BHP and Rio.
"This is not an adversarial approach, this is simply following a process that not only have Fortescue agreed with, but they have publicly said they support," he said.
Brockman, controlled by Hong Kong investors previously known as Wah Nam, wants to use the line to export up to 20 million tonnes of iron ore, starting in 2016.
Under the process, Fortescue (through the wholly owned subsidiary that holds its rail and port assets) must suggest a "ceiling cost" to the regulator by May 22, representing what Fortescue believes is the maximum charges Brockman will pay for rail access.
The regulator will then determine what it believes to be a fair price, before offering the two companies a ceiling price and a floor price to negotiate a final outcome.
Failure to agree could result in the matter going before arbitrators, who can nominate a final price. If unhappy with that outcome, Fortescue would have to challenge the issue in court.