Fortescue Metals Group challenges rail access

Iron ore miner Fortescue Metals Group (ASX: FMG) has lodged an application with the WA Supreme Court challenging a regulator’s agreement allowing rail access for Brockman Iron Pty Ltd.

The Economic Regulation Authority set access rules and costs that the two companies have to abide by, but Fortescue is challenging the ruling through its subsidiary The Pilbara Infrastructure Pty Ltd (TPI).

“We believe the ERA has made errors in its determination of the Floor and Ceiling Costs. TPI is entirely within its rights to challenge the outcome, and has a duty to shareholders to pursue a fair and reasonable return on its world class infrastructure,” Fortescue Chief Executive Officer Nev Power said in a press release.

The Pilbara Infrastructure Pty has also commenced proceedings in the WA Supreme Court for declarations that Brockman’s proposal for access to TPI’s railway is invalid and does not enliven the operation of the Code.

The Pilbara Infrastructure Pty claims Brockman is merely seeking an option to access TPI’s railway at some future time and is not capable of pauing for and using the railway at this time.

“TPI cannot be expected to subsidise third party projects that are uneconomic. The object of the code is not to provide an ‘option’ on infrastructure,” Power said.

On its website Brockman touts its hematite projects, “. . . located in the Pilbara Region of Western Australia and adjacent to the core tenements of Western Australia’s other major iron ore developers.”

“Among all projects, the Marillana Project is of the largest in scale, with approximately 1.63 billion tonnes of hematite Mineral Resources. Contained within the Mineral Resource is 1 billion tonnes of hematite Ore Reserves. The distance between the tenements and Port Hedland (being the largest port in the Western Australia) is approximately 270 kilometres.”

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