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Fortescue puffs out chest on rail lines

The Age

Tuesday February 22, 2011


JUST days after the full court of the Federal Court condemned Fortescue Metals and its founder, Andrew Forrest, for issuing misleading and deceptive disclosures, the iron ore company with a punchy attitude was back again yesterday before the chief justice.This time, however, Fortescue's lawyers were arguing the finer points of competition law as it doggedly pushes on with its bid to gain access to rail lines in the Pilbara that are owned and operated by rival miner Rio Tinto.Fortescue wants the full court, sitting in Melbourne, to overturn the Australian Competition Tribunal's decision of last year that granted Fortescue only limited access to the lines owned by BHP and Rio.The tribunal declined to open either BHP's Newman line, which links Mount Whaleback and Jimblebar mines with Port Hedland, or Rio's Hamersley line, which runs from Paraburdoo and Mount Tom Price to the port of Dampier.It ruled the potential disruptions and subsequent costs to the two big miners that might result from allowing smaller miners to use the main BHP and Rio rail lines would outweigh any benefits. But the tribunal opened access to smaller miners along BHP's Goldsworthy line and Rio's Robe River line. Access on the Robe line is limited to 10 years rather than 20 years.As judges and lawyers fiddled yesterday with foldout maps designed to put the vast reaches of the Pilbara into perspective, Fortescue's counsel, Jonathan Beach, QC, outlined how the miner believed the tribunal erred when it granted only partial access to Rio and BHP Billiton's lines.Fortescue wants the Hamersley line opened and it wants access on the Robe line extended past 2018. It is not appealing any aspect of the decision relating to the BHP lines. In turn, Rio wants the Robe line closed to third parties.In his opening submissions, Mr Beach said the tribunal erred in several respects. He said it "drilled" too far into detail about possible future disruptions, rather than focusing only on costs that arise "inevitably" due to the terms and conditions of granting third-party access.As well, Fortescue argues the tribunal played down the benefits of allowing rail access to as-yet-undeveloped iron ore tenements on the Hamersley line. Mr Beach suggested these "stranded" tenements could yield 32 million tonnes of iron ore a year, potentially generating billions of dollars of exports.The appeals before Chief Justice Patrick Keane and justices John Middleton and John Mansfield continue this week.

© 2011 The Age

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