November 21, 2008

BHPB FMG battle for rail to continue in High Court

It is reported that the legal battle over third party access to BHP's rail lines in mining areas continues with the High Court granting the company leave to appeal against a Federal Court ruling last week. The matter is likely to be heard in the High Court in July or August.

The Federal Court ruled that the rail lines are not an integral part of the ore production process.

BHP welcomed the High Court’s decision to grant leave to appeal against an earlier court judgment that went in favor of Fortescue.

A BHP spokeswoman told Dow Jones Newswires that "Our view is that the rail is part of the integrated mine rail port production process in Western Australia and we will continue to protect the interests of BHP shareholders in that rail line.

Iron ore developer Fortescue Metals Group Ltd brought the original Federal Court action, as it sought access to BHP's Mount Newman line under Australia's Trade Practices Act.

Both BHP and Rio are gearing up for substantial expansions of their Pilbara iron ore divisions and have based the plans on an ability to keep others off their tracks and out of their ports. However, both miners’ State agreements demand they haul third party ore. A WA Government working group is trying to come up with a framework under which other miners can use the BHP and Rio railways in return for paying a mutually agreed tariff.

Fortescue has declared its rail and port network open to all comers and is considering spinning off its infrastructure assets.