Aspiring iron ore miner Brockman Mining has submitted a proposal to gain access to rail infrastructure built by Fortescue Metals Group, setting up competition between two infrastructure providers in the Pilbara.
Brockman, along with Atlas Iron, is already in negotiations with Aurizon to set up an independent rail network to service proposed mines.
The new proposal would be an alternative to Aurizon, and potentially would add value to Fortescue’s wholly owned subsidiary The Pilbara Infrastructure (TPI) which owns the existing railway.
Fortescue is currently running a sales process in for a minority stake in TPI, and has been tipped to raise $3-4 billion.
Under the access proposal announced today Brockman would use the TPI railway to haul 20 million tonnes per annum of iron ore for 20 years, commencing in 2016.
The ore would be sourced from Brockman’s, yet to be completed, Marillana project and transported to the proposed North West Infrastructure facilities at Port Hedland, of which Brockman is a foundation shareholder.
Brockman is only seeking access to TPI’s below-rail infrastructure, the rail and signal network.
Brockman has said that it would provide the entire above-rail infrastructure, such as locomotives and the staff to run them, “through an experienced operator”.
In a statement released on the ASX Brockman’s CEO of Australian operations, Russel Tipper, cited a rail deal as a crucial step for the Marillana project, saying that the company needed “to achieve a rail solution to connect what is a very good resource to the proposed port”.
If Brockman’s proposed deal with TPI were to go ahead it would be the first of its kind in the state to be granted under section 8 of the Western Australian Railways (Access) Code.
The legislation which was introduced by the state in 2000 has never had a proposal submitted before Brockman’s.
However similar arrangements between mining companies in the Eastern states are common according to Mr Tipper.
Mr Tipper said that Brockman’s joint study with Aurizon (formerly QR National) and Atlas Iron for a new rail development in Pilbara, was still a possibility and went on to add that Brockman would be considering both these options simultaneously, “the parties intend to move the study to a Pre-Feasibility Study for an integrated rail and port solution and we intend to pursue this option in parallel with our Rail Access Proposal”.
Brockman is also unconcerned with the possibility of TPI being sold, with Mr Tipper saying “TPI is the signatory to the State agreement and is obliged to abide by the terms that will be agreed through our Rail Access Proposal regardless of whether they’re sold”.
Herbert Smith Freehills leading partner Jay Leary, who is advising Brockman on the application said the application, “is in many ways a watershed moment for iron ore mining companies in Western Australia seeking access to third party infrastructure”.
