Jun 21 2008
Rio Tinto Iron Ore is opposed to the National Competition Council’s call for its Pilbara rail infrastructure to be thrown open to third parties, a move it believes would put at risk billions of dollars in future investment and rapidly erode national wealth.
Imposing such a system would quickly see the infrastructure chaos and inefficiencies that have plagued the east coast coal ports duplicated in the Pilbara, where the single user integrated system is underpinning Australia’s economic growth.
Rio Tinto iron ore chief executive Sam Walsh said, “The NCC appears to be lining Australia up for a massive exercise in value destruction. A report by Access Economics estimated that a multi-user system could cost up to A$30 billion over 20 years. Its effect on future investment decisions would be equally wealth-destructive.
“Rio Tinto has spent or committed to spend US$8.6 billion since 2003 upgrading its infrastructure and expanding its integrated mine to port network to ensure the maximum efficiency. Not only would the inefficiencies of a multi-user system impede Rio Tinto’s ability to expand, but the likelihood that new capacity would be available to others would discourage further investment.”
The NCC has called for public comments on a draft recommendation it has released in relation to the application by Fortescue Metals Group (FMG) to have certain Hamersley and Robe River rail lines made subject to the open access regime contained in Part IIIA of the Trade Practices Act.
“Part IIIA of the TPA was originally designed to fix the poor performance of government owned monopolies, including infrastructure on the east coast. What has happened is that the east coast remains inefficient but instead the world-competitive Pilbara iron ore industry is being undermined,” Mr Walsh said.
Rio Tinto remains hopeful that the relevant decision makers will conclude that declaring its successful, efficient network open to outside interests would not be in the national interest.