Melbourne (Platts)--22Nov2010/618 am EST/1118 GMT
Anglo-American mining giant BHP Billiton has begun talks with iron ore junior FerrAus over rail haulage, a week after launching legal action against the company in an access dispute over the Mount Newman railway in the Pilbara region of Western Australia state, FerrAus said in a statement Monday. "Representatives of FerrAus and BHP Billiton ... have held discussions in regard to legal action in the Western Australian Supreme Court about rail haulage on the Mount Newman railway system," FerrAus said. "FerrAus expects to keep the market informed on the progress and status of the discussion." FerrAus last week sought to have former Australian Competition and Consumer Commission chairman Allan Fels decide on terms of a haulage deal, claiming this met the dispute resolution criteria of the state government agreement governing the issue. BHP Billiton declined the arbitration. This left FerrAus with the legal option of asking the president of Engineers Australia to appoint an independent expert to rule on the matter, which is the step that BHP Billiton's legal action sought to block. Small iron ore developers in the Pilbara region have long claimed lack of access to rail haulage was stifling development, while BHP Billiton and Rio Tinto maintain they have no spare capacity on their privately built rail infrastructure as their own production expands in the region. The Australian Competition Tribunal in July upheld the right of BHP Billiton and Rio Tinto to deny other miners access to their Mount Newman and Hamersley rail lines, respectively, but ruled they should allow third-party access to their less heavily utilized Goldsworthy and Robe River rail lines. BHP Billiton last week began talks with another emerging iron ore producer in the Pilbara, Atlas Iron, over potential access to Goldsworthy. FerrAus and fellow Pilbara emerging iron ore developer Brockman Resources are also currently the subject of a takeover offer from Hong-King listed Wah Nam International, a major shareholder in both companies, valued at a total A$1.16 billion ($1.14 billion). FerrAus, Brockman and Atlas contend they have the potential to produce up to 50 million mt/year of iron ore by 2013, but require access to private rail lines in some instances to deliver it to port. BHP Billiton operates the Mount Newman railway in a joint venture with Itochu Minerals & Energy of Australia (30%) and Mitsui-Itochu Iron (10%).--Wendy Wells, newsdesk@platts.comSimilar stories appear in Metals Week. See more information at http://www.platts.com/Products/metalsweek