FMG fights Brockman’s attempt to secure railway access

Fortescue Metals Groups is appealing a ruling which forces it to negotiate with its Pilbara neighbour Brockman Mining over access to railway infrastructure.

Brockman Mining is seeking access to the Pilbara railway, owned by FMG subsidiary The Pilbara Infrastructure [TPI], under third-party access laws.

The Economical Regulation Authority recently stipulated a price range for the two parties to negotiate within but FMG is refusing to play ball, launching legal action against the ERA in the Supreme Court of Western Australia.

FMG is seeking a judicial review of the ERA’s determination of floor and ceiling costs and its decision to approve negotiations between it and Brockman Mining.

“We believe the ERA has made errors in its determination of the floor and ceiling costs,” FMG chief executive officer Nev Power said.

The ERA rejected TPI’s cost claims of $575.6 million, to set a minimum annual price of $84.7 million and a maximum of $316.9 million from all line users – including FMG, The West Australian reports.

Power said TPI is within its rights to challenge the outcome and said the company has a duty to its shareholders to do so.

FMG said it is also commencing proceedings against Brockman’s proposal for access to the railway, claiming it is “invalid”.

The company said it believes Brockman is seeking an option to access TPI’s railway at some future time, arguing that Brockman is not capable of entering into a binding agreement to use and pay for use of TPI’s railway.

"TPI cannot be expected to subsidise third party projects that are uneconomic," Power said.

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