Pilbara miners have slammed the State Government’s approach to selling the Port Hedland facility after Utah Point generated enough cash to pay off the government’s $235 million infrastructure investment.
According to analysis presented by the Association of Mining and Exploration Companies to a parliamentary committee, the Utah Point sale is set to generate more than $100 million in free cash flow by the end of the financial year.
While the Utah Point project costs $315 million to build, $79 million of that was gifted by BHP Billiton and Atlas Iron. Another $51 million came as contributions from users in pre-paid facility charges, with the balance funded through a $187 million WA Treasury Corporation loan.
Users at Utah Point reiterated past concerns that a new private owner will attempt to sharply increase rates and bring in a major exporter to improve returns on the facility.
AMEC submissions, based on disclosures by the Pilbara Ports Authority, estimate it will cost about $1.68 a tonne to run the terminal this financial year.
MinRes boss Chris Ellison told the committee the PPA had been allowed to charge “obscene” rates to its users, who had little choice but to accept them.
The Government targets a 12 per cent return on assets for its monopoly ports, but the AMEC figures show Utah Point has a cumulative return of 34.5 per cent, and as high as 61 per cent last financial year.