May 30, 2013 / 9:53 AM / 5 years ago

Fortescue to charge miners up to $554 mln/yr for Pilbara railway

MELBOURNE, May 30 (Reuters) - Australia’s Fortescue Metals Group wants to charge Brockman Mining Ltd up to A$576 million ($554 million) a year to haul iron ore on its rail line, the first indication of how much miners may have to pay for rail access.

Brockman is the first miner to test a state code that requires Fortescue’s port and rail arm, The Pilbara Infrastructure (TPI), to let other miners use its rail line.

Without access to the Fortescue railway, miners including Brockman, Atlas Iron Ltd and Flinders Mines Ltd may have to build their own infrastructure, a costly undertaking that would require raising billions of dollars.

Brockman wants to export up to 20 million tonnes of iron ore a year for 20 years, starting in 2016.

In response to Brockman’s application to the Western Australia Economic Regulation Authority, TPI proposed a floor price of A$73.4 million and a ceiling price of A$575.6 million a year, TPI said in an email to Reuters.

It did not reveal whether those prices were based on only hauling Brockman’s 20 million tonnes of ore or would include volumes from Fortescue, which would take the total to 175 million tonnes a year.

Officials from Brockman were not immediately available for comment. Fortescue declined to elaborate on the TPI filing.

At 20 million tonnes a year, the proposal suggests a transport rate if between A$3.67 and A$28.80 per tonne, much higher than analysts’ expectations.

At 175 million tonnes a year, the proposed rate would be between A$0.42 and A$3.29 per tonne, roughly in line an estimate by Credit Suisse analyst Matthew Hope.

“This is potentially a new battlefront for Fortescue,” Hope said. ($1 = 1.0387 Australian dollars) (Reporting by Sonali Paul; Editing by Miral Fahmy)

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