Mumbai: Australia's National Competition Council has recommended that three key privately-owned Pilbara rail lines be opened to Fortescue Metals Group, potentially Australia's third largest mining company.
The federal advisory body wants the Robe, Hamersley rail lines owned by Rio Tinto and the Goldsworthy rail line, owned by rival BHP Billiton be opened to Andrew Forrest's Fortescue to boost export competition in minerals.
A final decision on granting Fortescue and other companies the right to negotiate access to the railroads will be made by Australian Treasurer Wayne Swan within two months, the council said in its draft recommendation on its website.
A Fortescue subsidiary had made an application for access to the rail lines, as there was no competing rail infrastructure in the Pilbara.
Citing the lack of transport facilities as a major constraint for developing iron ore mines, the company had sought the opening up of the Pilbara railways to haulage services to any iron ore or metals producer who wants to use them.
Rio Tinto sad the NCC recommendation, if accepted, could end up costing up to $30 billion in the next 20 years. It would create ''infrastructure chaos'', it added.
Swan has 60 days to decide whether or not to accept the NCC recommendation.
NCC made a similar recommendation about BHP's Mt Newman rail line in 2006, but that was not accepted by the then-treasurer Peter Costello, who instead asked BHP to negotiate a haulage system.
Fortescue is still fighting for open access to the Mt Newman line through courts.
Under a haulage system, the owner of the railway would transport the iron ore and charge the producer for both the cost of haulage and any associated infrastructure that needed to be built. The producer would still need to provide port and other storage facilities.
The NCC said opening up the Robe, Hamersley and Goldsworthy lines would promote competition in the Pilbara rail haulage and tenements markets, would avoid unnecessary duplication of infrastructure and would be in the national interest.
It rejected arguments from BHP and Rio that open access would be against the public interest.
Perth-based Fortescue, which is eager to export as much iron ore as possible after prices rose for a sixth straight year, has had to build its own railway line between its Cloud Break mine and Port Hedland.
"Australia stands to lose an enormous opportunity if mining companies in the Pilbara are denied the opportunity to access existing and available infrastructure to export their product," Fortescue executive director Graeme Rowley said in a statement.
BHP, the world's third-largest iron ore exporter, plans to challenge any decision on opening up its rail lines in the courts.
The company says it has committed $8.6 billion since 2003 to expanding its infrastructure, but the NCC's decision may discourage it from further investment.
The NCC, however, said even if the Federal Treasurer accepted its final recommendation, Fortescue must still negotiate with BHP and Rio to access their lines.
Fortescue Metals Group Ltd. said it will hit another milestone as it completed shipment of a million tonnes of iron ore to China.
Fortescue will ship 170,000 tonnes of ore to an unnamed Chinese mill today, its eighth shipment since loading its first vessel in mid-May, two years from the start of construction of its A$2.8 billion Pilbara venture.