Fortescue Has to Reprice Iron Ore Rail Access, Authority Says

Western Australia’s Economic Regulation Authority asked Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron ore exporter, to change its pricing system after a company applied to use part of its rail.

Brockman Resources Ltd., developing the Marillana iron ore deposit, last week applied to use the Perth-based company’s line under a state third-party rail access code. Brockman’s ability to ship ore along the rail is subject to availability and commercial negotiations.

Fortescue has by today to define six pricing sections along its more than 300 kilometers (186 mile) of rail in Western Australia’s Pilbara region, the authority said in a May 17 statement on its website.

Iron ore companies in Australia’s sparsely populated Pilbara region depend on access to rail and port facilities to bring their product to market. BHP Billiton Ltd. and Rio Tinto Group, Australia’s two biggest exporters, don’t allow other groups to use their infrastructure. Under a Western Australia state rail access code, companies can seek to ship on railways built after 2000.

Brockman plans to use a section of Fortescue’s rail from 2016 to ship 20 million metric tons annually through the proposed North West Infrastructure facilities at Port Hedland, it said last week in a statement.

Fortescue last week said it welcomed talks for third-party access on a commercial basis. Separately, the company is in talks to sell non-controlling stakes in its port and rail assets to cut debt.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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