Mining giant Rio Tinto Ltd/Plc (RIO.AX) (RIO.L) on Friday attacked an Australian regulator's recommendation that it allow rivals to use its rail lines in western Australia to transport iron ore, predicting it would lead to chaos.
Rio said the call by the National Competition Council over use of Rio's and rival BHP Billiton Ltd/Plc's (BHP.AX) (BLT.L) lines in the iron ore-rich Hamersley and Robe River regions of west Australia could cost the nation A$30 billion ($29 billion) in lost investments.
The recommendation, which will go to the government for a final decision, follows representations by rival iron ore miners who want to use existing lines rather than face the cost of building their own to grab a share of surging demand for iron ore, especially from China.
Imposing such a system would lead to the infrastructure chaos and inefficiencies, Rio's iron ore division head, Sam Walsh, said in a statement.
Nearly all of the 200 million tonnes or so mined in the Pilbara region of west Australia annually is exported by BHP or Rio via separate lines. Iron ore is one of Australia's largest exports.
The council, an advisory body whose recommendations go to the government for final approval, did not release reasons for its recommendation. It is asking for public comments by July 21.
Australia stands to lose enormous opportunity if mining companies in the Pilbara are denied the opportunity to access existing and available infrastructure to export their product, said miner Fortescue Metals Group (FMG.AX), which has been pushing for access to the lines.
Voracious appetite among Chinese steel mills for Australian ore has mining companies scrambling to fill orders and spawned a legion of entrants with no way to get their ore to waiting ocean freighters.
BHP, which is locked in a hostile takeover battle for Rio, is spending billions of dollars to treble its iron ore output to more than 300 million tonnes by the middle of the next decade. Rio has earmarked more than $5 million since 2003 to expand iron ore mining. Next year it expects to yield 220 million tonnes of ore. It argues that sharing its lines will mean no more lines will get built, depriving the country of future investment.
Rio is also spending $350 million to introduce driverless trains, which within five years should be operating on most of the 1,300 km (800 miles) of track that serves its Pilbara mines.
A typical train is about a mile long and consists of 300 cars hauling 24,000 metric tonnes of ore each hundreds of miles to Port Hedland or Port Dampier to waiting freighters.
On average a trainload leaves a mine in the Pilbara every hour 24 hours a day. ($1=A$1.05) (Reporting by James Regan)
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