JOHANNESBURG (miningweekly.com) – The Association of Mining & Exploration Companies (Amec) has welcomed the decision to extend the $2.50/t interim relief package at the Utah Point Bulk Handling Facility in Port Hedland for at least another 12 months. 

Western Australian State Development Minister Bill Marmion, together with Transport Minister Dean Nalder, jointly announced on Tuesday that the relief package, which was due to expire on June 30, would be extended.

Amec CEO Simon Bennison lauded the decision, as well as the news that the relief package would be extended to manganese. He reiterated that there had not been any definite resolution in terms of what the permanent charges at Utah Point should be.

“The Port Authorities Act requires all port authorities in Western Australia to use their fixed assets to encourage and facilitate the development of trade and commerce generally for the economic benefit of the State and to make profit as long as the function of encouraging and facilitating the development of trade and commerce is not affected,” said Bennison.
 
He added that financial information that had recently become publicly available through the National Treasury and the Pilbara Ports Authority’s (PPA’s) submissions to the Legislative Council Standing Committee on Legislation, which would review the Pilbara Ports Assets Bill, had been useful in shedding light on the considerable profits PPA had been making on its investment at Utah Point.

“Even with the $2.50/t fee reduction in place for the 2015/16 financial year, it is estimated that the PPA will make a sizeable 32% return on the $235-million actually invested.  Without the relief package, the standard charge at Utah Point is $6.42/t and, at current annual volumes, will see PPA make in excess of a 60% return on the funds it actually invested at Utah Point.”

Bennison noted that Amec’s analysis of financial information disclosed by the PPA and National Treasury indicated that, on current tonnages, PPA would make a 12% return on the $235-million actually invested at Utah Point if the underlying $6.42/t charge was permanently reduced by $3.25/t, to $3.17/t.

“Despite being appreciative of the announced extension of the relief package, the users would like to see a fair and equitable long-term reduction in the port fees on a permanent basis,” said Bennison, adding that the fees should be set at a level where a reasonable return on assets could be achieved.

He urged the government to conduct an urgent full review and investigation of the fees charged at Utah Point to provide a long-term solution for the current and future users.