JOHANNESBURG (miningweekly.com) – The Association of Mining and Exploration Companies (Amec) CEO Simon Bennison says junior miners feel vindicated by Australia’s statutory body on competition matters’ position on the privatisation of the Utah Point bulk handling facility.
Australian Competition and Consumer Commission (ACCC) chairperson Rod Sims has written to the standing Parliamentary Committee studying the proposed sale of Utah Point, stating that an effective regulatory regime should be extended to include pricing.
“Without sufficient regulatory arrangements being put in place during the privatisation process, the privatised owner will have the incentive and ability to use its market power to raise prices above efficient levels and/or reduce service quality,” Sims said in his letter, according to an Amec statement.
Bennison responded that ACCC’s observations were “critically important” and urged the Parliamentary Committee to heed the commission’s recommendations when delivering its final report.
The junior miners, which are the main users of the port, have consistently expressed concern about the future access and pricing regime if the port is sold to a private owner.
“Australia’s foremost statutory body on competition matters clearly shares our view that the pricing for Utah Point must be correctly set before privatisation; that rules governing changes to that pricing post privatisation must be cast into the legislation; and that changes to that pricing must only be permitted to reflect increases and decreases in the actual costs of operating the facility.
“Clearly the ACCC shares concerns about failed privatisation models of the past,” Bennison added.
The proposed sale terms and conditions do not appear to currently provide for prior consultation and negotiation on the future pricing regime. This has created angst and uncertainty for the users.
Users are looking to permanently reduce charges at Utah Point to deliver a 6% to 12% return on the $235-million actually invested by government.
“We hope that this significant letter from the ACCC motivates government to act in the long-term interests of all West Australians by immediately and permanently reducing Utah Point charges to an appropriate level and, thereafter, creating a commercial structure for the privatisation that encourages mineral production, exports and employment.
“We look forward to working with the government on this critical piece of economic infrastructure for the junior miners in the Pilbara,” said Bennison.
Western Australia announced in 2014 that it planned to sell two of its port handling facilities to generate cash to lower its debt levels. Last year, the Western Australian government introduced legislation to Parliament to enable the divestment of the Utah Point port facilities.