Flinders seeks clarity on Fortescue rail cost structures
PERTH (miningweekly.com) – Emerging iron-ore miner Flinders Mines has called on Fortescue Metals’ infrastructure arm, The Pilbara Infrastructure (TPI), to clarify its cost structures.
In a submission to Western Australia’s Economic Regulation Authority (ERA), Flinders said that the “lack of transparency” made it difficult to challenge the cost structure.
ERA called for public submissions on the TPI’s floor and ceiling cost determination for a section of the infrastructure provider’s railway between the Christmas Creek mine and Port Hedland.
However, TPI had submitted its proposed floor and ceiling costs to ERA on a confidential basis, which meant that the costs were not available for review by Flinders or any other third party.
However, fellow iron-ore miner Brockman was given a floor cost of more than A$73.4-million and a ceiling cost of more than A$575.6-million a year, based on the transportation of some 20-million tonnes a year of iron-ore, over only two of the six sections outlined by TPI.
Flinders pointed out that these figures were significantly higher than 2010 and 2011 cost models, and noted that without access to TPI’s revised cost model, it was difficult to understand how the price could have increased so much.
“At this stage, without access to TPI’s 2013 cost model, Flinders wishes to reserve its right to challenge that cost model, should it underpin any of TPI’s future prices in response to any access request made by Flinders,” the company told ERA.
Flinders was currently assessing transportation options for its Pilbara iron-ore project, which would produce some 15-million tonnes a year, with first production flagged for the second half of 2015.
Without access to the Fortescue railway, Flinders, Brockman and fellow miner Atlas Iron may have to build their own infrastructure.
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