PERTH (miningweekly.com) – The Association of Mining and Exploration Companies (Amec) has blasted the Western Australian Parliament’s passing of legislation to privatise the Utah Point bulk handling facility.

Legislation allowing the sale of the bulk handling facility in the world’s largest iron-ore export port, was passed by state Parliament on Thursday evening.

Treasurer Mike Nahan said the Pilbara Port Assets (Disposal) Bill 2015 provided the legal framework for the Liberal National Government's plans to transition the Utah Point facility, in Port Hedland, to the private sector via a long-term lease.

“The passage of this Bill enshrines in legislation the key elements necessary for the divestment of Utah Point,” Nahan said.

"This is another important milestone in the government's asset sales programme, which is aimed at improving the state's fiscal position and increasing international competitiveness."

To date, the Western Australian government has completed asset sales totalling A$2.2-billion.

However, Amec CEO Simon Bennison said on Friday that the passage of the Utah Point privatisation legislation was an example of the government risking A$1-billion worth of export trade and 2 000 jobs in the Pilbara to fix its budget hole.

“The Nationals had a great opportunity to oppose this legislation, but have refused to. The government is willing to privatise the only point of egress for the next generation of Western Australia’s miners in the region as a short-term fix.”

“Utah Point was originally built by this government as a dedicated facility for Western Australia’s growing junior miners. It was the only facility in the entire state exclusively dedicated to junior miners.”

“A key concern is that the legislation will only require Utah Point’s acquirer to reserve half of the port’s 23-million-tonne-a-year capacity for junior miners,” said Bennison.

The mining majors in the Pilbara currently hold some 500-million tonnes a year of capacity within Port Hedland and a further 350-million tonnes a year at Cape Lambert. Whereas, currently, junior miners only have the 23-million-tonne port capacity allocated.

Bennison raised concern that the allocation to junior miners might slip to only 11.5-million tonnes a year in the Pilbara region.

“Amec have also repeatedly raised concerns that the legislation does not clearly state what pricing regime will come into effect. The government has ignored industry calls to provide transparency and certainty around how much the acquirer will charge users.”

Nahan said the views of stakeholders, including the Amec and junior miners, as the key users of the facility, were considered extensively during committee proceedings through the parliamentary process.

"The state government has responded to key findings and recommendations made by the Legislative Council's Legislation Committee by amending the Bill to improve access protection for junior miners and agreeing to changes to the pricing model under the facility's access and pricing regime," he said.

"We understand the concerns of the users of the facility and they have been taken into account in drafting an amendment to the Bill, which imposes a 50% limit on the capacity to be able to be used by non-junior miners.

"This additional protection is an appropriate balance between protecting access for juniors while still allowing others to take up capacity if no juniors are able to - but only in those circumstances."

The Treasurer said the changes introduced to the pricing regime were consistent with the recommendations of both the Legislation Committee and the Australian Competition and Consumer Commission, with a 'negotiate/arbitrate' model now adopted for pricing and access. The detail of the regime would be contained in regulations, as it was not practical for it to be incorporated in the Bill.

"Given the timeframe of the proposed lease and the potential for circumstances to evolve over that period, it is important for the government to retain the ability to refine the regime to meet the changing needs of the lessee and users," he said.

Under the amended regime, price will be directly negotiated between the future Utah Point lessee and users seeking access to capacity, with binding arbitration if agreement cannot be reached by the parties.

Bidders will be required to base their prices on the access and pricing regime and any associated constraints.  From a user perspective, the legislation sets out a clear mechanism to promote fairness in access and pricing.

The transaction phase of the proposed sale of Utah Point will start after the March 2017 election.