West Australia Agreements To Allow Sharing Of Iron Ore Railways

Revisions to laws governing Western Australia's iron ore industry will allow Rio Tinto Ltd. (RIO) and BHP Billiton Ltd. (BHP) to integrate their operations and build shared infrastructure and could give junior miners access to Fortescue Metals Group Ltd.'s (FMG.AU) ore railway, the state government said Friday.

Premier Colin Barnett said that Rio and BHP, the world's second and third-largest producers of iron ore, would pay A$350 million to the state "in recognition of the value of these changes".

The two amendments were passed by the state's Legislative Council Thursday night, Barnett said in a statement.

Western Australia's Pilbara region supplies around a third of the world's 1 billion tons a year seaborne iron ore trade, but the constraints of the region's infrastructure are a major impediment to new mines coming onstream.

Rio, BHP and Fortescue operate their own railways and port facilities but don't currently allow competitors to use their tracks.

Atlas Iron Ltd. (AGO.AU) announced last month that it was starting discussions with BHP over use of the miner's Goldsworthy line to haul iron ore from its mine projects in the eastern Pilbara, but other miners have looked at building their own lines.

Hong Kong-based taxi and investment company Wah Nam International Holdings Ltd. (0159.HK) last month said it would build a separate rail line if successful in its takeover bid for junior miners Ferraus Ltd. (FRS.AU) and Brockman Resources Ltd. (BRM.AU), while privately-owned company Hancock Prospecting Pty. Ltd. is looking at building a line to its Roy Hill project in partnership with steelmaker POSCO (005490.SE) and shipping group STX Corp. (011810.SE).

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]