Fortescue says BHP Billiton's tugboat plan will stop iron ore being 'held to ransom'
Post Date: 27 Jul 2015 Viewed: 408
Fortescue Metals Group has praised its bitter rival BHP Billiton for bringing a second tugboat contractor into Port Hedland and continues to push for its own fleet, as the miners seek to avoid of repeat of last year's workplace dispute at Australia's top iron ore export facility.
BHP has the exclusive licence to operate tug services for all users of Port Hedland, and has been shaking-up the service ever since tug workers and their three unions threatened to halt tens of millions of dollars worth of iron ore exports with a strike in 2014.
The unions' nine month stand-off with BHP's tug contractor Teekay Shipping prompted BHP to bring in Queensland ferry company Riverside Marine as a second contractor, and the two contractors now run 14 and 4 tugs in Port Hedland respectively.
Riverside's fleet is believed to be non-union, and the competitive tension has arrived just in time for Teekay's contract to expire later this year.
The unions have already agreed to conditionally cede many of the benefits won in last year's dispute in a bid to help Teekay win a contract extension, and the tense situation comes as BHP prepares to spend $325 million on six new tugboats.
Fortescue chief executive Nev Power said BHP has reduced the risk of miners being "held to ransom" in the future by bringing in a second tug contractor into the port.
"I think it is a very wise move and it just shows the importance of thinking about these things strategically and long term and not putting all your eggs in one basket so you do create those opportunities (for strikes). I do think it is very positive," he said.
FORTESCUE ON THE SHORTLIST
The operator of Port Hedland is investigating whether to issue a second licence to operate tugs in the port, and Fortescue was last year named on a shortlist to win the licence, along with Maersk subsidiary Svitzer Australia.
A decision was expected in mid 2015, but has been pushed back to early 2016, and the port operator now says the awarding of a second licence is subject to an applicant being "competent, experienced and financially capable of delivering the infrastructure and services".
With $US7.2 billion of net debt, weak iron ore prices and needing to refinance or sell assets to meet a $US5.9 billion debt repayment due in 2019, Fortescue may find the cost of setting up a tug fleet to be challenging.
But Mr Power said Fortescue was still keen to establish its own fleet.
"We will continue to review all of the options there, but we are very keen to make sure we have a long term, sustainable provision of towage services that is not going to create a bottleneck or hold the business to ransom," he said.
Svitzer Australia, the Maritime Union of Australia and the Australian Institute of Marine and Power Engineers did not return calls.