PILBARA: The Pilbara Ports Authority has defended itself against allegations it has been “gouging” smaller miners, telling a parliamentary inquiry that higher returns were necessary due to increased uncertainty.
PPA chief executive Roger Johnston and general manager of finance Nick Sarandopoulos were quizzed on the charges they levied on smaller miners as part of a parliamentary inquiry into the proposed sale of the Utah Point facility in Port Hedland.
Utah Point was developed by the state government to provide an export point for small miners in the Pilbara, with ASX-listed Atlas Iron and Mineral Resources among its users.
Utah Point has been put up for sale as part of the West Australian government’s efforts to privatise assets and pay down its ballooning debt, with the
The likes of Atlas and Mineral Resources as well as the Association of Mining and Exploration Companies have flagged concerns that a private operator could eventually shut smaller miners out of Utah Point.
They called for action on pricing at the port, claiming that rates charged were excessive.
Under questioning yesterday, Mr Sarandopoulos said Utah Point had generated a return on assets last year of just under.
Labor MP and inquiry member Ken Travers noted that the return was well above the legislated return target of 12 per cent, and questioned how such a high return could be in keeping with the PPA’s legislative obligation to facilitate trade.
Mr Sarandopoulos noted that returns out of Utah Point could rapidly turn negative if junior miners ran into trouble and pointed out that the port had faced the prospect of losing money at Utah Point when Atlas Iron suddenly (but ultimately temporarily) shut down its Pilbara iron ore operations last year.
“Should those volumes not transpire, the risk is the rate of return goes negative,” he said.
AMEC last week questioned the methodology used by the PPA to calculate Utah Point’s return, and argued alternative standard methodologies suggested Utah Point was generating a return on funded operating assets of 61 per cent.
The PPA said its accounting methodologies had been supported by independent reviews and audits.
“We have had two independent pricing reviews,” Mr Sarandopoulos said.
“Both those price reviews … were broadly aligned with our return on asset calculations. We are subject to an external audit, we have an audited set of accounts, and all the information we have presented is in accordance with accounting standards.”
