BHP's Hedland tugboat monopoly queried

Peter Kerr

BHP Billiton faces an unusual challenge to its dominance in Port Hedland, with a group of miners and shipping companies attempting to undermine the Big Australian's tugboat monopoly in the world's biggest bulk export harbour.

Miners including Fortescue Metals Group have been trying for decades to reduce BHP Billiton's influence in the region but have concentrated on building rail and opening new iron ore mines.

Until now.

A relic of an era when BHP was the main exporter in the region, its exclusive right to operate the tugboats that are essential to guide the giant iron ore carriers in and out of the harbour expired in 2011.

It has been operating on a short-term extension, but the State-owned Port Hedland Port Authority has sought approval from the competition watchdog, the ACCC, to grant BHP exclusive tugboat rights for another 25 years.

The authority argues that a solo operator maximises the number of precious cargos that can leave the port, which outweighs any anti-competitive drawbacks.

In a bid to maximise their revenue from shipping ore to China, both BHP and FMG have embarked in recent months on major projects to squeeze the most out of their supply chains.

BHP argued in its submission to the ACCC that it was essential to have an experienced operator because without tugboats "it is highly likely a vessel would become grounded, or dangerously collide with a berth or another vessel".

However, FMG said while it was generally satisfied with BHP's service, it wanted the right to explore the use of a second operator.

"Without testing the market, it is impossible to say whether the current cost and quality of towage services at the port is reasonable," FMG's submission says.

Other shipping operators such as Svitzer say the port could handle a second operator, without affecting the reliability of shipments.

The ACCC declined to comment.

Broader changes at Port Hedland could be coming. Should the Liberal National Government be returned at the March election, it has vowed to reduce the influence of mining companies on the port's board. Separately, operations at Port Hedland, and the Pilbara's other major facility of Dampier, have resumed after being disrupted by tropical cyclone Peta.