Brookfield targets new rail asset
Brookfield Rail has sent shudders through the Wheatbelt as it eyes another logistics asset.
The company, which holds a controversial 49-year lease over the State's freight rail network, would gain control of dominant east-west hauler Pacific National and port assets in WA if it were to take over Asciano Ltd.
In a company statement released to its shareholders, Brookfield said it is engaged in exclusive discussions to acquire Asciano, a large rail and port logistics company operating across Australia.
It said the company valued Asciano's well-established rail and port sector market positions and would be "highly complementary" to its existing rail business.
However, before any potential acquisition could take place, the Australian Competition and Consumer Commission will convene an informal inquiry into the proposed Brookfield bid for the company.
The ACCC has set a date of September 4 for any submissions, with a decision due on October 15.
Brookfield is due to update its merger plans when Asciano releases its results on August 18.
The company owns rail assets in WA, which may raise concerns with Asciano's control of Pacific National, the dominant east-west rail hauler.
The ACCC review comes as the market is still assessing the bid and another party is known to have entered the race for control, but there is plenty of speculation about alternative bids once Brookfield has completed its due diligence.
Last year, Brookfield managed an across-the-board 4 per cent increase in profits on its rail business, with solid gains in not only CBH grain volumes but also increases in its iron ore and alumina haulage.
But many Wheatbelt growers remain furious at Brookfield's monopolistic position on the State's grain freight network, which has been blamed for rail access fees up to four times the rate of the Eastern States' and the closure of Tier 3 lines last year.
Brookfield is involved in a drawn-out dispute with CBH over charges it has imposed on the grain giant for access to the rail network on behalf of its 4200 growers, with the Canadian-based infrastructure company planning to increase rates for long-term access when the current extended access agreement ends on December 31.
The industry is concerned that if Brookfield took control of the company, combined with its 49-year lease of the State's grain freight network, WA would be unable to compete internationally.
WAFarmers president Dale Park said the State's growers already had experience of Brookfield exploiting a monopoly.
"This situation will mean a return to the days when CBH did not provide a rail service because they may end up competing with a Brookfield-owned above-rail provider with absolutely no transparency requirements to declare what that provider is being charged in access fees," he said.
"This will mean rail will go back to the days before CBH, when the cost of carting grain on rail was almost equivalent to the cost of carting it by road and we'll see many more than thousands of grain trucks on our crumbling Wheatbelt roads, in addition to the extra thousands already as a result of the Tier 3 closures last year."
Mr Park said he welcomed the ACCC inquiry into Brookfield's latest acquisition plans.
"The industry applauds this inquiry but this commission should have done more sooner to look into Brookfield's anti-competitive stranglehold of the WA rail freight network," he said.
Quairading grower Haydyn Richards said the thought of Brookfield owning another logistic asset did not sit comfortably with farmers.
"This potential purchase is a worry for farmers who don't know what their grain price or what this year's yield is going to be, and the only thing they know for certain is they will be paying much more to cart their grain on rail this harvest," he said.
"It's just wrong the State's industry is being held to ransom by a foreign-owned, profit-driven superannuation investment company."
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