Billionaires’ $12m railway row

Billionaires’ $12m railway row

14th August 2007, 6:00 WST

Billionaires Len Buckeridge and Andrew Forrest have fallen out in a multi-million-dollar dispute over the railway line destined to open up the Pilbara and break the iron ore stranglehold held by mining giants BHP Billiton and Rio Tinto. Mr Buckeridge’s BGC Contracting has issued a writ in the WA Supreme Court claiming $12.35 million from a subsidiary of Mr Forrest’s Fortescue Metals Group, which is racing against time to complete its 260km railway line to ship its first iron ore to Chinese buyers in May next year. That ambitious deadline represents a critical milestone for Fortescue’s $2.9 billion iron ore project, which ultimately aims to export 200 million tonnes of iron ore a year from a new port it is building at Port Hedland. Mr Buckeridge said yesterday that while cyclones had delayed progress on the railway line and contributed to cost blowouts, he could not be held responsible. “My name’s Len, not God, I didn’t cause the cyclones,” Mr Buckeridge said. BGC was the sole contractor carrying out the earthworks for the railway line until the two Perth billionaires personally struck a deal on May 30 which allowed Fortescue to bring in two extra contractors to help make up for the lost time caused by three cyclones. According to the statement of claim lodged by BGC with its writ, Fortescue agreed to pay a fee of at least $12.35 million to Mr Buckeridge’s company as part of a deed to terminate their original contract, with a further claim of $6.4 million to be settled via arbitration. However, the writ stated that in a letter dated July 11, Mr Forrest informed Mr Buckeridge “that the defendant would not be paying the fee to the plaintiff” without giving any reasons. It stated that when Mr Buckeridge -demanded Mr Forrest release the dispute fee from a trust account during a telephone call on August 2, the Fortescue chief refused. Mr Buckeridge’s lawyers filed the writ in the Supreme Court the next day. While Mr Forrest could not be reached for comment yesterday, Fortescue executive director Graeme Rowley said the legal action taken by Mr Buckeridge would not delay progress on the line, even though BGC continued to work on the project. Mr Rowley said the writ was the first dispute Fortescue had experienced in $2.9 billion worth of contracts issued to build the company’s rail, port and iron ore mine. “We push all our contractors for value, that’s always been our focus and we will continue to do that,” Mr Rowley said. “And if you’re going to keep pushing your contractors for value, then you’re not always going to see eye to eye with them.” He said Fortescue hoped to reach a negotiated settlement out-of-court with BGC.
MARK DRUMMOND CHIEF REPORTER

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