Chris Ellison-led iron ore miner in legal fight over shipping levies

Mineral Resources has blasted the oil and gas giant as it fights for the future of a $3.5bn iron ore project and thousands of jobs.

MinRes managing director Chris Ellison Picture: Courtney McAllister

Mineral Resources has blasted oil and gas giant Chevron as it fights to avoid paying onerous shipping levies on every tonne of iron ore it exports from already under pressure mining operations in Western Australia.

Chris Ellison-led MinRes has launched legal action after being ordered to pay two multi-million dollar a year levies by the WA government’s Pilbara Port Authority that will be passed on to Chevron.

The WA government has in turn taken action against MinRes in an attempt to recover what it alleges are unpaid and overdue port charges.

The until-now undisclosed levies are the latest blow to the embattled company’s Onslow Iron project. The success of Onslow Iron — already facing cost blowouts and production downgrades amid big question marks over a 150 kilometre-long haul road connecting mining operations to port facilities at Onslow — is crucial to MinRes’ survival and thousands of jobs.

In a bitter attack on Chevron, MinRes said: “All of the money collected from these levies would go straight to Chevron, with no benefit to the public whatsoever.

“This money would be taken from a WA company and gifted to an oil and gas giant in Houston for sailing our own ships from our own port facilities in Australian waters through a public channel.”

The port authority has told MinRes it intends to collect the levies payable to Chevron under a confidential deal between the US energy major and the WA government.

MinRes said it has not been allowed to see the confidential agreement between Chevron and the government on access to a public shipping channel part of the Port of Ashburton at Onslow.

Perth-headquartered MinRes has raised the issue of sovereignty over WA and Australian waters as it digs in for a fight with Chevron and WA’s Labor government.

Chevron dredged the now-public shipping channel around 2011 during construction of its Wheatstone oil and gas project.

MinRes, which has its back to the wall after being forced into major repairs of the haul road and following a series of scandals involving its managing director Chris Ellison, said Chevron generated $US200bn in a year in revenue, with a lot of that wealth coming from Australia.

“Chevron should have handed the channel back to the State as a matter of course — not tried to skim off the top of the hard work of others to send even more cash back to the US,” MinRes said.

“If this deal is in the best interests of the WA public, it begs the question why repeated requests to scrutinise the documents being relied upon by the PPA (Pilbara Port Authority) have been rejected.”

Chevron did not respond to question about the dispute, but issued a statement defending its contribution to the port facilities and the WA economy.

It is understood MinRes knew about the potential for levies while planning Onslow Iron, but received verbal assurances from WA government officials they would be waived.

The company is thought to have received notice it would need to pay up in June last year.

MinRes said it was unforeseeable a bulk commodity project would be operating through the port back in 2011.

“Onslow Iron unlocked an entire new iron ore region, and Chevron are now trying to benefit from it via levies imposed by the State which may be invalid,” MinRes said

“Onslow Iron will deliver the State some $250m per annum in royalties, with MinRes investing billions of dollars in the project and creating thousands of WA jobs.”

One of Mineral Resources transhippers which operates out of Onslow.

MinRes has invested about $3.5bn in the Onslow Iron project, which in addition to the haul road and jumbo road trains relies on transhippers and port facilities it built at Onslow to get iron ore to carriers anchored about 22 nautical miles offshore.

The public channel is about 10 nautical miles in total and MinRes uses about 4 nautical miles of this. The channel is dredged to a depth of 14 metres, but the MinRes-owned fleet of transhippers only need 8 metres of draft.

MinRes said Chevron’s oil and gas operations were not disrupted in any way, and it did not use any Chevron infrastructure.

“MinRes has designed and built its own wharf and port infrastructure at our own cost — and MinRes and other public users should not be slugged as part of a secret deal,” MinRes said.

MinRes has launched legal action in the WA Supreme Court in a bid to gain access to the confidential documents being relied upon to impose the levies.

It took the action against the PPA after being advised the taxpayer-owned port authority was required to charge users of the Port of Ashburton’s public shipping channel levies and pass the proceeds to Chevron.

MinRes is seeking access to documents being relied upon by the PPA to charge both a channel levy and a separate cargo wharf levy.

The two levies were included in contracts that have never been made public which the WA government signed as part of the development of Chevron’s Wheatstone LNG project.

The Chevron-linked levies are in addition to normal port dues already paid by MinRes to cover standard operating costs at the Port of Ashburton.

MinRes developed its transhipping wharf adjacent to the Wheatstone development on Port of Ashburton public allotments.

Chevron dredged the shipping channel to accommodate its bulk LNG carriers and maintains priority access of the public channel.

“Chevron Australia constructed the Port of Ashburton during development of the Wheatstone project and handed it over to the Pilbara Ports Authority at no cost in stages between 2017 and 2018,” a Chevron spokesman said.

“Together with the Wheatstone joint venture participants, we are proud to have contributed this significant infrastructure asset to the state of WA, which has lowered the cost of development of other projects in the region.

“Our contributions to the community of Onslow near the Port of Ashburton, including more than $350m in social and critical infrastructure assets such as the Onslow Airport and access roads, have also benefited subsequent project proponents in the region, including MinRes.”

MinRes has made numerous formal requests for access to the documents to determine if the levies and the basis of their calculation are valid.

Most big resources projects in WA are covered by state development agreements made available to the public. In Wheatstone’s case, the then Liberal-Nationals government made a confidential agreement.

It is understood Chevron has not consented to the PPA disclosing the terms of the agreement to MinRes.

WA ports minister Stephen Dawson was also contacted for comment but did not respond before deadline.

Originally published as Chris Ellison-led iron ore miner in legal fight over shipping levies