Aurizon managing director and chief executive officer Andrew Harding expects that a Chinese decline in coal imports will continue.
The rail freight company’s coal business which operates in Queensland and New South Wales saw a 5 per cent drop in its coal haulage for the September 2020 quarter compared to the corresponding period.
“This is consistent with our commentary in August that we expected a softer first half in coal railings due to lower steel production related to COVID-19, in addition to China curtailing aggregate coal import volume to maintain a similar annual result to the prior calendar year,” Harding said.
Aurizon is expecting railings to increase in the second half the current financial year when steel demand returns.
“It is no secret that transporting coal for customers is a large part of our business,” Aurizon chairman Tim Poole said.
“As part of our six-monthly strategic planning, we assess the future demand for coal.
“This scenario-based analysis is captured in our Sustainability Report. Despite short-term fluctuations caused by COVID-19, the fundamental demand drivers of coal demand remain – both for thermal and metallurgical coal.
“About 95 per cent of Australian thermal coal exports are destined for Asia, where there is a relatively young existing coal-fired generation fleet, with new capacity coming online.”
Aurizon has also released its climate strategy and action plan, which will see the company push toward an electrified coal network that utilises electric locomotives.
“Aurizon is already working with other railroads and manufacturers on the early development of battery and hydrogen-powered locomotives for deployment in a heavy-haul railway environment,” Harding said.
“This includes options of upgrades to the existing fleet and new rollingstock. We would expect to see prototypes trialling on our network by 2025, as technology advances and costs come down further.”