Coal miners reach deal with Aurizon over QLD rail access

Rail operator Aurizon has signed agreements with coal mining customers for a revised rail access deal via the Central Queensland Coal Network (CQCN).

The decision follows months of back-and-forth with the miners over Aurizon’s revenues from the operation of the CQCN.

Aurizon managing director and chief executive officer Andrew Harding said the announcement was an important step in developing an access period undertaking that would better address customer need and provide “longer term certainty for the Queensland resources sector”.

The source of the debate was a Queensland Competition Authority (QCA) draft ruling from December 2017 allowing the company to earn $3.9 billion from the rail network over a four-year access undertaking period (July 2017–June 2021), a figure Aurizon argued was too low.

Aurizon subsequently made cutbacks to its maintenance regime at the CQCN, which caused issues for miners reliant on the network.

Aurizon’s industry customer list in the region includes mining majors such as Anglo American, BHP, Glencore, Idemitsu, Jellinbah, Kestrel and Yancoal (among others), and is expected to provide over 90 per cent of railed tonnes across the CQCN.

The revised agreement (the result of “months of negotiation” according to Aurizon) will increase Aurizon’s maximum allowable revenue on the network — based on weighted average cost of capital —  from the previous figure of 5.7 per cent to 5.9 per cent, increasing further to 6.3 per cent subject to passing certain milestones. In addition, the access period will be significantly extended to June 30, 2027.

Queensland Coal Rail Working Group chair and BHP vice president, technology global transformation, Rag Udd said the new access regime would provide the coal industry “with greater certainty of access to the rail capacity it requires to sustain its export operations.”

“It places a greater commitment on Aurizon Network to deliver the capacity that it has sold and to work with Industry to develop productivity and efficiency improvements, including a more reliable and transparent maintenance regime and investments to address shortfalls in the system capacity,” Udd said.

The agreement is still subject to review and approval by the QCA.

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