Aurizon is set to lose $100 million in revenues after Cockatoo Coal failed to fulfill the terms of its contracts with the Wiggins Island Coal Export Terminal.
The Queensland coal miner, which went into administration in November, is currently being restructured following a deed in company arrangement.
As the reorganisation does not include any guarantees to pay out the coal miner’s contracts with Aurizon or WICET, United States group Liberty Metals & Mining sent over a $6 million cash infusion alongside the $100 million debt facility to the QLD company.
Cockatoo signed up to export 3 million tonnes of coal annually from WICET but only produced enough coal to export around 1 million tonnes annually, some wof which was exported through the RG Tanner coal terminal in Gladstone. RG Tanner’s export costs run at $4-$5 per tonne, compared to $20 per tonne at WICET.
WICET has been in talks with its lenders and co-owners over a debt restructure, which is expected to take place over the next 12 months. It took on large amounts of debt during the resources boom to pay for construction, which started in late 2011, amid expectations miners would expand coal production and need to push exports through the terminal.
Under the deed of company arrangement approved this month by Cockatoo's creditors, Cockatoo will use $78 million of its $100 million debt facility to pay out creditors' claims, including loans from ANZ.
Aurizon said that all liabilities for its haulage commitments with Cockatoo before it went into administration are covered by a bank guarantee and that future haulage revenues from Cockatoo have "been removed from our financial planning process".
Aurizon's rail track business intends to recover regulated revenues through "socialisation and revenue cap processes", the company said.
Cockatoo's take-or-pay obligations to WICET – which are estimated to be worth around $612 million over the long term – will be picked up by WICET's remaining coal owners, increasing the costs for other coal miners using the terminal, which include Glencore and Wesfarmers Curragh.
WICET's co-owners have also been forced to take on Bandanna Energy's contract obligations after the miner went into administration in late 2014.
Coal miners' take-or-pay agreements with WICET took effect in April 2015.