Filling the infrastructure GAP

The Queensland Resources Council (QRC) last week welcomed the Premier's re-commitment to build the Goonyella-Abbot Point (GAP) coal rail project in north Queensland ahead of export demand.

The Queensland Resources Council (QRC) last week welcomed the Premier’s re-commitment to build the Goonyella-Abbot Point (GAP) coal rail project in north Queensland ahead of export demand.

The Queensland Government announced the $1.1 billion rail project on Friday, after two Bowen Basin coal mines reached an agreement with rail infrastructure provider QR.

The Government aims to complete the project by January 2012.

According to QRC chief executive Michael Roche, these are the first two coal mines to sign up since formal negotiations began in February 2008.

“That should tell the Government and QR that the commercial model being pursued outside the normal regulatory process has not been a success,” he said.

“It needs to be reviewed urgently before it is locked in as the template for other key rail track projects.

“The argument for an independent review to ensure reasonable and sustainable commercial outcomes has never been stronger.”

According to Roche, the commercial negotiations surrounding the GAP project are complex, because it proposes to service a large number of Bowen Basin coal mines with varying needs and cost structures.

He said any reviews need to ensure the QR commercial framework avoids the gouging of monopoly rents rather the pursuit of commercial returns benchmarked against similar investments.

“The GAP project represents a significant opportunity for Queensland to capitalise on the next surge in minerals and energy demand,” he said

“We are hoping the Premier’s comments will provide inspiration.”

In 2008-09, Queensland exported more than 159 million tonnes of coal with total production valued at more than $38 billion.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.