Aurizon’s group executive for coal Ed McKeiver says his customers are frustrated with ongoing capacity restrictions on the Central Queensland Coal Network, but says the frustration is yet to cost the company a major contract.
McKeiver on June 27 said the maintenance restrictions enforced by Aurizon’s below-rail business unit on the CQCN had put a strain on his relationship with Aurizon’s above-rail clients.
“There’s no doubt there’s frustration, and customer dissatisfaction in our Central Queensland business,” McKeiver said.
“Demand’s strong, capacity’s constrained, and stockpiles are filling. And customers are getting frustrated, and some of them are even curtailing production as those stockpiles stock out.”
Customer dissatisfaction stems from Aurizon’s ongoing fight with Queensland’s market regulator, QCA, over how much it is allowed to earn from its monopoly ownership of the CQCN.
The QCA’s draft access undertaking instructs Aurizon to cut its maintenance spending, and Aurizon has responded by amending its practices, in turn cutting an estimated 20 million tonnes in annual capacity from the network.
Miners are furious with what they perceive to be Aurizon using its monopoly to attempt to bully the QCA into giving it what it wants. But Aurizon says it has to act sensibly, as it holds little hope the QCA will adjust its framework significantly before it makes its final decision.
McKeiver said on Wednesday it remains to be seen whether the dispute translates to lost contracts for Aurizon’s above rail business.
“There’s no evidence yet of a contract loss,” he said. “Our first [contract up for renewal] is in FY20. “In fact we’ve won a contract in this context, signing up Bounty in the Blackwater System in March.”
Nonetheless, the coal rail boss said he was aware the dispute posed a legitimate risk to future contract decisions.
“I’m alert to the risk, my team’s alert to the risk. We’ve got a professional team,” McKeiver said.
“There is absolutely tension in the tender process. Our customers are sophisticated counter-parties, though, and some of them can look through and continue to assess our suitability for their haulage solutions based on our service quality, scale, and the long-term value we can deliver for their business.
“We are doing whatever we can for our customers in [Central Queensland] by scrambling, and pushing, and demanding access, and trying to get as many trains scheduled to meet the demand as we can.”