Operator Aurizon looks to have ended its long-running stoush with key mining customers over revenue on the Central Queensland Coal Network, announcing an agreement towards a revised access deal on May 3.
Aurizon will submit a draft amending access undertaking document to the Queensland Competition Authority (QCA) after it came to terms with miners representing more than 90 per cent of the tonnes moved on the Central Queensland Coal Network (CQCN) – which is owned by Aurizon’s below-rail business.
The draft terms include extending the term of the CQCN access undertaking to ten years, from FY17 to FY27, and a maximum allowable revenue for Aurizon based on a weighted average cost of capital (WACC) of 5.9 per cent, increasing to 6.3 per cent, subject to completion of specified milestones.
The WACC figure is an improvement on the 5.7 per cent determined by the QCA in its final access undertaking – the undertaking which will be modified by the submission now being made by Aurizon.
Aurizon reluctantly accepted the QCA’s final access terms in February after months of back-and-forth with the regulator over how much it should be allowed to earn from operating the CQCN.
At that time Aurizon vowed to work with miners to come to a better agreement, and now it believes it has.
“Today’s announcement is an important step in the development of an Undertaking that better addresses customer needs and provides longer term certainty for the Queensland resources sector,” Aurizon CEO Andrew Harding said.
The new access terms also commit to the development of mechanisms to provide improved supply chain stability and improved maintenance and asset renewal programs.
Aurizon says mining customers who had signed up to the new terms included Anglo American, BHP, Coronado, Glencore, Idemitsu, Jellinbah, Kestrel, Middlemount, Peabody, QCoal and Yancoal.
The company said in an ASX statement the new access terms were the result of “months of negotiation,” and said they would provide “greater commercial and operational certainty for all users of the CQCN”.
Aurizon angered miners when it shifted to a less flexible maintenance regime on the CQCN in February 2018, in response to the draft terms then set out by the QCA. The rail operator said the QCA’s terms forced it to make the cutbacks.
Aurizon slammed the QCA’s terms as ‘deeply flawed’, arguing they didn’t allow Aurizon to make a commercial rate of return on the CQCN without making significant changes to procedures like maintenance.