Rail turnout - RISSB

Nye, Tanner to leave ARA

Australasian Railway Association chief executive Bryan Nye will leave the organisation by April 30, following the association’s split with the Rail Industry and Safety Standards Board (RISSB) announced earlier this year.

ARA chairman Lindsay Tanner will also leave the association following the end of his term this year.

“This is a new phase for the ARA, and it will be led by a new CEO, following the decision by existing CEO Bryan Nye to stand down as of 30 April 2015,” Tanner said this morning.

“Bryan has made an enormous contribution to the industry since he was appointed as CEO of the ARA in 2003, some twelve years ago.

“In January 2014 he was awarded the Medal of the Order of Australia for services to the rail transport industry, and to the business sector.

“On behalf of all of its members, the ARA would like to thank Bryan for his leadership over the past 12 years and wish him the very best for the future.”

Tanner continued: “After a two year period assisting the organisation with its transition I will finish my term in April 2015.”

Bob Herbert has been appointed as interim chair to complete the review process.

The ARA has been undergoing lengthy reviews in recent months, with the first major result being the announcement of the separation of the ARA and RISSB.

“This decision was aimed at driving further progress in improving rail’s safety and productivity and to more closely align to the objectives of the newly established Office of the National Rail Safety Regulator (ONRSR),” Tanner said of the split.

RISSB will be formally established as a separate body on July 1.

“The ARA is now well positioned to review its own important role within the industry as the peak representative body for rail,” Tanner concluded.

“This review is being led by a sub-committee of the ARA Board and will be completed over the next three months.”

Rail R U OK? Day. Graphic: TrackSAFE Foundation

Thursday marks Rail’s R U OK? Day

April 16, 2015 will be the inaugural industry-wide Rail R U OK? Day, with the TrackSAFE Foundation leading a group of Australian companies to raise awareness of depression and trauma as a result of rail incidents.

A spin-off of the R U OK? not-for-profit, Rail R U OK? Day is designed to focus on engaging rail staff in conversations about their emotional status by promoting them to answer the simple question: Are you okay?

“We believe stations are a place of interaction and engagement within communities that foster people coming together,” TrackSAFE said.

“Let us extend this sentiment into our work environment by showing support for our rail staff.”

Several major Australian rail businesses have signed on for the inaugural Rail R U OK? Day, including ARTC, Aurizon, Bombardier, Downer, John Holland, Genesee & Wyoming, Pacific National, UGL and several others.

Paul Larsen, chief executive of Brookfield Rail, which is also signed up to take part, said the company is committed to helping its employees feel safe and supported at work.

“Looking after ourselves and each other is important for all of us,” Larsen said. “However we are all guilty of getting caught up in the details of our days and failing to realise those around us might not be ok.

“Together the rail industry is making positive steps to increase awareness of the importance of mental health by encouraging rail employees to connect with, and offer support to, one another.

“We realise that regular, meaningful conversations can really help someone who is struggling to feel supported and connected,” he continued.

“That is why we will be actively encouraging employees to start meaningful conversations with their workmates by asking them, are you okay?”

Brookfield will coordinate a series of activities on Thursday aimed at encouraging their employees to take part in these conversations.

TrackSAFE and R U OK? have partnered to deliver the new campaign. Click here for more information.

Patrick and ACFS join forces

ACFS Port Logistics (ACFS) and Asciano’s logistics arm Patrick Port Logistics will form a joint venture in which each will own a 50% equity interest.

Current ACFS managing director Arthur Tzaneros has been appointed the chief executive officer of the new entity.

It will be headquartered in Sydney with senior management from both Patrick and ACFS on the management team.

Asciano’s chief executive officer and managing director John Mullen said the venture will deliver an expanded platform of services providing strengthened customer relationships and opportunities for Asciano to grow over the long-term.

Key assets which will provide a service to both new and existing customers will include ACFS’ new purpose-built logistics facility in close proximity to Patrick’s Fisherman Islands container terminal in Brisbane, and its undeveloped site at the port of Fremantle, adjacent to North Quay Rail Terminal.

Patrick Terminals and Logistics director Alistair Field said the joint venture will improve the competitive position of Patrick’s metropolitan logistics business, bringing operational efficiency, while establishing a platform for future growth.

He said it will create an “enhanced national logistics service” for customers of each company.

Patrick Port Logistics is a wholly-owned subsidy of Asciano Limited – a combined rail and cargo ports operator with an annual turnover of $4bn.

ACFS is a privately-owned container logistics operator in Australia, offering transport, warehousing and supply chain solutions to big-volume container importers and exporters.

Current freight facilities are located in Sydney, Melbourne and Brisbane.

This article originally appeared on our sister publication, Lloyd’s List Australia.

Mount Everest. Photo: Creative Commons / shrimpo1967

China wants to build a railway under Mount Everest

The Chinese Government believes a rail line between China and Nepal would strongly boost bilateral trade and tourism between the nations.

State-owned media outlet the China Daily late last week reported that government experts, at the request of the Nepalese Government, had begun to look into a rail line which would tunnel under Mount Everest to link the two Asian nations.

“If the proposal becomes a reality, bilateral trade, especially in agricultural products, will get a strong boost, along with tourism and people-to-people exchanges,” Chinese Academy of Engineering rail expert Wang Menshu said.

A 251km extension to China’s national railway was completed from Lhasa to Xigaze in August. State sources reported in December that China plans to extend this railway 540km to Kerung – the Chinese town nearest to Nepal – by 2020.

But China believes there is more potential in that extension. During a visit to Nepal late last year, foreign minister Wang Yi reportedly discussed extending the line to Kathmandu, Nepal’s capital, and potentially beyond that.

Reports in state media last week furthered that message, and drew attention from a variety of sources after the potential route was detailed.

“The changes in elevation along the line are remarkable,” Wang Menshu said. “And the line will probably have to go through Qomolangma so that workers may have to dig some very long tunnels.”

Qomolangma is known to most English speakers as Mount Everest.

Wang said engineers will face a variety of technical difficulties once the project begins. Those engineering difficulties, and other physical factors, will likely restrict trains running on the line to a maximum speed of 120 km/h, he said.

John Holland. Photo John Holland

Hockey gives nod to Chinese acquisition of John Holland

Federal treasurer Joe Hockey has given the go-ahead to the $1.15 billion acquisition of Leighton Holdings’ subsidiary John Holland by China’s CCCC International.

John Holland, whose current projects include work on the North West Rail Link and part of Victoria’s Regional Rail Link, was put up for sale last year by Leighton, which is looking to improve its gearing in the face of a slowdown in the global construction industry.

Other rumoured potential suitors in the deal included South Korea’s Samsung and Brisbane’s ATEC Rail, but CCCCI was announced the winner after a several-month bidding process.

CCCCI is owned by the Chinese state-owned business China Communications Construction Company (CCCC). The Chinese company and Leighton signed a binding agreement late in 2014.

Hockey, who has blocked at least one major international acquisition in the past (the attempted acquisition of GrainCorp by US giant Archer Daniels Midland), approved the John Holland deal on Wednesday.

“The Government welcomes foreign investment where it is not contrary to our national interest,” Hockey said.

“Foreign investment has helped build Australia’s economy and will continue to enhance the wellbeing of Australians by supporting economic growth and prosperity.”

Hockey also responded to concerns by some who noted the debarment of CCCC by the World Bank in 2011, following alleged fraudulent practices during work on the Philippines National Roads Improvement and Management Project.

“I note there have been some media reports about CCCC in relation to a World Bank debarment,” the treasurer said. “I have sought advice on these and other issues in relation to CCCC. As a result, appropriate arrangements have been put in place to mitigate any concerns in relation to this issue and I am satisfied that this investment is not contrary to our national interest.”

Leighton has said its work in hand will fall by roughly $5.5 billion after the deal occurs.

Tasmania derailment. Photo: Google / West Coast Wilderness Railway

Lubrication lacking in derailment of historic loco

The derailment of a 1953-built Drewry locomotive near Teepookana, Tasmania, was caused by an under-lubricated axle box horn guide, according to a new report.

On December 9, 2014, locomotive 71SG travelled from Regatta Point to Dubbil Barril, to collect an empty passenger carriage for transfer back to Regatta Point.

The train’s operator, West Coast Wilderness Railway, was collecting the empty carriage in preparations for the planned commencement of passenger services along the line on December 15, 2014.

The 27 tonne, 7.6 metre locomotive left Dubbil Barril with the empty carriage in tow at around 11:36am on December 9. Roughly 40 minutes later, the train’s crew radioed in to report the locomotive had derailed all wheels.

Photo: ATSB / West Coast Wilderness Railway
Photo: ATSB / West Coast Wilderness Railway

One member of the three-person crew suffered minor injuries, described by the Australian Transport Safety Bureau (ATSB) as bruising and stiffness. Damage to the locomotive was described as minor, and the empty passenger carriage remained on the track.

An investigation by West Coast Wilderness Railway found the track condition and geometry did not contribute to the incident. Crew interviews and a review of the damage done ruled out the possibility that the train was exceeding the enforced 10km/h speed limit on the historic line.

Instead, mechanical examination of the locomotive found the cause of derailment to be the front-right-hand axle box horn guide, which had jammed due to a lack of lubrication.

“The jammed horn guide had restricted axle articulation while the locomotive was negotiating a slight left-hand curve, causing the leading wheel on the right side to climb the rail head and derail to the right,” the ATSB reported on April 8.

Photo: ATSB / West Coast Wilderness Railway
Photo: ATSB / West Coast Wilderness Railway

West Coast Wilderness Railway operates three diesel locomotives like Train 71SG, and uses them primarily for shunting as well as the occasional freight service.

While the locomotives receive regular maintenance, the ATSB found they can spend long periods idle, often outside, thus exposing them to “the harsh environment of Tasmania’s west coast.”

As a result of the investigation, West Coast Wilderness Railway has advised the ATSB that it will investigate its examination and recording methods, as well as the possibility of improving the lubricating delivery message for its machines.

“This incident highlights to operators and maintainers the importance of continually monitoring and reassessing risks to the safe operation of rolling stock,” the bureau concluded, “particularly with respect to low utilisation operating scenarios.”

Train carrying iron ore through the Pilbara in Western Australia, run by Rio Tintos Pilbara Iron. Photo: Rio Tinto

Iron ore far from the bottom?

Prominent economist Ross Garnaut has poured fuel on the flaming trash can that is Australia’s iron ore sector, predicting China’s steel production will fall this year, and will fall 25% by 2030.

Garnaut, a professorial research fellow at the University of Melbourne, made the prediction in an op-ed for the Australian Financial Review on Tuesday.

“Australia’s resources boom was a China boom,” Garnaut wrote.

“From 2007 to 2014, China accounted for more than the whole of the global increase in steel production. Chinese production rose from 489mt [per annum] to 823mt. The rest of the world’s production fell from 855mt to 839mt.

“Chinese production will fall this year.”

Garnaut said his Chinese sources believe steel production will fall from above 800mtpa today to just 600mtpa by 2030.

“With Chinese exports pouring onto world markets at an annual rate of 100mt and taking global prices down with them, and with environmental pressures forcing early responses, much of the shrinkage will happen early,” he added.

It’s a dire prediction, even for a sector which has become used to dire predictions.

For months, the iron ore sector has dealt with increasing supply and ‘slowing’ demand. Garnaut’s prediction would see iron ore demand do worse than ‘slow down’, though; it would see demand go into reverse.

“Falling demand for iron ore will run into the tsunami of new supply from Vale, BHP Billiton, Rio Tinto, Fortescue, Roy Hill, Sino Iron and others,” the economist wrote.

“The price trend is down until enough of the old or new supply capacity has been destroyed to balance the decline in demand.”

Since peaking at roughly US$190 a tonne in early 2011, dipping below US$100 in 2012 and then peaking again around US$140 in early 2014, the price of iron ore has nose-dived.

Iron ore wound its way downwards, with experts and banks revising and re-revising their long-term predictions to US$80 a tonne, then US$60 a tonne, and downwards. Overnight, the iron ore price closed at a decade-low mark of US$47.60 a tonne.

Fortescue Chief Executive Officer Andrew Forrest aboard the first train loaded with iron ore. Photo: FMG

Twiggy spurns ‘short-sellers’

Fortescue Metals Group chairman Andrew ‘Twiggy’ Forrest has hit back at suggestions from analysts that he should sell some (or all) of his 33% stake in the company, as the iron ore price dipped below FMG’s reported ‘break-even’ mark this month.

In a candid interview with Fairfax the colourful executive fired back at the reports, insisting the company’s critics were spreading the rumours in an attempt to drive down the share price.

“I have a very secure position,” Forrest was quoted by the Sydney Morning Herald on Tuesday. “My wife and I don’t give away hundreds of millions of dollars to charities … if we’ve got any security issues at all.

“So the hedge funds starting the rumourtrage really need to take that into account when they start rumours.”

Forrest believes short-sellers are targeting FMG.

Short-sellers are individuals or companies which, having sold a stock, aim to drive the price of that stock down to then buy it again at a lower price – effectively earning a profit in the short term, and leaving the potential for more profits down the road if the price rebounds to its proper, natural value.

“I just think people who start rumours which cause detriment to Australian companies [by] having a go to try and make a trade of their rumour are immoral,” Forrest reportedly said, “and such traders should have a good hard look at themselves.”

Forrest said FMG would “play the long game,” and said investors should “look beyond the market rumour and tomorrow’s share price.”

Analysts last week said Fortescue should look to sell off some of its assets in order to handle its debts, as the price at that time dipped below US$53 a tonne, which is around the point of FMG’s reported ‘break-even’ mark – indicating the miner could soon (or may already) be selling iron ore at a loss.

Analysts at that time also suggested Forrest may look for an escape route out of FMG. But Forrest doesn’t look to be quite so skittish.

“If you’re setting seven-year money, you set it on [what] the company is going to look like over the next seven years,” he was quoted by Fairfax.

“You play a long game, and not be concerned by what might appear in the markets in the morning.”

Wagons without bogies at the Bradken commissioning site at Kwinana, WA. Photo: Bradken

Shareholder chatter as Bradken rejects another bid

Rail wagon supplier Bradken will reportedly receive pressure from its shareholders over another failed takeover bid last week.

Bradken’s board on April 2 confirmed that it had received a $2.50 a share bid the day prior, but had turned it down.

“The Board of Bradken considered the proposal and determined that it does not represent fair value and accordingly determined not to engage further,” the company told the ASX.

The $2.50 a share bid is less than half of the original non-binding, indicative proposal from the joint venture of Pacific Equity Partners and Bain Capital Asia, which was said to be $6.00, and was originally bid in August last year.

The $2.50 a share bid is also less than half of the formal bid made by that same consortium in December 2014, which was $5.10 a share.

Bradken told the market that it was not happy with the $5.10 a share bid in January this year, and had rejected it.

“The board notes that the proposal by the consortium has been made at a low point in the mining cycle during a time of significant share price volatility in the broader mining services sector,” Bradken said at the time of the original bid.

Now Pacific Equity Partners has returned with a new takeover partner – Koch Industries – and it should come as little surprise that Bradken so quickly rejected a $2.50 a share bid.

But shareholders are reportedly preparing to pressure Bradken into better engaging its suitors, as fears grow that takeover candidates may grow restless and move for a hostile bid.

A year ago Bradken’s share price sat at around $4.50. It fluctuated throughout the middle of the year, reaching $5.00 in mid-August, before declining to $3.30 just prior to the announcement of the formal $5.10 a share bid in December, at which point it jumped back up to $4.50.

The share price stayed at $4.50 until the initial bid fell through in January, at which point the share price plummeted.

Just prior to the announcement of the recent takeover bid, the company’s share price was below $1.90. Since the announcement, it has risen to roughly $2.30.

Bradken announced a net loss after tax of $92.6m in the first half of 2014/15. It reported $14.5m in EBITDA – down 83% – and did not issue a half-year dividend, following a 15c a share dividend after the first half of last financial year.

“Ongoing volatility in a number of commodity and mineral markets to which Bradken is exposed, continued to persist in the first half,” Bradken said in February.

Leader Street Crossing. Photo: Google

‘Substantial’ damage to Aurizon train in Mile End collision

The Australian Transport Safety Bureau will investigate last week’s collision between two trains at Mile End, South Australia.

The Australian Rail Track Corporation (ARTC) reported the collision last week, announcing that an intermodal train had collided with another freight train just before 8am on Tuesday, March 31, at Mile End, in Adelaide’s inner west.

Rail Express reported the incident last week, with details sourced from the ARTC’s initial announcements.

An investigation was launched by the ATSB soon afterwards, with more details released.

“At about 0730 (CDT) on 31 March 2015, intermodal freight train 2MP9, operated by SCT Logistics, passed signal No. 1 displaying a ‘Proceed at low speed, prepare to stop indication’ at the southern end of the Mile End Loop,” the bureau reported.

“Train 2MP9 proceeded past the signal No.1, at low speed, but subsequently collided with the rear end of intermodal freight train 2MP1, operated by Aurizon, that was at stop on the Main Line waiting to depart.

“There were no injuries to the train crew of either train and while there was only minor damage to train 2MP9, train 2MP1 incurred substantial impact damage to wagons along the length of the train, with three wagons fully derailed.”

Both trains were on their way to Perth, having left Melbourne.

The ATSB is expecting to complete its investigation by October this year.