Premier Anna Bligh gave the green light for the Goonyella to Abbot Point (GAP) expansion on October 23rd after QR Network agreed commercial principles with foundation coal customers Lake Vermont and Bowen Central Coal.
Calling the project the “Suez Canal” of the central Queensland coal industry, Bligh said the project is set to “revolutionise” the transportation of coal in the state.
“What this deal means is that we now have certainty that both this project and up to 4000 jobs will be delivered not only in construction but by opening up new export opportunities in the region,” she said.
The project includes the 69-kilometre Northern Missing Link which connects the Goonyella coal rail system to the Newlands rail system, as well as upgrades to the Newlands system.
Importantly, the GAP project will increase rail capacity and allow mines from the Newlands and Goonyella rail systems to export up to 50 mtpa of coal via the Abbot Point Coal Terminal, QR general manager Michael Carter said.
However this capacity is reportedly a trimmed-down version of the original 100 mtpa, with the cost of the project also scaled back from an original $4 billion price tag.
QR had reportedly put the GAP project on hold in February for 18 months because of the global financial crisis, but QR chief executive Lance Hockridge said that since then the market had “bounced back” and the long-term forecasts for export coal tonnages are strong.
While Carter said the rail infrastructure project was being developed using a commercial model agreed with foundation coal customers in a way that will “deliver infrastructure to support industry growth, QRC chief executive Michael Roche warned that that commercial negotiations surrounding the project were complex because the project proposes to service a large number of Bowen Basin coal mines with varying needs and cost structures.
“It’s instructive that that since formal negotiations began in February 2008 two coal companies have been signed up. That should be signalling to the government and QR that the commercial model being pursued outside the normal regulatory processes has not been a success and needs to be reviewed urgently before locking it in as the template for other key rail track projects,” he said.
“The argument for an independent review to ensure reasonable and sustainable commercial outcomes has never been stronger.”
“In particular, the review needs to ensure that the QR commercial framework avoids the gouging of monopoly rents, rather the pursuit of commercial returns benchmarked against similar investments.”
QR’s final planning work for the project will start immediately, with work on the site near Moranbah expected to commence by April 2010 and project completion targeted for January 2012.
 
