O'Donnell review puts cost of Goonyella losses at $1bn

O’Donnell review puts cost of Goonyella losses at $1bn

Congestion in Queensland’s Goonyella Coal Chain had caused more than $1bn of lost economic benefit in the last 12 months alone, largely because QR National was running short of rolling stock capacity, according to a new report . Former Pacific National chief Stephen O’Donnell said the purpose of his report was not to assign blame, but he attributed the present bottleneck to &#8220a lack of rail rolling stock capacity&#8221 and a lack of flexibility in the supply chain. The report called for an urgent business improvement plan for the whole coal chain but one initially focused on QR’s operations because it was the main congestion contributor. The Queensland Resources Council and the Queensland Government commissioned Mr O’Donnell in May to examine the supply chain operating through Dalrymple Bay Coal Terminal (DBCT) and Hay Point Coal Services. Mr O’Donnell, in his report released yesterday (Monday, July 30), said the plan could help squeeze out another 5m tonnes of annual capacity from the coal chain, but he noted that it could take six months for the plan to work. Queensland premier Peter Beattie said QR began implementing such a plan last week. But Mr O’Donnell warned that DBCT would become the main limit on throughput when work begins later this year to expand port capacity to 68m tonnes a year. &#8220Following completion of this work, the bottleneck will return to being lack of rolling stock,&#8221 Mr O’Donnell said. &#8220QR’s plans have yet to be finalised to address this situation.&#8221 Mr Beattie said the O’Donnell review put both QR and DBCT on notice to &#8220lift their game&#8221, despite repeated industry rumblings that it was the State Government-owned QR that was the chief limiter on export growth. "There’s certainly a new-found resolve among industry participants – the miners, QR and the ports – to address the issues collaboratively acknowledging that no one party can be responsible for total supply chain performance,&#8221 Mr Beattie said. &#8220All parties accept that performance could have been better and are now focussed on what can be done to lift capacity moving forward.&#8221 The report makes two other recommendations, including the appointment of a central person to coordinate the supply chain on behalf of the coal producers. Mr O’Donnell also said QR should immediately buy more train sets to meet projected demand, owing to the long lead-times for delivery of new rolling stock. Acting QR chief Stephen Cantwell said QR accepted all three recommendations and was finalising a plan to place a $110m order for 510 new wagons. QR was looking to buy another 40 locomotives, worth $200m, and said it was investing $2.5bn across its whole operation to add new rolling stock and track capacity. The Goonyella system could expect the addition of two new $50m train sets by February, with capacity for 10,000 tonnes of coal for every delivery to the port. QR is also working on a $110m third unloading track at DBCT, to be operational by November. The investment in the system cannot come soon enough for QR, after a fall in its total haulage volumes to DBCT in 2006&#4707. Mr Cantwell conceded that QR could have performed better, noting that tonnages of 50.5m tonnes to DBCT in 2006&#4707 were &#8220flat&#8221 compared with the previous year when it moved 50.8m tonnes. QR moved 87.7m tonnes through the system, including to the BHP-Mitsubishi Alliance-owned Hay Point Coal Services, up 5.3m tonnes on 2005&#4706. Mr Cantwell said the review would put the operator’s full attention on moving forward to push through more coal. "For the first time, the report provides a clear and independent picture of the complexity of the supply chain and the constraints that have emerged,&#8221 Mr Cantwell said. &#8220[The&#93 report clearly reinforces the need for shared responsibility and identifies issues of past performance and future improvement for all parties – QR, the mines and ports."

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