Pacific National haulage deal delayed, but extended

Staff WriterOctober 9, 2013, 12:00 amOctober 9, 2013

A haulage agreement between rail operator, Pacific National, and future coal producer Bandanna Energy has been pushed back 18 months, due to delayed construction estimates for Wiggins Island Coal Export Terminal (WICET) though Bandanna has extended the deal by five years. Bandanna, which holds a 14% stake in WICET, announced almost 12 months ago – in November last year – that WICET’s completion had been delayed to March 2015, but has waited until now to formally push back its agreement with Pacific National, for coal haulage to the port. Perhaps another trigger for Bandanna’s announcement is the growing length of its application to secure a mining lease on its Springsure Creek tenement, south-east of Emerald, in Central Queensland. Once Bandanna secures the lease, it hopes to build an underground coal mine there, at which point it will be able to engage with Pacific National in hauling it to WICET. But the timing of the commencement of the deal between Bandanna and PN has been revised from July 1, 2014, to January 1, 2016. Bandanna said in an announcement on the ASX that the new agreement with PN gave the two companies more flexibility to accommodate any further change in the construction schedule for WICET, perhaps beyond even its current estimate of a March 2015 completion date. However, the new agreement “allows for smaller initial production volumes from Springsure Creek to be railed prior to the formal commencement of rail haulage on 1 January 2016,” Bandanna said. This could be good news in the long term for PN, as it could mean more coal moved throughout the contract as a whole. And of course, PN will be pleased with the extension of the contract, which has gone from being a 15-year deal to a 20-year one. But the rail provider will still be eager to see the contract reach its full capacity as soon as possible. Queensland is a region dominated – in terms of freight rail – by Australia’s biggest coal haulier, Aurizon. PN, a subsidiary of Asciano, has been trying to crack into the market for some years now. Bandanna Energy managing director, Michael Gray, thanked PN for its cooperation throughout the time spent sorting out the new deal. “A long-term relationship such as is involved in the rail haulage contract with Pacific National for the Springsure Creek Coal Mine Project needs to be sufficiently flexible to meet the needs of the customer and the service provider over a long period of time and in changing external circumstances.”