Aurizon targets net zero operational emissions by 2050

Aurizon will invest $50m in low carbon locomotives such as battery and hydrogen-powered trains to meet a net zero goal by 2050.

The freight hauler and network owner will also look to maximise the benefits of the electrified freight network in Queensland, particularly as more renewable energy is fed into the grid.

Managing director and CEO of Aurizon, Andrew Harding said that the company was confident that technology would meet the company’s goals.

“We are confident that rapidly-advancing technology in the rail sector will unlock major benefits like we are seeing in motor vehicles, energy generation and general industry. Our focus will be low-carbon technology for our locomotive fleet which accounts for more than 90 per cent of Aurizon’s CO2 emissions.”

In addition to actions undertaken internally, Aurizon will also push for government action.

“We directly advocate for policy actions to increase the use of rail freight on key national freight corridors. Our aim is to ensure that rail freight remains competitive and part of the solution as the economy transitions to a low-carbon future,” said Harding.

The company’s commitment follows the latest Sustainability Report from the freight operator. In the report, Aurizon advocates for lowered electricity costs to reduce the risk of substituting electric locomotives for diesel-powered trains. In addition, Aurizon outlines that the company has been advocating for greater infrastructure investment, improvements to regulation and finding efficiencies at interfaces between modes.

To meet the goal of lower emissions, Aurizon said that it would be making significant investments in new rollingstock shortly.

“Aurizon is already working with other railroads and manufacturers on the early development of battery and hydrogen-powered locomotives for deployment in a heavy-haul railway environment. This includes options of upgrades to the existing fleet and new rollingstock. We would expect to see prototypes trialling on our network by 2025, as technology advances and costs come down further,” said Harding.

“Locomotives are long-life assets of 20 – 30 years. We have some significant decisions ahead in renewing our locomotive fleet – potential game-changers for the freight industry – when we invest in the next generations of rollingstock to power our business through to 2050.”

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Aurizon posts increase in profit, earnings with limited COVID impact

Aurizon has increased its earnings before interest and tax (EBIT) by 10 per cent on the previous year’s results and a 12 per cent increase in profit.

This improvement was largely driven by increased earnings from Aurizon’s managing of the Central Queensland Coal Network (CQCN) and strong performance of the company’s bulk business.

These results include the impact of COVID-19 on the business, which managing director and CEO Andrew Harding said had limited impact.

“Despite the emergence of COVID-19 in the second half of FY2020, the Company has delivered a solid operational and financial performance with no material impact as a result of the pandemic,” said Harding.

With much of Aurizon’s business involving the haulage of metallurgical coal, consistent steel production in China and a rebound of steel production in India in May and June helped the freight operator through the COVID-19 period. In addition, a drop in US metallurgical coal exports contributed.

In Aurizon’s coal business, it added new customers including Peabody and Bluescope and added volume in the contract with Coronado.

On the bulk side of the business, Aurizon added contracts with BGC for cement products from Kalgoorlie. Aurizon extended its contracts with South32 Cannington and Incitec Pivot, both on the Mt Isa corridor. Aurizon began the operation and maintenance of a ballast cleaning machine for Rio Tinto in the Pilbara and there was an increase in demand from Mineral Resources. These led to a 21 per cent increase in revenue from bulk operations.

In Aurizon’s management of the CQCN there was a shortfall of volume. Volumes are expected to be lower in the next year due to COVID-19.

Aurizon also reported on its safety record over the 2019-2020 financial year. While there was a 10 per cent improvement in the total recordable injury frequency rate, there was an 8 per cent deterioration in rail process safety performance.

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Leadership change at Aurizon

Aurizon has appointed Pam Bains to the position of group executive network.

Bains will take up the role from March 9, 2020.

Bains comes to the role as chief financial officer and group executive strategy at Aurizon, a position she has held since December 2016.

Bains will oversee Aurizon’s implementation of the UT5 Undertaking, said Aurizon managing director & CEO, Andrew Harding.

“The new UT5 Undertaking provides long-term regulatory and investment certainty for the Central Queensland Coal Network, Australia’s largest coal supply chain. In addition, there is major opportunity to drive further improvements in supply chain performance and operational efficiencies for the mutual benefit of industry. Pam is absolutely the right person to unlock these opportunities and grow value for Aurizon customers and shareholders,” he said.

Currently, Bains has been responsible for central finance functions and manages enterprise targets and valuation. Previously, Bains was involved in Aurizon’s initial public offering and listing on the ASX, capital restructuring, and separation of Aurizon’s Network business.

“In her current role, Pam has led the development and implementation of Aurizon’s strategic plan ‘Strategy in Action’ including the implementation of a new corporate structure. Pam was previously the Vice President Finance for Aurizon Network and has a deep understanding of the regulatory environment in which the Network business operates,” said Harding.

Head of strategy and corporate development George Lippiatt will act as CFO and group executive strategy for Aurizon while recruitment for the role is completed.