Rail freight group meets with Environment Minister to resolve grain concerns

To resolve a standoff on noise and CO2 emissions from grain haulage, an alliance of grain freight businesses have held a roundtable with NSW Environment Minister Matthew Kean.

Representatives of Southern Shorthaul Railrod, Pacific National, LINX Cargo Care Group, CF Asia Pacific, Qube Holdings, Aurizon, Manildra Group, NSW Farmers Association, and Grain Corp amde their concerns heard to Kean.

Last week, the group had banded together to protest draft emissions thresholds which would have forced grain movements off trains and onto trucks. The discussion with Kean has allayed fears of the end of grain freight via trains, said Save our NSW grain lines spokesperson Jason Ferguson and Southern Shorthaul Railroad owner.

“To his credit, Minister Kean acknowledged the importance of allowing older, lighter diesel locomotives to continue providing essential haulage services to farmers needing to transport bulk grain from regional silos to coastal ports like Kembla and Newcastle.”

Kean also reiterated the NSW’s government’s commitment to keeping freight on rail.

“I made it clear to those present that we do not want to see rolling stock taken off tracks and replaced by trucks however we do have a duty to ensure communities are not impacted by extreme noise and air pollution just because they happen to live near rail lines,” Kean told Rail Express.

The draft emissions thresholds would have prohibited the older locomotives used to haul grain. These older locomotives are the only fit-for-purpose solution due to the older tracks – some laid 100 years ago – being unable to hold newer locomotives with heavier axel loads.

“This debate was never about industry resisting the purchase of new locomotives – it was about recognising older, lighter loco classes provide fit-for-purpose haulage services on many regional rail lines,” said Ferguson.

“The minister took our advice about expensive loco emission kit technology causing higher fuel burns and therefore CO2 emissions,” Mr Ferguson.

Due to these discussions, Ferguson expects that the final Environment Protection Licences for Rollingstock operators to take the industry’s concerns into account.

“Just like any vehicle, different types of locos have different noise profiles – the EPA’s original proposals didn’t factor this in. I’m pleased the Minister has,” said Ferguson.

Kean also saw a way forward for both the EPA and the rail freight industry.

“In what are highly technical issues, I believe we found a balance between satisfying the communities concerns whilst limiting the impact on industry,” said Kean.

Aurizon’s revenue rises to $1.53bn

Aurizon Holdings Limited revenue has increased by $73.4 million or five per cent in the 2019/20 first-half earnings before interest and tax.

Australia’s largest rail-based transport business has released a half year report for the period ending 31 December 2019, detailing new growth in the company.

Aurizon stated in the report that the higher revenue is offset by the sale of the rail grinding business.

A spokeswoman from Aurizon said the large sale transaction for the rail grinding business was completed with Loram in October 2019 for $167m with $105m net gain on sale (not included in underlying earnings).

With revenue up five per cent to a total of $1.53 billion, the company’s underlying net profit rose 19 per cent to $268.9m.

The group credited the UT5 Undertaking as a factor that improved revenue. In December last year, Queensland Competition Authority (QCA) approved the agreement that governs access to its rail network. 

Aurizon executives stated that the company’s financial position and performance was partially affected by the closure and sale of Acacia Ridge Intermodal Terminal. 

Two years ago the Australian Competition and Consumer Commission (ACCC) opposed the sale of Acacia Ridge Intermodal Terminal and commenced proceedings against Aurizon and Pacific National in the Federal Court. Aurizon and the proposed new owner of the terminal, Pacific National, both filed notices of cross-appeal that will be heard by the full Federal Court later in February. 

Aurizon executives highlighted its full-year earning guidance to $930 million from $880 million. This figure was noted before assumed impacts from the Australian bushfires and the world health emergency, coronavirus.

The coronavirus has delayed the arrival of 66 rail wagons being made in the epicentre of the disease, Wuhan in China. 

A spokeswoman from Aurizon said an initial order of 66 wagons have already been delivered and the remaining 66 wagons are planned for delivery in February or March.

The first batch of 132 coal wagons have been completed by our supplier. The construction of the second tranche of 132 wagons has been delayed due to a slow down of production in China,” the spokeswoman said.

Operating costs increased $13.9m or 2 per cent, which were identified as due to to increased labour costs.

Aurizon’s network operates the 2,670km CQCN, the largest coal rail network in Australia. 

Aurizon executives stated in the 2019/20 half year report that 58 per cent of the company’s revenue, a total of $887.5m, was from transporting coal from mines in Queensland and NSW to customer ports.

Operational performance across the network  “remained strong” during the first half of the new financial year, according to Aurizon.

Total system availability improved from 81 per cent to 82.2 per cent, and cycle velocity improved 4 per cent.

Aurizon’s executives said the focus has been on the trial and implementation of schedule adherence in the Blackwater system in QLD.

Compared to the previous half, the network delivered an average reduction in turnaround time of 1.2 hours per service and both on-time arrival to mine and to port increased.

Aurizon’s executives said the network is now working with operators to improve the current scheduling process by realigning maintenance constraints to unlock capacity and optimising the weekly Intermediate Train Plan to avoid pathing contests between operators. The report stated that system throughput is expected to increase, in the third quarter of this year.

Aurizon

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.

Coal train derails in central Queensland

Coal trains have been disrupted in central Queensland, near the town of Middlemount.

An unloaded coal train operated by Aurizon derailed on January 19, at roughly 1pm AEST.

According to statements reported in local media, a locomotive and a number of wagons have been derailed, and Aurizon is mobilising recovery crews.

Aurizon notified other coal miners in the area as their shipments may also be affected. Nearby mines include German Creek, owned by Anglo American, and Glencore’s Oaky North.

After 25 to 30 coal bins tipped over, power lines were brought down, and a small grass fire ignited. The fire was subsequently brought under control.

Reports suggested that the line will reopen by Friday, January 24.

The two train drivers were uninjured.

Aurizon operates the largest export coal rail network in Australia, the Central Queensland Coal Network. The 2,670 multi-user track stretches from Bowen to Gladstone.

Pacific National, Aurizon critical of ACCC appeal in Acacia Ridge case

Aurizon and Pacific National have criticised the competition watchdog’s decision to extend its “expensive and reputationally damaging” campaign against the agreed sale of the Acacia Ridge intermodal terminal in Queensland.

The Australian Competition and Consumer Commission (ACCC) on June 27 said it would appeal the Federal Court’s rejection of its case against Aurizon selling Acacia Ridge to Pacific National.

Aurizon and Pacific National have been trying to finalise the deal since August 2017, when they announced PN would team up with Linfox to acquire Acacia Ridge and Aurizon’s Queensland Intermodal above rail business.

Initial opposition from the ACCC led to a split in that sale, with Aurizon selling Queensland Intermodal to Linfox, and PN to acquire Acacia Ridge.

An unsatisfied ACCC pressed on, however, taking its challenge of the Acacia Ridge sale to the Federal Court in July last year.

At that time the ACCC not only challenged the sale on competition grounds, but went so far as to make the pernicious accusation that PN and Aurizon had conspired to limit competition in the Australian rail market with the deal.

The ACCC dropped this component of its case before the court’s ruling, but was still unsuccessful with its competition claims, with the Federal Court approving the sale on May 15. The Court told the ACCC the competition issues it had raised were resolved with an unconditional access undertaking presented to the court by Pacific National.

Now the ACCC has announced it will again try to block the sale with an appeal of that Federal Court decision.

“This court action by the ACCC has been an expensive and reputationally damaging exercise,” a PN spokesperson told Rail Express on June 27.

Pacific National believes the Federal Court judgement created a pro-competitive outcome for freight in Australia by guaranteeing access for new entrants to get freight from road to rail. It’s important to remember the undertakings we’ve committed to did not previously exist at Acacia Ridge Terminal and any assertion that we would somehow subtly work to discriminate against other users is simply wrong.”

Aurizon responded to the news of the ACCC’s appeal through an ASX statement.

“The ACCC is asserting they believe the Court made an error in accepting an access undertaking in relation to use of the terminal,” Aurizon said. “Aurizon does not accept this assertion and is of the view this matter was fully considered by the Federal Court and the decision handed down in May 2019 was clear and comprehensive.”

If the appeal is granted, Aurizon said the Acacia Ridge sale will have to wait until the case is finalised by the Full Bench of the Federal Court, a process which could take several months.

The ACCC said its appeal would focus on the court’s involvement in the access undertaking itself.

“Among other things, we will argue that the court made an error by accepting the undertaking, and then using it as a relevant fact when determining whether there was likely to be a substantial lessening of competition,” ACCC chairman Rod Sims said.

“This appeal is crucial to Australia’s merger regime because acceptance of undertakings of this kind by the Court means that anti-competitive mergers could be approved, and this has the potential to damage the Australian economy.”