Saturday 11th Jul, 2020

Aurizon coal volumes dip

Coal wagons Aurizon. Photo: Aurizon
Photo: Aurizon

Capacity constraints on the Central Queensland Coal Network and a derailment in the Hunter Valley drove a 5 percent decline in Aurizon’s above-rail coal volumes in the September quarter.

Aurizon said on Thursday “supply chain constraints” on the Central Queensland Coal Network (CQCN) – which it manages – had cut into above-rail volumes.

Aurizon’s below rail business angered miners when it shifted to a less flexible maintenance regime on the CQCN in February.

The rail operator says it is being forced to make the cutbacks by a draft decision from the Queensland Competition Authority (QCA), which dictates the access undertaking terms under which Aurizon operates the CQCN as its monopoly owner.

Aurizon says the QCA’s terms are deeply flawed, and don’t allow Aurizon to make a commercial rate of return on the CQCN without making significant changes to procedures like maintenance.

The Queensland Resources Council, which represents coal miners, has demanded Aurizon wait until the QCA hands down its final decision later this year, before cutting capacity.

But Aurizon boss Andrew Harding, who used to work for mining giant Rio Tinto, has insisted the QCA is unlikely to vary significantly from its draft decision and – when it is finally enforced – the undertaking will limit Aurizon’s revenue retroactively from the start of FY17, meaning the operator cannot afford to wait.

Aurizon’s total above-rail coal volumes were 38 million tonnes on the CQCN in the September quarter, down 4 percent from the September quarter in 2017.

Elsewhere, the company’s above-rail coal volumes were down 7 percent in New South Wales and South East Queensland, where a derailment and industrial action in the Hunter Valley cut into operations.

Aurizon said coal guidance for FY19 remained at 215-225 million tonnes.

Aurizon’s Bulk business – covering iron ore and its Bulk East and Bulk West operations – saw a 19 percent drop in volumes in the September quarter, to 11.5 million tonnes.

It said this was “predominately due to lower iron ore volumes with the cessation of Cliffs in June 2018, and lower volumes in Bulk East, with the expiry of the Wilmar Sugar contract in FY2018 and lower QLD/NSW grain volumes due to dry weather conditions”.