Wednesday 15th Aug, 2018

Aurizon dealing with unhappy CQCN miners

Coal wagons Aurizon. Photo: Aurizon
Photo: Aurizon

A law firm representing coal miners has reportedly asked Aurizon to reverse recent maintenance changes which will carve a 20 million tonne chunk out of the Central Queensland Coal Network’s annual capacity.

Miners are furious over a new, less flexible maintenance strategy being imposed by Aurizon, which operates the CQCN under an access deal administered by the Queensland Competition Authority.

But Aurizon says it’s being forced to limit maintenance to avoid losing money, under draft figures outlined by the competition authority for an access agreement to cover the CQCN through to 2021.

The Queensland-based operator announced the changes in February, saying a $1 billion difference between what it thinks it should be allowed to earn operating the CQCN, and what the competition authority says it is allowed to earn, is to blame for a scaled-back operation.

Miners responded in February by calling on Aurizon to delay making moves until the final QCA decision comes down later this year.

But Aurizon boss Andrew Harding believes the QCA is unlikely to stray too far from its draft figures, and pointed out the new access deal – once finalised – will be retrospective from the start of FY17.

“I’m already most of the way through the first year of this decision being impacted,” Harding said, “and it is costing us a great deal of money. So we have to act very quickly to position ourselves with the draft decision.”

Queensland Resources Council boss Ian Macfarlane slammed Aurizon’s decision, saying in February: “For the sake of $25 million in its maintenance allowance, the decision by Aurizon to move away from a flexible maintenance system to an inflexible system, would cost Queensland 20 million tonnes of coal exports per year.”

Now Fairfax columnist Matthew Stevens is reporting law firm Herbert Smith Freehills has sent Aurizon Network manager Michael Riches, “requesting” an immediate return to the old maintenance schedule.

“A number of our clients have experienced train paths not being scheduled or being cancelled,” Stevens quotes the letter.

Aurizon is reportedly warned in the letter that the liability protections it would normally have in rail path access contracts “do not apply to protect against deliberate breaches of the agreement”.

Aurizon management has acknowledged the new maintenance schedule – which goes away from a flexible method to work around miners’ needs, and shifts to a set schedule of maintenance periods which will require sections of network to be shut down – is not best practice.

But the operator is adamant it has no choice, and the QCA is not likely to change its mind on how much Aurizon is allowed to earn in revenues – a figure which factors in projected maintenance spending.

“The draft decision; it’s not a thought bubble. It’s not some guys that get together in a pub, after work, and draw up a way of working on a beer coaster,” Harding said in February.

“If you look at the history of the difference between QCA draft decisions, and final decisions, irrespective of submissions made by anyone, the difference is minimal. It’s trivial.”