Article: Wiggins Island closer with rail link

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Wiggins Island closer with rail link

Wiggins Island closer with rail link

   Tony Grant-Taylor
   From: The Courier-Mail
   September 06, 2011 12:00AM

THE next big expansion of Queensland's coal industry has reached a major milestone, with QR National signing a $900 million agreement to upgrade the rail link from the southern Bowen Basin to Gladstone to service the first stage of the proposed Wiggins Island Coal Export Terminal.

The rail project, due to start early next year, to haul its first coal in mid-2014 and be complete in March 2015, will underpin the 27 million tonne first stage of WICET, which will lift Gladstone's overall export capacity to about 100 million tonnes and potentially add $3 to $3.5 billion to Queensland's export income.

"The Wiggins Island rail project will be one of the largest rail expansions in Australia and represents a significant commitment to the future growth of the Queensland coal industry," QRN chief executive Lance Hockridge said yesterday.

While a final financial commitment to WICET is yet to be made, the QRN agreement - though negotiated with the eight coal companies individually, not through WICET - indicates that the companies, all WICET shareholders, are very close to signing off on the $2 billion project.

WICET, where initial construction work is scheduled to start this month, will initially have a capacity of 27 million tonnes but it will be capable of staged expansion to about 100 million tonnes so as to also service coal hopefuls with exploration areas in Queensland's Surat Basin.

The Wiggins Island rail project is the first major expansion project QRN has taken on as a publicly listed company.

The new project, when completed, will add about 20 per cent to QRN's coal haulage capacity overall and increase southern Bowen Basin capacity by about 30 per cent.

They will pay commercial rates to use the new rail capacity but it will be a godsend for the companies who've signed up - Xstrata, Aquila Resources, Bandanna Energy, Caledon Resources, Northern Energy Corporation, Yancoal Australia, Wesfarmers Curragh and Cockatoo Coal.

With only Xstrata and Curragh currently major producers, the others are either small scale operators or explorers who will now be hoping to use the new rail infrastructure to get into production.

Bandanna Energy managing director Ray Shaw said yesterday the agreement was a very significant milestone both for Bandanna and other companies expecting to ship through Stage One of WICET.

"QRN's expenditure of $900 million plus for infrastructure is a very strong vote of confidence in WICET and the shippers' source mines," Dr Shaw said.

The rail project will create 3000 jobs during construction.