Article: $900m to boost QR rails

[ozbob]

From the Brisbanetimes click here!

$900m to boost QR rails

$900m to boost QR rails
Matt O'Sullivan
September 6, 2011

QR NATIONAL will spend $900 million on improving rail links between central Queensland and a new port terminal at Gladstone after striking an agreement with mining companies for higher coal-haulage charges.

Bringing to a close protracted negotiations, the coal companies - including Xstrata, Aquila Resources and Wesfarmers Curragh - have agreed to QR National carrying a total of 27 million tonnes a year for fees higher than the regulated returns on investment of about 9 per cent to 10 per cent.

QR National expects construction of the $900 million rail upgrade to begin early next year and be completed by March 2015.
Advertisement: Story continues below

The project largely involves boosting the ability of the rail network to carry more coal from the Southern Bowen and Surat basins to a new $5 billion coal-export terminal at Wiggins Island near Gladstone.

It will include the construction of a 13-kilometre rail loop near Gladstone, upgrades to sections of tracks and duplication of an existing line in the Blackwater rail network, the second largest in Queensland. Although QR National flagged last week that an announcement was imminent, analysts said the commercial agreement removed some uncertainty for Australia's largest rail company.

''For QR and its shareholders, it means that from 2015 onwards they will be expecting to see a significant step up in their [rail] network earnings,'' a CBA Equities analyst, Matt Crowe, said.

Along with several other upgrades, the first stage of the Wiggins Island rail project will increase QR National's coal capacity by about 70 million tonnes a year to about 300 million within the next three years.

The mining companies that are funding the new terminal at Wiggins Island, one of the largest port developments on Australia's east coast, expect coal shipments to begin in 2014.

QR National chief executive Lance Hockridge said the Wiggins Island rail project would be one of the largest rail expansions in Australia.

''This is the first major rail infrastructure investment by QR National as a privatised entity and underscores our strategy to invest in growth projects in coal,'' he said.

The deal is subject to approval from the Queensland Competition Authority.

Shares in QR National closed unchanged at $3.26 yesterday.

Read more: http://www.brisbanetimes.com.au/business/900m-to-boost-qr-rails-20110905-1ju6i.html