A consortium of coal mining companies has today offered to buy Queensland's coal track network for $4.85 billion
May 26, 2010
The Queensland Coal Industry Rail Group (QCIRG) today delivered a full cash offer to the Queensland Government to buy the QR Central Queensland coal track network for $4.85 billion.
QCIRG Chairman Nick Greiner says the offer represents a substantial premium to what is likely to be achieved under the Queensland Government’s proposed Initial Public Offering (IPO).
“Importantly, our offer is able to be settled with the Government prior to the IPO and will not be dependent on volatile equity markets, removing major risk for the State while also providing early settlement,” Greiner says.
“The QCIRG offer has four goals: to encourage fair and open access, optimise network performance, enable early system expansions, and encourage rail haulage competition, all with flow-on benefits through enhance investment, employment and royalties,” he says in a company statement.
Today’s cash offer is for the Central Queensland track network, covering four systems and the Goonyella to Abbot Point Expansion, which are used predominately or exclusively by the coal industry.
CONSORTIUM MEMBERSHIP
QCIRG comprises 13 coal producers in the Queensland coal industry.
Each of Anglo American Metallurgical Coal, BHP Billiton, Ensham Resources, Felix Resources, Jellinbah Resources, Macarthur Coal, Peabody Energy, Rio Tinto Coal, Vale Australia, Wesfarmers Resources and Xstrata Coal have signed equity Subscription Agreements.
In addition, Aquila Resources and New Hope Coal Australia are supporting parties and have the opportunity to provide equity at a later stage.
“In total QCIRG members comprise 98 percent of the Queensland export coal industry,” Greiner explains.
In addition to the coal industry participants, the Australian Rail Track Corporation (ARTC) will act as the dedicated manager of the rail network.
It will participate as an equity owners and provider of long term railway management (operation and maintenance) services.
All QCIRG members have signed a Heads of Agreement, which provides a framework for the coordination of the industry consortium and the basis for the offer.
‘BEST INTERESTS’ OF THE STATE
Greiner says the industry has been committed to providing the Government with an attractive offer, as it strongly believes its approach will be in the best interests of Queensland, the coal industry and many businesses and jobs that rely on it.
He says the starting point for QCIRG in its consideration has been to realise a structure for coal related rail operations which is in the best interests of the State and system users.
“Protection will be provided for all users through fair and equitable access arrangements for small and large companies, current and future users and non-coal users such as agriculture,” he says.
He says the Consortium expects the Queensland Government and QCIRG will discuss and agree a suitable transition process to be followed after completion.
“QCIRG is confident that, working in conjunction with the Government, there can be early completion of the transaction, well ahead of the IPO timetable.
“QCIRG is hopeful the Government will engage positively and provide due diligence information to facilitate this early completion.”