Aurizon jolt as miners make Wiggins Island rail claim

Rail firm will seek to avoid losing up to $27 million at a bad time for coal

Aurizon jolt as miners make Wiggins Island rail claim
Aurizon is facing a miners' mutiny.


A new attempt by miners to renegotiate their transport-related deals appears to have surfaced involving Aurizon.

The rail operator says it is subject to disputed claims from seven of its eight Wiggins Island Rail Project (WIRP) customers over an infrastructure deal signed in 2011, when coal prices were high.

Thermal coal was selling at around the US$130 a tonne mark that year, when Aurizon was known as QR National, but is now sitting at about $US60.

The eight are Glencore Xstrata Coal, Aquila Resources, Bandanna Energy, Caledon Resources, Cockatoo Coal, Northern Energy Corporation, Wesfarmers Curragh and Yancoal, though Bandanna went into administration last October.

WIRP involved investment in new and upgraded rail lines to Wiggins Island Coal ​​Export Terminal (WICET) at the Port of Gladstone aimed at a 30 per cent capacity boost by this year for mines in the Bowen and Surat basins.

"Under the Project Deeds, Aurizon Network was to receive certain payments, which would deliver an above regulatory return on its investment in the $831 million Wiggins Island Rail Project, in return for Aurizon Network agreeing to develop the project on time and for a lower than forecast cost (both of which were achieved)," Aurizon says in a stock exchange statement.

"The effect of the notices, if valid, would be to substantially reduce the above regulatory return component of project revenue that Aurizon Network will receive under the Project Deeds.

"The exact impact would be dependent upon a number of variables by which the above regulatory return component is calculated, some of which are yet to be determined.  

"Accordingly, at this point in time Aurizon can provide guidance that the annual impact would be in a range from $0 to $27 million in Earnings Before Interest and Tax per annum over the 19.5 year life of the above regulatory return component.

"The impact of the notices, if valid, in this financial year is more limited, at a maximum of $10 million in Earnings Before Interest and Tax."

With observers believing the dispute is headed for the courts, one upshot might be an eventual adjustment of the terms.

That was the outcome of Atlas Iron’s deal with McAleese and Qube amongst others but that was secured through a great deal of good will and acknowledgement of the realities.

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