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Uncertainty derails Aurizon’s Galilee plans

09 Feb 2018

AUSTRALIA: Prospects for the construction of rail links to serve controversial mining developments in Queensland’s Galilee Basin coal reserves have been thrown into doubt after heavy haul operator Aurizon announced on February 9 that it had decided to withdraw its application for funding from the federal government’s Northern Australia Infrastructure Facility.

Aurizon has been working on proposals for a multi-user rail link to connect the Galilee Basin to its existing 1 067 mm gauge Central Queensland network, which would allow coal to be exported through expanded port facilities at Abbot Point. In 2014, Aurizon estimated this ‘greenfield-brownfield’ approach being promoted with mining group GVL Hancock would be A$1bn cheaper than building a new railway.

A rival project backed by the Adani Group envisages construction of a 310 km standard gauge line to serve its planned Carmichael mine. An environmental impact statement for Adani’s line was approved ‘with conditions’ in December, but funding for that A$2·2bn project remains in doubt. Queensland Premier Annastacia Palaszczuk said last year she would veto any NAIF application from Adani, and she was reportedly under pressure from environmentalists to veto Aurizon’s bid for up to A$1bn.

Announcing the decision to withdraw the NAIF application, Managing Director & CEO Andrew Harding said Aurizon would continue to support the development of the Galilee Basin, which he believed ‘has the potential to provide a major boost to the national economy and create thousands of jobs in regional Queensland’.

Aurizon still believed that it could ‘play a key role in helping facilitate a multi-user, open access rail solution for the various new mines in the region’, Harding said. ‘However, while we are in ongoing discussions with several Galilee Basin mine proponents we have not yet progressed to definitive contractual arrangements. ‘Our NAIF application is, in part, predicated on having customer contracts secured. Given this is unlikely to occur in the near future we believe it is prudent to withdraw the application. If market circumstances change and our discussions with potential customers progress to commercial arrangements we will look at all possible financing arrangements.’