THE BOURSE WHISPERER: Rail and logistics company Aurizon (ASX: AZJ) has signed a new long-term, performance-based coal haulage contract with Xstrata Coal, to haul coal from the Rolleston mine in central Queensland to RG Tanna Terminal in Gladstone and the new Wiggins Island Coal Terminal (WICET), which is under construction near Gladstone.
Aurizon said the contract supports Xstrata’s mine expansion at Rolleston from the current rate of 9.4 million tonnes per annum (mtpa) to the expected rate of 14.6mtpa due to commence in December 2014.
The contract also comes with a provision for Aurizon to haul expanded output volumes up to 20mtpa in future years.
“Aurizon is delighted to extend its long-term relationship with Xstrata Coal where we will provide haulage services for more than 80 per cent of its Queensland business,” Aurizon managing director & CEO Lance Hockridge said in the company’s announcement to the Australian Securities Exchange.
“Aurizon has built operational credibility with Xstrata in recent years on key performance criteria of on time running, volume requirements including surge capacity, and safety performance.
“Xstrata ran a competitive bidding process for this large-scale contract for Rolleston, so Aurizon is extremely pleased with this vote of confidence in our continued high performance on this haul.”
Aurizon’s other long-term haulage contracts with Xstrata service the Newlands, Collinsville and Oaky Creek mines, with all of these contracts continuing to September 2021.
Together with the new 14.6mtpa contract for Rolleston starting December 2014, this will take total contracted tonnages with Xstrata in Queensland to more than 31mtpa.
The contract will commence from 1 December 2014, or upon completion of WICET, whichever comes first, and will run to 30 September 2025.
Aurizon indicated it will invest up to $215 million in rolling stock to support this haul, dependent upon final fleet configuration.
The needs of the contract may also require the company to electrify the 110km Bauhinia rail spur that services Rolleston as all services for Rolleston are currently provided by diesel-hauled trains.