Xstrata shunts Asciano with its own trainsMatt Chambers |...

Xstrata shunts Asciano with its own trains

Matt Chambers | September 25, 2009
Article from: The Australian
IN an east coast first, Swiss miner Xstrata plans to bring some competitive tension to the Hunter Valley coal railway by buying three big coal trains and hauling its own coal to Newcastle Port.

From 2011 the miner will move about a quarter of its coal itself, acting as a competitor to the region's main hauler, Asciano's Pacific National, as well as to Queensland Rail, which recently entered the Hunter Valley market.

Xstrata will remain a Pacific National customer under a decade-long, $800 million haulage deal the pair signed in July.

But extra capacity which would have been picked up by Pacific National will now be moved by the miner instead.

"We have entered into a commitment to procure rolling stock and commence haulage operations from 2011," an Xstrata spokesman said.

"By investing directly into the Hunter Valley coal chain, we are providing greater security of supply for our customers."

Xstrata's move was finalised in recent days and is understood to have come as a surprise to Pacific National.

It comes after last week's landmark deal between NSW coal exporters and the state government to overhaul port access at Newcastle, an agreement Ports Minister Joe Tripodi claims could double exports over the next six or seven years.

Newcastle, operated by Port Waratah Coal Services (PWCS), is already the world's biggest coal harbour but has been a notorious bottleneck for exports.

Xstrata has agreed to buy three trains, each consisting of three locomotives and 90 wagons, for a total of $120m.

The three trains, each about 1.5km long and able to carry 9000 tonnes of coal, will haul a total of just over 10 million tonnes of coal a year by making up to two trips a day from Xstrata's Hunter Valley mines to Newcastle.

"This purchase complements the recently announced port access arrangements at PWCS and we are looking forward to working with port and track service providers to further increase the capacity of the Hunter Valley coal chain," Xstrata said.

Yesterday, Pacific National played down the move.

"Pacific National signed a contract with Xstrata recently to haul the majority of their coal over the next 10 years to Newcastle and their decision to acquire three train sets does not impact the contracts in place," said David Irwin, Pacific National's coal general manager. "We understand that the train sets have been purchased to exclusively service a proportion of Xstrata's growth volumes and is the result of Xstrata's requirement to diversify their supply chain risk."

The Pacific National agreement is understood to account for about 30 million tonnes of Xstrata's 40 million tonnes a year of output.

The remaining 10 million tonnes a year had been up for grabs by either Pacific National or Queensland Rail but Xstrata's relationship with Pacific National had made it the natural choice for a hauler.

The new rail business will be called X-Rail and will be operated by Freightliner.

Bradken is building the wagons and United Group will provide the locomotives.

If its first stage is a success X-Rail could expand in NSW to take more of Xstrata's coal.

http://www.theaustralian.news.com.au/business/story/0,28124,26120552-643,00.html