Aug 10, 2020

NQ deals help turn around Aurizon bulk business

NQ deals help turn around Aurizon bulk business

Wins on the Mount Isa corridor and at Townsville port have helped rail giant Aurizon turn around its bulks business.

In its annual report today the company said its bulk business achieved EBIT
of $90 million last financial year, after being in a loss-making position three
years ago.

Contract wins include South32 Cannington (11-year extension to 2032 on the Mount Isa corridor), Incitec Pivot (new contract commencing January 2020 on the Mount Isa corridor), and BGC (new contract commencing June 2020 on the Kalgoorlie Freighter).

During the year, Aurizon Bulk completed the acquisition of Townsville Bulk
Storage and Handling which operates bulk transport, handling and stevedoring services in North Queensland.

The company said the acquisition, for a consideration of $24.8 million, allowed it to extend supply chain services beyond its core rail capability on the Mount Isa line corridor, connecting the Port of Townsville to the commodity-rich North West Minerals province.

“The turnaround of the operational and financial performance of the bulk business is continuing strongly and ahead of plan, with new customer contracts and ongoing efficiency improvements,” Aurizon managing director and chief executive officer Andrew Harding said.

“The company initiated a turnaround plan in 2017 following a strategic review of the loss-making freight business.”

The company – which also operates the Central Queensland Coal Network (CQCN) – reported slightly lower coal volumes than anticipated in the past year as the COVID-19 pandemic impacted demand in Asia and on the Indian sub-continent.

The coal business delivered 214 million tonnes of coal for customers during FY2020, which was broadly in line with FY2019.

Contract wins during FY2020 included: Peabody (extension of all
existing volumes and new business on the CQCN and NSW); Coronado (contract variation with additional volumes and term extension for
Curragh mine, CQCN), Bluescope (commenced railings in April 2020 installing Aurizon into the Illawarra region. NSW).

Tonnages carried across the CQCN in FY2020 were 229 million tonnes, compared to 234 million tonnes in FY2019, a decrease of 2 per cent.

Across the board Aurizon delivered $909 million in Earnings Before Interest and Tax (EBIT) in FY2020, in what was described as a solid result given the uncertain business environment that unfolded in recent months.