Post on 20-Aug-2015
Heavy Haul Rail Conference
31st July 2013
Simon Smart
Vice-President Rail Assets and Operations Development
Unlocking Queensland coal reserves through the joint development of rail
and port infrastructure
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Introduction to Aurizon
Global Coal Markets & Logistics
Aurizon’s Galilee Solution
Questions
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2
3
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Today’s Presentation
Aurizon bulk operations
Aurizon rail network
Track Aurizon does not own/operate
Queensland Bulk, regional freight and
intermodal
Queensland Coal Operations
New South Wales Coal Operations
North – South Intermodal
East – West Intermodal
Western Australia Bulk & Freight
Queensland Coal Rail Network
Aurizon is Australia’s largest rail freight transporter
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*as at 1 June, 2013
• Australia’s largest rail
freight hauler
• Top 50 ASX-listed
company
• Market capitalisation of
>$9 billion*
• More than 100 sites
across Australia
• Employing more than
8000 people in hundreds
of communities across
Australia
• We move products worth
more than
$50 billion in export
earnings every year
Aurizon:
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• The worlds largest
rail transporter of
export coal from
mine to port
• Hauls on average
>500,000 tonnes of
coal each day,
hauling over 180
Mtpa
• Hauls 60 Mtpa of
bulk minerals and
commodities
including Alumina,
Bauxite, Nickel,
across road and rail
• Supply chain
solutions
• 18 strategically
located
maintenance depots
across Australia
• Operates the 2,670
kilometre open
access Central
Queensland Coal
Network (CQCN)
• Construction of
Brownfield and
Greenfield rail
expansion projects
• Additional network
and rollingstock
services
• First third party
haulage provider to
the iron ore industry
in Western Australia
• Headquartered in
Perth with six iron
ore depots across
Western Australia
• Hauling near to
20 Mtpa of iron ore
across 1,300km
of track
Aurizon operates nationally across four main business areas
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Aurizon operates in one of the world’s largest and most complex bulk
heavy-haul supply chains
Central Queensland Coal Network
• 145 years of experience
• More than 50 coal mines
• 2,700 km of common user track
• 5 independently operated export
terminals
• Responsive to fluctuating export
demand
• Manages within regulated
environment
• Copes with extreme weather
events
Overview
Coal demand growth will be largely driven by economic growth in China and India
Attractiveness of Australian Coal
Source: Wood Mackenzie 2013
Despite challenging short term conditions, demand for seaborne
thermal and metallurgical coal is projected to more than double by 2030
Key
China India
SE Asia
NE Asia Europe
Rest of World
2012a 2030f
-22% +270%
+340%
+305%
+6%
+91%
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Australia has some of the most competitive bulk commodity supply
chains in the world
$24
$0
$6
$36
$30
$12
$18 35
36
24 20 19 18
12
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2013 Metallurgical, Thermal & Iron Ore Transportation Costs – Leading Export Countries1
Australia
Tra
ns
po
rt C
as
h C
ost
(US
$ p
er
ton
ne
– n
om
ina
l d
olla
rs
Source: Wood Mackenzie Cost & Margin Tool 2013, February 2013 dataset & Internal Analysis, CRU 1 Australian transport cash costs are a weighted average between Aurizon and Australian contestable and non-contestable costs
• Facing challenging global economics
• Cutting costs and increasing productivity
• Focussing on remaining globally competitive
• Large scale and complex Greenfield and Brownfield projects
• Rising capital costs in slowing markets
• High Australian Dollar
• Operating within highly regulated rail and port environments
• Creating alignment across disaggregated supply chains
• Improving operational efficiency to maximise throughput
Enabling growth in the current Australian market remains challenging
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Customers
Costs
Capability
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•The most advanced port
development in QLD
•Majority of environmental
approvals secured
•Realisation of rail-port
efficiencies
Creating one of the worlds largest co-ordinated coal development
projects to unlock and sustain Galilee growth
Rail Port
•Combination of two advanced
Galilee projects:
•Central Queensland
Integrated Rail Project
•GVK Rail Project
•Construction of multi user rail
infrastructure
• Innovative technologies to
improve operational efficiency
• Infrastructure optimisation to
increase system capacity
•Above and below rail
innovations maximise
throughput efficiency
Asset Innovation
Potential Aurizon/GVK Partnership
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Taking advantage of scalable infrastructure to improve
capital efficiency is the key to unlocking new basins
» Connects the most advanced Galilee mines
with Queensland ports
» Combines Aurizon’s CQIRP with GVK Rail
» Staged development aligned to mine ramp-up
» Consolidate Galilee tonnes along a single
corridor
Proposed Aurizon and GVK Greenfield
*Indicative map only – not to scale
CQIRP Brownfield Upgrade
GVK South to North Alignment
Existing Rail Line
CQIRP Greenfield
LEGEND
Alpha
China First
Kevin’s Corner
Degulla
Carmichael
China Stone
Proposed Rail Corridors
RAIL
» Highly scalable for future growth
» Significantly reduces capital intensity
» Reduces environmental and community
impact
CQCN Brownfield
Expanding the Brownfield CQCN is a commercially sensible
solution to facilitate staged growth in the Galilee C
ap
ita
l E
xp
en
ditu
re (
$M
)
>$1bn
Y5 Y4 Y3 Y2 Y1 Y0
Greenfield Standard Gauge
CQIRP Brownfield-Greenfield
Ability to stage investment to
match mine ramp-up volumes
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Below Rail Capital Expenditure Comparison for the Galilee Basin
Year
RAIL
Longer Trains New
Generation Rollingstock
Higher
Axle Loads
Increased Grade Easing
Signalling
Technology
Technology Optimisation
Extracting higher value from existing assets creates extra
capacity and lifts efficiency
Lower unit cost/NTK
Aligning Above and Below Rail Capex
Reduced Infrastructure
Costs
Efficient use of capital
Reduce Operating
Costs
Train lengths from 2km to
4km
Increase system capacity
Payloads from 10,000t to
20,000t
More powerful locos
Reduced number of locos
per consist
Increased train capacity
Track upgrades from 26.5 TAL to
30 TAL
Track capable of handling heavier
payloads
Increase grade easing
Increased fuel efficiency
Extending the life of assets by
lowering wear and tear
Latest scheduling systems
Driver assist technology
Trackside condition
monitoring maintenance
In-Cab signalling
Minimises trackside signalling
requirements
Improved communication
systems
1 2 3 4 5 6
INNOVATION
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Aurizon’s Galilee solution will provide projects with a lower unit
cost across a range of production ramp-ups and peak tonnages
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Payloads from 10,000t to 20,000t
Tonne Axle Loads from 26.5 TAL
to 30 TAL
Technology Optimisation
Source: Aurizon Team Analysis
90 60 30
CQIRP Brownfield-Greenfield
Greenfield Standard Gauge
Target Throughput (Mtpa)
Un
it C
ost/
To
nn
e
Note: Key variables ramp-up profile, discount rate
Indicative Rail Unit Cost Comparison for the
Galilee Basin
New Generation Rollingstock
Key Aspects of Aurizon Solution
INNOVATION
Increased Grade Easings
Train lengths from 2km to 4km
(Double Goonyella length)
The Port of Abbot Point represents enormous opportunity for
the Bowen and Galilee Basins
The Abbot Point Opportunity
» Staged development of coal, minerals and
freight terminal infrastructure
» Deep water access and scalable footprint
» Alignment of rail investment and
operations
» Proposed Aurizon and GVK joint
development of 60mtpa Terminal (T3)
» Aurizon and Lend Lease Join Proposal:
NorthHub Consortium
» NorthHub announced as a Preferred
Proponent for AP-X development (T4)
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Updated
map from
Ruby6
Queensland Ports
T3 Port
T4 Port
PORT
Coordination across the supply chain provides opportunity to maximise
value returns for all proponents
Align capital
management
ALIGNED SUPPLY CHAIN OPERATING MODEL
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Integrate planning &
scheduling
Align contractual
obligations
Optimise supply
chain design for
effective
deployment of
capital
Improve asset
utilisation for
reduced cycle times
and system
congestion
Common incentives
linked to supply
chain performance
to maximise
throughput
Aurizon has plans to run longer trains (4km) with heavier payloads (>20,000t) enabled by a series of innovations
Staged development that extracts maximum value from existing rail assets, is required to unlock this growth in Queensland
Long term coal market fundamentals remain robust with demand from China and India to drive future coal growth
The alignment of rail and port development and operations to Abbot Point presents an enormous opportunity for Queensland Coal that
Aurizon is excited to participate in
Recap
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