The MCG distributed a media release on Monday saying Aurizon’s Central Queensland Integrated Rail Project had failed to meet government deadlines, placing further doubt on speculative Galilee Basin coal export plans.
The CQIRP would have linked proposed coal mines in the Galilee Basin with the existing Aurizon rail infrastructure, and is part of proposed co-operation between Aurizon and GVK Hancock to transport coal from the controversial Alpha coal mine, the MCG reported.
“The company had until September 20 to produce an environmental impact statement for the project and has failed to do so,” MCG community organiser Moira Williams said. “They have now lost their status as a ‘co-ordinated project.”
She said the project was mentioned in a non-binding agreement between Aurizon and GVK announced in March last year.
“We have seen no movement on the ground for over 18 months and coal prices remain low. Both Aurizon and GVK have questions to answer about how serious they are about progressing these projects, as the lapsing of the CQIRP suggests they are walking away,” Williams said.
“GVK Hancock were always reliant on Aurizon bringing $2-3 billion to the table to build the rail line. But last month, Aurizon announced they would delay any decision on its proposed joint venture with its Indian partner till early next year, and possibly for a year after that.”
She was referring to a report in the Australian Financial Review on August 19 that Aurizon CEO Lance Hockridge had confirmed the rail group would consider selling a stake in its Queensland tracks as it reported a 43% fall in annual net profit to $253 million.
“‘Most of the coal deposits in the Galilee Basin were bought based on the assumption that India's energy demands would ensure a ready market for the coal,” Williams continued.
“But with world coal prices continuing to fall, the commercial viability of the projects have been called into serious question.”
She said Deputy Premier Jeff Seeney “jumped the gun” giving companies the power to compulsorily buy up land for these rail lines “at a time when these projects are becoming increasingly unviable”
However, Aurizon was unequivocal that there was “no change” to the company’s plans to develop rail and port infrastructure to support future mines in the Galilee Basin, and that claims to the contrary were “misguided and misinformed”.
“In fact Aurizon continues to work with the Queensland government in regard to the approval of the expansion of its existing Newlands System under the Galilee Basin State Development Area which has been declared for the development of integrated rail corridors between the Galilee Basin and Abbot Point,” the company said.
“This work formed part of the previously declared Central Queensland Integrated Rail Project (CQIRP) for which an EIS was drafted.
“As recently as Friday, we acknowledged this change in process and welcomed the government’s initiative in progressing with the State Development Area, as the key state mechanism in the regulation of development of necessary infrastructure to service this important area.
“Aurizon is continuing to proceed with the preparation of an EIS under the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 for the brownfield expansion of the Newlands System in accordance with guidelines issued by the Australian government in May 2012.”
The company added that it was also continuing positively in discussions with GVK Hancock towards a transaction to secure majority ownership (51%) of GVK rail and port project including the current approvals by early next year.
For its part, GVK confirmed yesterday that it was continuing to finalise its proposed JV with Aurizon to connect its Galilee Basin coal assets to export markets.
“The development of the Galilee Basin represents one of the most significant pieces of regional and economic development Queensland has seen for decades and we remain firmly committed to finalising our joint venture proposal with Aurizon and continuing to advance our projects to a point where construction can start,” the company said yesterday after receiving a flood of calls following the MCG’s statement.
“This proposed transaction will provide development certainty for the rail and port projects and de-risks the Alpha coal project from a logistics point of view. The transaction will also provide a pathway for sufficient equity and debt funding for the rail and port projects to reach financial close.
“We are in the process of finalising this joint venture agreement.”
GVK recently started a ‘material change of use’ application for the 310km first stage of its rail corridor, following years of extensive planning and hydrological assessments in development of infrastructure along our proposed rail corridor.
The MCU application is the next step in finalising planning for the rail infrastructure development and follows on from the granting of state environmental approval in May 2012, federal environmental approval in August 2012 and the granting of the Galilee Basin State Development Area in June 2014.
