Aurizon disputes Wiggins Island financial exposure reduction notices
PERTH (miningweekly.com) – Freight and infrastructure heavyweight Aurizon was disputing notices from seven of the eight Wiggins Island rail project customers to reduce their financial exposure to the rail project.
Aurizon said on Monday that the notices detailed that the seven customers had exercised their right under a 2011 agreement to reduce their financial exposure to the A$831-million project.
Under the initial agreement, Aurizon subsidiary Aurizon Network was to receive certain payments, which would deliver an above-regulatory return on its investment in the rail project, in return for the subsidiary agreeing to develop the project on time and at lower-than-forecast costs, both of which were achieved.
Aurizon said the notices, if valid, would result in a substantial reduction of the regulatory return component of project revenue that Aurizon Network would receive under the project deeds.
It was expected that the financial impact could be as high as A$27-million a year in earnings before interest and taxes (Ebit), over the 19.5-year life of the regulatory return component.
For 2015, the impact of the notices would reach a maximum of A$10-million in Ebit.
Aurizon delivered the first rail for the Wiggins Island project in April, with trial coal shipments having started in May.
The eight signatories to the rail project were Yancoal Australia, Wesfarmers Currach, Cockatoo Coal, Northern Energy Corporation, Xstrata Coal (now Glencore), Aquila Resources, Bandanna Energy and Caledon Resources.
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