PERTH (miningweekly.com) – A group of coal miners on Wednesday made a cash offer of A$4,85-billion to buy the Queensland Rail (QR) coal track network.
Nick Greiner, the chairperson of the Queensland Coal Industry Rail Group (QCIRG), said that the fully funded offer made by the 13 coal producers, including BHP Billiton and Rio Tinto, represented a substantial premium to what was likely to be achieved under the government’s proposed initial public offering (IPO).
“Our offer is able to be settled with the government prior to the IPO, and will not be dependent on volatile equity markets, removing major risk for the state while also providing early settlement,” Greiner said.
In March, the Queensland government announced plans to sell QR’s coal, freight and infrastructure servicing businesses through a A$3-billion IPO by the end of the year, while it would retain ownership of the passenger service business and assets.
But miners argued that a privatisation model was not in the interest of the coal sector, as it could potentially limit investment in new rail capacity needed to grow the sector.
Greiner said that the QCIRG had considered the alternative model under the IPO and associated regulation and legislation, and believed that it did not represent an optimal basis for assuring the future of the state’s major export industry.
“The QCIRG offer has four goals; to encourage fair and open access, optimise network performance, enable early system expansions, and encourage rail haulage competition, all with flow-on benefits through enhanced investment, employment and royalties.”
He added that the group’s gearing would also provide headroom for financing of the high-growth requirements across the coal track network. The group has secured an acquisition facility of A$1,35-billion, as well as havin committed to a capital expenditure facility in excess of A$2,05-billion to fund the current QR capital plan and catch-up maintenance.
The QCIRG offer excluded QR’s above rail rolling stock assets, and the freight business, but included the central Queensland track network covering four systems and the Goonyella and Abbot Point expansion, which were used predominantly by the coal industry.
Under the offer, the Queensland government would have the option to separately consider arrangements for the QR haulage business.
The Queensland Resources Council (QRC) on Wednesday stated that the offer by QCIRG “ticks all the boxes” for the state government and taxpayers.
“The bid, on behalf of the companies producing 98% of Queensland’s coal exports, ticks all the boxes not only in terms of locking in a compelling financial result for the state government, but also in ensuring that the interests of smaller producers, new entrants and other industries using the central Queensland coal rail network are protected,” said QRC CEO Michael Roche.
Roche said that the coal industry proposal, which included the federal government-owned Australian Rail Track Corporation as the independent network operator, would ensure timely new investment in the network as well as open competition among rail freight companies, including QR National.
“With uncertainty hanging over the world’s stock markets, the state government has been given a gilt-edged opportunity to reconfigure its QR National asset sale plans while underpinning the future growth of the state’s leading export industry,” Roche said.
Meanwhile, Greiner said that the coal industry recognised that the offer was being made a time of “great uncertainty” over the future taxation arrangements because of the proposed super profits tax.
“QCIRG assumes that the proposed tax, if implemented would not apply to infrastructure or the operations of QCIRG and that a sensible outcome can be achieved with the commonwealth government on any tax on resources, such that the industry’s growth ambitions can still be realised.”
Greiner added, however, that the industry was in any event compelled to protect its existing coal business through direct ownership of the coal rail network infrastructure.
“The industry cannot be exposed to operational and financial risk from network ownership and operation not aligned with industry objectives,” he said.
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