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Aurizon chief Lance Hockridge not done shaking up rail giant
While the Indian energy giant resurrected hopes it could deliver its long-awaited mega-mine in Central Queensland by announcing on Thursday it was scaling back its rail link to save $1.5 billion, the company is still yet to find the finance to deliver the project.
But industry insiders have been buoyed by the new direction under Adani Mining boss Lucas Dow and there is hope the final investment decision can be made by the end of the year.
Adani has become a lightning rod for environmental activists. Dan Peled/AAP
Instead it will build a lower-capacity $1 billion, 200-kilometre narrow gauge link that will connect into Aurizon's existing Goonyella and Newlands rail network.
Queensland Resources Council chief executive Ian Macfarlane said it was a "common-sense solution" and the quickest way to get the project completed.
"The world is crying out for our commodities, with high prices for coal. It makes sense to find the most practical way to get our resources to market, because our exports deliver for every Queensland," he said.
Potential death knell
Aurizon had put its own $1.5 billion rail link to the Galilee Basin on the backburner this year, withdrawing its application for funding from the federal government's $5 billion Northern Australia Infrastructure Facility.
Aurizon chief executive Andrew Harding said at the time that it supported the development of the frontier Galilee Basin, but there did not seem much point to pursue the NAIF application if it had not secured any contracts to deliver coal.
"Our NAIF application is, in part, predicated on having customer contracts secured. Given this is unlikely to occur in the near future we believe it is prudent to withdraw the NAIF application," Mr Harding said in February.
But the revival of Adani's Carmichael mine and rail project, especially the decision to change rail gauges and link it to Aurizon's existing network, could be the final death knell for Aurizon's rail project.
If Adani is the trailblazer to open up the Galilee Basin, other project proponents – such as GVK/Hancock Coal and Clive Palmer's Waratah Coal – would be expected to follow. Mr Palmer announced this week plans to build a $1.5 billion ultra supercritical coal-fired power station adjoining his planned mine.
All those multibillion-dollar projects are likely to use the Adani mine, then Aurizon rail networks to get coal to the coast. As a regulated asset, Aurizon would get to "clip the ticket" and it would be a new revenue stream for the company.
Mr Dow told AFR Weekend he was hoping other companies would use the scaled back 200-kilometre rail link that is being built to have a capacity of 40 million tonnes. This would easily cater for Adani's 27.5 million tonnes coming out of Carmichael mine.
Mr Dow said there was scope with the addition of passing loops to boost the capacity of the rail link out of the Galilee Basin.
This article first appeared on www.afr.com
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