Common parts needed to reduce WA railcar cost

Heavy rail users need to standardise parts if they want railcar manufacturing in Western Australia to become cost-competitive with Chinese imports, according to the nation’s peak railway lobby group.

Australasian Railway Association rail freight and heavy haul general manager Georgia Nicholls said common parts and reducing the need for diesel were among the key challenges in need of addressing by a new industry collaboration.

Ms Nicholls’ comments came as the state government revealed it would tip about $1 million into a Karratha-based railway collaboration centre bringing the industry’s best minds together to improve efficiency and drive down costs in the sector.

“If we want to localise the supply chain, diversify the people that are involved in the rail sector and become more efficient in the way we are doing things, particularly as we aspire to get to a green future and rail operations, it is critical that those facilities are local,” Ms Nicholls said.

“If we can get these big rail operators to be more standardised in their approach to operations, and therefore the kind of equipment and components that they rely on, it delivers the kind of scale we would need in order to achieve local industry at a competitive price.

“The differences are not huge, but they are material enough that you couldn't tool up to make one product for all of them.”

WA’s major heavy rail users – BHP, Rio Tinto, Fortescue, Roy Hill and Aurizon – have agreed to work with the CORE Innovation Hub-run rail centres in Perth, Karratha and Newman.

The office would serve as a research hub where ideas can be tested with an aim to increasing the local input into railcar manufacturing and maintenance.

BHP and Rio Tinto have both embarked on projects to assemble Chinese-built railcar flatpacks locally.

Assistant State and Industry Development Minister Stephen Dawson said other rail operators had indicated a desire to build railcars locally too.

“Rio has already committed to manufacturing trains locally, as have BHP, and … we continue to have conversations with the other stakeholders,” he said.

“With some of the projects that are planned for the Pilbara [such as] the renewable energy hub that's planned over the next few years, if we are able to increase our energy generation such that the price of energy drops substantially, there won't be the same cost differential between us and some of the overseas manufacturers.”

In June, Rio Tinto committed $150 million to Gemco Rail to find a site in Karratha to build a manufacturing and maintenance hub.

Rio Tinto rail general manager Matt Baartz said standardisation of parts would create economies of scale to drive down manufacturing costs.

“The collaboration centre is a great opportunity to build greater standardisation across, particularly, the four heavy haul railways in the in the north-west,” he said.

“(Wednesday) has been the culmination of four years of hard work… where industry and particularly the heavy haul railways in the north-west can work together to solve for really challenging opportunities, like how do we achieve net zero, together.”

A WAToday report in August revealed WA’s railcar manufacturing was unable to compete with China despite having millions of dollars poured into it by the state government.

That report came off the back of a CBH Group tender for 650 grain wagons awarded to Chinese firm CRRC Meishan, with cost and capacity cited as key reasons to turn down local applicants which could draw on government funds.