Gindalbie Metals is poised to secure national transport providers QR to exclusively provide long-term bulk rail haulage services for its Karara iron ore project in the Mid West.
Gindalbie Metals is poised to secure national transport providers QR to exclusively provide long-term bulk rail haulage services for its Karara iron ore project in the Mid West.
Gindalbie this morning said in a statement tha it had signed a heads of agreement with QR's national bulk freight haulage business, QR Freight.
Under the agreement, QRF will be the exclusive provider of rail operations for the initial tonnages of magnetite concentrate (8Mtpa) and Direct Shipping Ore (up to 3Mtpa) to be produced by the Karara Project.
The HOA represents a key step towards finalising a separate Rail Haulage Agreement with QRF which is expected to last 10 years. This long-term agreement will have options for future growth and expansion tonnages to accommodate the potential growth of the Karara Project to a production capacity of 30Mtpa.
Construction commenced at Karara last year and is progressing on schedule with approximately 200 personnel currently on site. Karara, which is located 500km north-east of Perth and 225km east of Geraldton, is the Mid West region's largest resources project and is being developed as an integrated iron ore project under a 50/50 joint venture between Gindalbie and leading Chinese steel and iron ore company, Ansteel.
The agreement with QRF covers the full rail distance of approximately 300km from the Karara mine site to the port of Geraldton and encompasses bulk haulage transport operations both on the new 85km spur line to be built from Karara to Tilley Siding, near Morawa, and on the existing narrow gauge railway line that runs from Morawa to Geraldton.
The future growth options will include the opportunity to dovetail the expansion of the Karara Project with the availability of new Port and Rail Infrastructure to be developed by Oakajee Port and Rail ("OPR").
The HOA also covers an Early Works phase where QRF is providing:
the design of a Rail Operating Plan to determine the optimal size and frequency of rail operations;
the specification, modification and certification of locomotives to meet KML's requirements;
the design, specification and construction of rail wagons to meet KML's requirements; and
the provision of personnel, support and maintenance services for the rolling stock to ensure that the greatest possible efficiencies are realised from the rolling stock.
Gindalbie's Managing Director, Mr Garret Dixon, said QRF was selected on the basis of their strong presence in Western Australia through its business Australian Railroad Group (ARG) and significant experience in operating and maintaining bulk freight haulage services.
"This is potentially one of the largest individual long-term contracts which will be awarded for the Karara Project, with a value of several hundreds of millions of dollars over the initial 10-year period," Mr Dixon said. "Under this contract we will secure the transport of our iron ore products initially through Geraldton and then to Oakajee Port when it becomes available."
"We are very pleased to have on board one of the largest and most experienced bulk rail freight operators in the country. We have now established a strong framework agreement and a relationship that will form a key part of the Karara Project development and operations for many years into the future," he added.
QR - one of Australia's largest integrated transport providers, generating almost $4 billion per annum in revenue - acquired the ARG business from a consortium of Wesfarmers/Genesee and Wyoming in 2006. ARG hauls a range of bulk commodities for Australia's primary industries and mining sectors, railing approximately 60 million tonnes of freight in bulk including iron ore, minerals, and agricultural products.
QRF Executive General Manager Ken Lewsey said involvement with KML cemented ARG's position as an export enabler in Western Australia.
"Karara is a significant project for this State. It represents the first phase of developing the Mid West as the State's second iron ore province and, as the first of the foundational projects for Oakajee to come on stream, will help drive the delivery of Oakajee infrastructure," Mr Lewsey said.
"ARG is the largest haulier of iron ore in Australia outside the Pilbara region, and we welcome a long-term partnership with KML as an important component of our future operations."
QRF will form part of the proposed multi-billion dollar float of the QR National coal, freight and infrastructure servicing business. The Queensland Government recently announced the appointment of five investment banks to manage this IPO, which is expected to be Australia's largest public share offer this year.
The Queensland State Government is separating its QR passenger business together with QR rail network other than the central Qld coal system ("Queensland Rail") from the current QR Limited entity. The remaining "QR National" business will include both the current coal and freight haulage businesses together with the central Queensland coal network business. The Government is only proposing to publicly list the QR National business and will retain ownership of the separated Queensland Rail business.
