QUEENSLAND rail giant QR National is eyeing Western Australia’s booming iron ore sector as a major growth driver after it completes its proposed $7 billion float in November.
QUEENSLAND rail giant QR National is eyeing Western Australia’s booming iron ore sector as a major growth driver after it completes its proposed $7 billion float in November.
The float will easily be Australia’s biggest this year, with the Queensland government expected to retain 40 to 25 per cent of QR National, the business it created to house Queensland Rail’s non-passenger rail services in July.
That should see the float return up to $5.25 billion to the Queensland government.
With annual turnover of around $3 billion, QR National is the nation’s biggest rail services provider to the coal sector. Though coal will remain its core business, the group believes its WA arm has the potential to become its fastest growing division.
Queensland Rail has owned WA’s biggest rail freight operator, ARG, since 2006 and it is now the key subsidiary of the group’s QR National Freight arm. ARG currently hauls 45 million tonnes of iron ore, bauxite, mineral sands, grain and general freight annually in WA, equal to three quarters of the freight division’s total annual tonnage.
QR National managing director Lance Hockridge said he saw tremendous upside for the group in WA as the state’s mining industry, iron ore in particular, continues to expand.
“The advantage of having ARG in our portfolio is that it represents both geographic and product diversification for us … but also goes back to the same heartland in terms of what’s driving the growth,” he told WA Business News.
“The iron ore opportunity is especially significant for us because in proportionate terms, it is probably the largest growth opportunity we’ve got.”
QR National Freight chief executive Ken Lewsey said with the “elephant in the room” of Queensland government ownership about to be removed, the business would have far greater flexibility to invest outside of Queensland.
“With the IPO, that elephant departs, and the best projects will get up,” he said. “We’ve been working very hard with this in mind for several years developing a portfolio of opportunities, particularly in the iron ore space.”
ARG is currently the biggest carrier of iron ore outside of the Pilbara, hauling 11 million tonnes last year from US miner Cliffs Natural Resources Koolyanobbing operations and Mt Gibson Iron’s Mid West mines.
It has since struck a deal to haul ore from Gindalbie Metals’ Karara iron ore project south-east of Geraldton, and expects to strike new contracts as other mines proceed, especially in the Yilgarn and Mid West.
Mr Lewsey said ARG would also look at involvement in the Oakajee rail project once developer Oakajee Port & Rail completes bankable feasibility studies on the $4 billion infrastructure development in the next few months.
