Railway robbery as Aurizon plans to hike coal rail prices

AURIZON'S proposed tariff hike for its coal rail network would slug mining companies an extra $1.2 billion over four years, QRC boss Michael Roche says.

Mr Roche has hit back at the rail network provider, saying the resources council is "prosecuting the coal industry's concerns with vigour through the Queensland Competition Authority and the Queensland Government".

The resources industry says the recently privatised Aurizon was clearly working in a "significantly different operating environment to its major customers".

In a draft submission to the Queensland Competition Authority (known as the 2013 Undertaking or UT4) Aurizon submits its tariffs should rise by an average of 36% on a dollar per net tonne basis compared with the last year of the 2010/UT3 undertaking.

Mr Roche said Aurizon was also seeking regulatory approval for excessive returns despite being exposed to less commercial risk and the removal of previously hard-won protections against monopoly power under UT3 and previous undertakings.

"This proposed hike in prices comes at a time when coal companies are cutting their discretionary costs deeply in a bid to restore some semblance of profitability or at least minimise losses in the face of weak prices for coal," Mr Roche said in his State of the Sector September quarter report.

"If approved, Aurizon's pricing proposals would add $1.2 billion of additional costs on coal companies using the Central Queensland Coal (rail freight) Network over the four years from 2013-14."

He said if the draft undertaking was not substantially revised through negotiation or regulation, the competitiveness of the coal industry's current operations and future investment pipeline would be severely compromised.

"Investors will not risk an environment where monopolistic powers of a key supplier are unchecked," Mr Roche said.

"They have every right to seek a stable, certain and fair operating environment in Queensland."

Topics:  aurizon coal michael roche queensland resources council resources

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