Malcolm Turnbull and the Australian Rail Track Corporation have announced a 600km East-West rail replacement program will be brought forward, and have positioned South Australian steelmaker Arrium to provide material for the upgrade from its facility in Whyalla.
Arrium, formerly BHP Billiton spin-off OneSteel, has been battling through a slumping commodities sector which saw it shut down its Southern Iron mining operation last year.
But Prime Minister Turnbull and ARTC chief executive John Fullerton said Arrium should get a boost, should it win the contract to supply steel to upgrade the 600km section of ARTC track between Adelaide and Tarcoola – representing 1200km of track to replace.
While South Australian treasurer Tom Koutsantonis emphasised there would still be a contract process, Turnbull and the ARTC said last week said Arrium would help replace decades-old rail with steel weighing 60kg per metre, compared to the current 47kg per metre.
New rail will increase maximum axle weight from 23 tonnes to 25 tonnes at 80km/h along the crucial stretch.
Tarcoola, in the far north of South Australia, is the junction of the Sydney-Perth and Adelaide-Darwin railways.
The section of track between Adelaide and Tarcoola is considered part of the ARTC’s East-West Corridor, but also serves as the first section of the rail connection between Adelaide and Darwin.
Arrium managing director Andrew Roberts praised the announcement from Turnbull, who toured the Whyalla Steelworks on March 9.
“The prime minister’s recognition of the key role Arrium plays in employment and growth in the region is encouraging,” Roberts said.
“The Whyalla Steelworks is ideally placed to supply the rail and sleeper requirements of this project and the additional volume will help the steelworks.”
Roberts said he spoke with the prime minister about the steelworks’ uneconomic position at current steel prices, saying the company needs to change the way it does business to keep the operation viable.
“This will require all our key stakeholders including employees, contractors, external partners and government to pull together and deliver this change,” he said.
“We are looking to do everything possible to enable both our Steelworks and Mining businesses to be viable and sustainable.”
South Australian treasurer Tom Koutsantonis said the announcement was good news for the local company.
“We have been working closely with the minister for industry, innovation and science Christopher Pyne on this very action and we welcome today’s news and acceptance of this proposal,” he said.
“Historically, Arrium has supplied high-quality rail to the Australian Rail Track Corp which manages more than 8,500 kilometres of infrastructure in this country.
“By bringing forward this investment, Arrium will be in a position to bid to supply rail from its Whyalla Steelworks, improving the profitability of the company’s steel division.
“The ARTC estimates this upgrade to be about $80 million of rail, which can be smelted and provided by Arrium should it win the contract.
“The contract would provide Arrium with substantial revenue during this period of low steel prices.”
The rail upgrade was welcomed by Australasian Railway Association boss Danny Broad.
“The replacement of over 1200km of freight rail line between Adelaide and Tarcoola is set to significantly boost freight productivity for the state,” Broad said.
“The major upgrades will create jobs in South Australia, through the production of steel, the laying of the rail, sleepers and ballast.
“These upgrades are set to advantage freight productivity locally in South Australia as well as the national freight network.”