Monday 18th Jun, 2018

Anglo boss slams “unacceptable” Aurizon cuts

Aurizon is feeling the force of struggling coal and iron ore markets. Photo: RailGallery
Photo: RailGallery

The new chief executive of Anglo American’s met coal business has criticised rail operator Aurizon for cutting capacity by changing its maintenance scheme on the Central Queensland Coal Network.

In his first public interview, the miner’s new coal boss Tyler Mitchelson told The Australian Aurizon’s conduct would not only hurt the industry, but the nation.

Aurizon has made cost-cutting changes to how it maintains the CQCN, claiming it is being forced to do so by a draft decision from the state’s competition authority, QCA.

QCA’s draft decision, which is yet to be finalised, dictates the amount of revenue Aurizon is allowed to earn from the CQCN as its monopoly operator.

QCA and Aurizon have been in dispute for some time over a gap of $1 billion in terms of what Aurizon thinks it should be allowed to earn, and what the QCA will allow it to earn.

A key figure in the QCA’s calculations is maintenance spending. The authority has told Aurizon its maintenance spending is inefficient, but Aurizon has said its expensive maintenance methods are designed to maximise capacity on the network, by being flexible to miners’ needs.

Despite the fact it is disputing the QCA’s draft decision, Aurizon has decided to make changes to its maintenance scheme before the final decision is handed down, holding the opinion that the QCA is unlikely to budge from its draft choices.

And now Mitchelson has joined the ranks of Aurizon’s mining customers who are upset with maintenance changes which are cutting the annualised capacity of the CQCN by at least 20 million tonnes.

“The uncertainty is a huge, huge concern for us right now,” Mitchelson was quoted in an interview with The Australian.

“They have introduced complete and utter certainty so you don’t know which rail line and which capacity is going to be affected and when.”

Labelling the operator’s conduct “completely unacceptable,” Mitchelson said Aurizon owes it to the mining sector to wait until the final decision is handed down by the QCA.

“There’s a regulatory process, so follow the process,” he reportedly said.

“At some point when this is all resolved we have to go back and understand how do we prevent this type of thing from happening again and prevent these behaviours.

“To have a monopoly network and react the way they have hurts the industry, it hurts the state and it hurts the country.”