Investors are set to question rail operator Aurizon’s growth options at the company’s half-year results presentation, after key iron ore client Cliffs announced it would likely shut its WA operations this year.
Aurizon boss Andrew Harding, who orchestrated the company’s exit from the freight rail business last year, will face questions from investors concerned over what options the company has for future growth at the upcoming presentation, according to several reports.
The reports follow last month’s announcement by US-based iron ore miner Cleveland-Cliffs, that it would likely exit mining operations in Australia during the calendar year.
Cliffs is Aurizon’s largest iron ore client, exporting product from its Koolyanobbing mine from a processing facility at Esperance Port on WA’s south coast.
Meanwhile, on the east coast, Aurizon is drastically at odds with the Queensland Competition Authority over how much money it’s allowed to make via its operation of the Central Queensland Coal Network.
Aurizon said in December it “will consider the full range” of options to challenge the QCA’s draft access framework to cover the network until FY21.
The state competition authority’s calculations come to a maximum allowable revenue (MAR) for Aurizon of $3.893 billion over four years, some $999 million below the MAR calculated by Aurizon in its submission and, “implausibly,” $40 million below the final MAR calculated for the previous access undertaking.
Aurizon said the QCA’s proposal would have a “significant” impact on efficiency, capacity and reliability, if it was not fixed.
With Queensland network operations up in the air, iron ore drying up, and freight now out of the picture for Aurizon, investors have reportedly grown concerned over a lack of growth options.
Harding will reportedly be asked for his assessment of the company’s chances against Pacific National in a series of upcoming coal haulage contract renewals in New South Wales.
Since hitting its two-year peak of $5.44 a week before QCA’s draft document was released in December, Aurizon’s share price has slipped to an opening price of $4.59 on Wednesday.