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Aurizon coal volumes fall in 4Q15

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World Coal,

Australian rail freight operator, Aurizon, saw a 5% fall in coal volumes in the last three months of last year compared to the same period in 2014. Total tonnage handled was 51.8 million t compared to 54.8 million t in 4Q14.

Queensland coal volumes – which comprise the majority of the companies coal business - were particularly hit, falling 8% in 4Q15 to 40.3 million t with the company blaming increased competition from BMA Rail and the loss of a 2 million tpa contract with Anglo American’s German Creek mine.

BMA Rail is a division of BHP Mitsubishi Alliance, the world’s largest suppliers or seaborne metallurgical coal, and runs trains from the BMA mines in the Bowen Basin through the Goonyella rail system to the BMA export terminal at Hay Point.

BMA followed Glencore in operating its own trains, a strategy that increases a mining company’s flexibility to cut production without being penalised under traditional take-or-pay contracts with a third-party rail operator.

In contrast, Aurizon’s New South Wales coal volumes were up 6% to 11.5 million t compared to 10.9 million t in 4Q14 on the back of new contract with Whitehaven coal.

Overall, the company lowered its coal guidance to 202 – 212 million t for the financial year to June 2016 from 210 – 220 million t. In the financial year to June 2015, the company hauled 211.2 million t of coal.

The company’s net tonne kilometers (NTKs) faired better, however, as lower volumes were offset by longer haulage distances in both Queenland (GAPE and Blackwater corridors) and in New South Wales on the back of the Whitehaven contract, which hauls coal from the Gunnedah Basin.

Total NTKs for Aurizon’s coal business were down just 1% to 12.4 billion for the quarter on the back of a 26% increase in New South Wales NTKs to 21 billion mitigating a 6% in Queensland.

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