Tuesday, September 21, 2010

Australian Rail Freight Flotation On Track But Port Encounters Problems

Sale of QR Goes Ahead Whilst Patrick Incurs Government Wrath
Shipping News Feature

AUSTRALIA – Despite the efforts of some of the biggest mining interests in the country the state government have refused to sell off the state owned QR National in advance of the planned public sale. State authorities only revealed the company accounts in full to the consortium of ten mining companies when they raised their bid to A$5 billion. Anna Maria Bligh, left wing State Premier and a distant relative of the famous Captain, intends to sell QR on the open market and follow it up with the sale of more assets to balance the books.

The government intend to sell off the coal hauling freight network for around A$7 million (they hope) and the deal has analysts wavering as to the value of the sale to investors. The buyers will inherit assets with undoubted value but also presumably the recently restructured loans for network investment which are essential to maintain those same assets. Potential buyers need to register their interests for the initial public offering before the sale which is to be in mid November.

Apparently the government wish to retain 40% of QR National initially, selling 15% of this at a later date, and with the company shipping around 200 million tonnes per annum between mines and ports there is currently no shortage of business. A key factor in the sale is the type of product shipped on the network; primarily coking coal, cleaner burning than steam coal which is frowned upon by many in the environmental lobby, the market overseas, mainly China, is strong, and a key Australian export target.

Needless to say Asciano, the main competitors of QR, are incensed by the sale. Asciano subsidiary Pacific National, haul much less tonnage than their rivals but are more cost efficient and the two often vie for new contracts. Having said that one cannot imagine they would have been too pleased by a private deal with the mining consortium bid from the Queensland Coal Industry Rail Group (QCIRG) which would have meant the larger mining groups, Rio Tinto, Xstrata, BHP Bilton and the rest, having a vested interest in the main rail freight haulier in the state.

The unfolding of the deal will be especially interesting to shipping groups of all types as, dependent on the outcome; the premier apparently intends to follow it up by releasing highways and possibly a nationalised port onto the open market in the same way.

Meanwhile in adjacent New South Wales another Asciano company is also crying ‘foul’ as the state government announced this week it would not allow the groups stevedoring subsidiary, Patrick, to continue to charge an increased tariff on rail containers implemented on 1st September. Ports Minister Eric Roozendaal said yesterday the increased charges at Port Botany would put ‘thousands of extra trucks on our roads’ and that he would regulate prices by legislation to ‘ensure fairness’ and meet the Government target of 40% of freight in the state moved by rail.

Patrick reacted immediately saying in a statement that pricing was not the issue and the government was merely trying to disguise its own lamentable lack of investment in rail infrastructure. The company say they have repeatedly been snubbed in their attempts to engage in discussions to improve intermodal efficiency.

Local residents and union representatives welcomed the governments intervention saying they believed the price hike would increase Patrick’s profits whilst throwing large amounts of freight back onto the state roads into the port.

Photo: Courtesy of Patrick