Mount Isa and Townsville: Why Aurizon's Loss of Major Contract Was Just the Beginning
Image by Andreas Nagel - Own work, CC BY 3.0,
With Adani and Aurizon vying for government funding to develop rail coal lines, and leaders in the North Queensland calling out for improvements to the Mount Isa rail line, it seems Aurizon’s first major loss of contract to Pacific National was just the beginning.
How It All Began
In December of 2016, Aurizon lost its first major contract with Glencore to Pacific National, which resulted in major job losses along the length of the Mount Isa rail line. Glencore said their reason for the switch was an inability to negotiate favourable terms with Aurizon and the fact that road freight is significantly less expensive than rail lines. More than six months on, and Aurizon and rail freight, in general, are in more trouble than ever.
The Impact: A Domino Effect
Aurizon’s net profit has dropped significantly in the last financial year from over $600 million last year to just $73 million this year. As a result, they are slashing jobs everywhere as part of a broader company restructuring. Jobs have been cut in Rockhampton, Townsville and their Mackay depot closed entirely and people in the area are worried about their futures.
This has had a hugely negative impact on the areas affected, with Rockhampton’s number of job seekers on welfare climbing by 1,800 in just a year. Some people are moving away from the area to find work in other places, but many cannot afford to make such a big move or be so far away from family.
The Implications for Freight Transport
So, what does this mean for freight transport in North Queensland? Mining giant Glencore and other major industry leaders have confirmed that more freight will be on the roads. Some towns have reported as many as 50 or 60 more road trains passing by than in previous years and are concerned about the impact this might have on tourism.
In response to these concerns, some leaders and individuals are calling for road taxes to be charged on heavy users of these roads such as Glencore. Others, such as the mayor of Townsville, are vying for improvements to the Mount Isa rail line, which is subject to extreme temperatures in many parts and is badly damaged.
Trains are meant to be able to travel the Mount Isa Rail Line at around 80km/h along the whole course of the track, but in some places, they are forced to crawl along at 40km/h and in other places even slower. This has understandably resulted in slower transport times and subsequently, in some companies choosing to take their freight transport business elsewhere.
Why Road Freight is a Viable Alternative
While State Government investment in the Mount Isa Rail Line is still not forthcoming, road freight continues to grow along those routes and is becoming a more affordable and attractive option for major industries. Aurizon, on the other hand, has set their sights elsewhere, now vying with Indian company, Adani, for government funding on a new coal rail network to connect the Galilee Basin with major ports. Aurizon’s bid for the contract is significantly less than Adani’s proposal, but Aurizon has been accused of trying to cut corners, proposing a rail line that would be unable to handle the weights required by Adani’s freight.
Many companies, such as mining giant Glencore, have bemoaned the loss of rail lines as a viable means of transporting their freight and say that rail freight is their preferred method and the company’s long-term plan.
However, it seems we could be waiting a while for the government to release the funding to make the necessary upgrades to the Mount Isa rail line. So, for now, road freight is the best way to go.
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