Australia's largest rail freight operator Aurizon has been awarded a two- year contract by Wollongong Coal to haul 800,000 mt/year of its metallurgical coal for export, the miner said Monday.
The contract will see Aurizon haul the miner's Wongawilli colliery output to Port Kembla Coal Terminal in New South Wales state from August 2016 to August 2018, Wollongong Coal said.
Delta SBD is set to mine and operate the colliery for an initial period of two years to extract around 1.45 million mt of run-of-mine coal, Wollongong Coal CEO Milind Oza said.
The colliery, formally Elouera Colliery, was sold by BHP Billiton to Indian company Gujarat NRE in 2007, who renamed it Wongawilli Colliery.
Gujarat NRE was later renamed Wollongong Coal.
Aurizon EVP commercial & strategy's Mauro Neves said the deal sees Aurizon extend its footprint for coal haulage in New South Wales beyond the Hunter Valley and Gunnedah Basin.
In Aurizon's annual report released Monday, the haulage company said its above rail coal volumes in the July 2016-June 2017 financial year are expected to be stable year on year at between 200 million mt and 212 million mt after totaling 206.8 million mt in FY2015-16 and 211.2 million mt in FY2014-15.
"In Queensland, demand was down by 5 [million mt] at 163 [million mt] and in New South Wales tonnages rose slightly due to the ramp up of operations by a major Hunter Valley customer," Aurizon chairman Tim Poole said in the report.
"Market conditions in the resources sector were not conducive for new development and the company decided to significantly reduce activity on several growth projects," he said.
While a record 225.9 million mt of coal passed through the company's Central Queensland Coal Network in FY2015-16, it was only slightly ahead of the previous year's 225.7 million mt, the company said.
Demand has diminished in recent years in places such as the US and Europe, which has resulted in lower growth than earlier expected.
"There continues to be growth in demand -- in absolute terms the numbers are still expanding, but not at the rapid growth rate that once was," a spokesman for Aurizon told S&P Global last month.
"In 2013, the amount of tons that flowed through the [Central Queensland] network was 182 million mt; the year before it was 166 million mt," he said.
Aurizon's below rail underlying EBIT rose 5% year on year to A$506 million ($388.3 million), while above rail underlying EBIT was down 21% at A$435 million, the company said.
Total underlying EBIT for the company fell 10% year on year to A$871 million and its statutory net profit after tax plunged 88% to A$72 million.
