Iron ore train - credit BHP Billiton

Bulk of BHP’s rail interests to stay in spin-off move

BHP Billiton has formalised the 10 key assets that will make up its spin-off business South32, but the bulk of the company’s rail-relevant assets will stay within BHP.

BHP chief executive Andrew Mackenzie addressed shareholders yesterday, saying the spin-off – which was announced late last year – was aimed at simplifying the portfolio of the greater BHP business, while also creating a promising new company.

The spin-off of 10 key assets into the new company, South32, will leave the ASX-listed giant with its four key ‘pillars’ to work on: coal, iron ore, oil & gas, and copper/gold.

Coal and iron ore are of course the two most relevant aspects of BHP when it comes to the rail industry in Australia.

Illawarra Coal will be moved to South32, but the majority of BHP’s other Australian coal and iron ore ventures will stay with the larger business.

“With a simplified portfolio we intend to streamline our organisational model, further standardise our common systems and better leverage our technical expertise across our operations,” Mackenzie said.

“Having achieved significant productivity gains to date, future gains will be harder won … The demerger will materially simplify our portfolio in a single step and in the longer term allow us to further focus on delivering gains…”

South32 will include assets within a few key product groups:

Bauxite, alumina and aluminium

  • Worsley Alumina: an 86% interest in an integrated bauxite mining and alumina refining operation located in WA.
  • South Africa Aluminium: a 100% interest in the Hillside smelter near Richards Bay, South Africa.
  • Mozal Aluminium: a 47.1% interest in the Mozal Aluminium smelter located near Maputo, Mozambique.
  • Brazil Aluminium: a 14.8% interest in the Mineração Rio do Norte open-cut bauxite mine, as well as a 36% in the Alumar alumina refinery, and a 40% interest in the Alumar aluminium smelter, along with interests in certain ancillary facilities, all in Brazil.

Coal

  • South Africa Energy Coal: a 90% interest in four operating energy coal mines in the Witbank region in the Mpumalanga province, South Africa.
  • Illawarra Metallurgical Coal: a 100% interest in three underground metallurgical coal mines near Wollongong, NSW.

Manganese

  • Australia Manganese: a 60% interest in the Groote Eylandt Mining Company (GEMCO) open-cut manganese mine, and the Tasmanian Electro Metallurgical Company (TEMCO) manganese alloy plant. GEMCO is on Groote Eylandt, an island off the Northern Territory’s eastern coastline. TEMCO is near Bell Bay, in Tasmania.
  • South Africa Manganese: a 44.4% effective interest in the Mamatwan open-cut mine and the Wessels underground mine, and a 60% interest in the Samancor Manganese Metalloys alloy plant, in South Africa.

Other base metals

  • Cerro Matoso: a 99.94% interest in an open-cut lateritic nickel mine and ferronickel smelter located near Montelibano, in the Córdoba Department, northern Columbia.
  • Cannington: a 100% interest in a silver, lead and zinc underground mine and concentrator operation located roughly 200km southeast of Mount Isa, Queensland.

Together, the South32 businesses comprise gross assets of US$26.723bn as at December 2014, according to BHP’s figures.

The assets contributed net profit after tax of US$738m in the first half of the 2014/15 financial year.

Graham Kerr, elected as the inaugural chief executive of South32, said while the new company is comprised of existing assets, he intends to run the business as a new player in the global market.

“We are building a new company from the ground up,” Kerr said. “We will have competitive assets significant reserve lives and financial strength.”

BHP formally recommended the demerger to shareholders yesterday. It will be voted upon on May 6, in what is likely a formality process.

The South32 assets as at December 31, 2014, included net debt of US$674m, which should please major BHP shareholders, who have expressed a desire to have South32’s net debt below US$1.5bn.

Road projects - Ingram Publishing

Albanese grills Government on road choices

Shadow minister for transport and infrastructure Anthony Albanese has again called out the Government for its propensity to fund major road projects, suggesting that Infrastructure Australia is being ignored in Federal decision making.

Speaking at an Australian Logistics Council forum in Melbourne on March 12, the former deputy prime minister said the Labor Government, when it was in power, used Infrastructure Australia to its advantage to make wise planning decisions.

“When Labor Government took power, Australia was 20th in the OECD for infrastructure investment as a proportion of GDP,” Albanese recalled. “When we left, Australia was 1st.”

While the budget for roads was doubled under Rudd/Gillard/Rudd, that government also rebuilt more than a third of the national freight rail network, Albanese said, with $3.4 billion spent on 4000km of track.

“One outcome of our investments is that by 2016, the average trip from Brisbane to Melbourne will have been shortened by seven hours,” he said. “The journey from the nation’s east to west coasts will have been reduced by nine hours.”

Albanese praised recent decisions by Woolworths and Australia Post to move some of their freight to rail.

“That’s highly significant,” he said. “There will always be a role for moving freight by road. But when we move freight on to efficient, properly maintained rail systems, we make the roads safer and we reduce carbon emissions.”

Albanese said the former Labor Government’s propensity towards rail projects was triggered by analysis from Infrastructure Australia; analysis which – Albanese believes – the Abbott Government doesn’t follow closely enough.

“I am deeply concerned that the current government is drifting away from the Infrastructure Australia model,” Albanese said.

“Despite pre-election promises that it would adhere to, and indeed strengthen, the model, the current government appears to have succumbed to political temptation and is drifting away from transparency and evidence-based policy making.”

He said the worst example of this is the Government’s $3 billon commitment to the (now shelved) East-West Link in Melbourne, to which it committed $1.5 billion in advanced funding in its 2014 Budget.

“It did this without Infrastructure Australia having seen a cost-benefit analysis, let alone having approved the project,” Albanese said.

“As those of you who live in Melbourne know, the project was at the very centre of November’s state election campaign.

“After the election, documents released by the incoming Andrews Government showed that the project had a benefit-cost ratio of only 0.45. That’s a paltry return of only 45 cents in the dollar.”

Albanese said the government’s decision to fund East-West Link over other projects – including the Melbourne Metro Rail Project – was therefore not a good one.

“In this case, proper process went out the window along with common sense and respect for taxpayers,” he said.

“The last thing this nation needs is political parties fighting election campaigns on the basis of the delivery of major infrastructure projects that have not undergone independent scrutiny.

“Only the facts can empower voters to make informed judgements about what politicians say in the heat of electoral battle.”

Albanese also questioned the Government’s decision to fund Sydney’s WestConnex road project, which he said had also been questioned in recent months.

Inland Rail

Inland Rail tenders open

Deputy prime minister and minister for infrastructure and transport Warren Truss has opened the tender process for engineering design and environmental services contracts for the proposed Inland Rail project set to link Brisbane and Melbourne.

It’s the first round of tenders Inland Rail, a project which Truss called ‘iconic’ prior to the tenders’ launch on March 7.

“Inland Rail is a game-changer,” the deputy PM said.

“It is vital infrastructure that will boost capacity and productivity along the country’s fastest growth freight corridor.

“It is a critical investment in jobs, growth and future prosperity, as well as a boost for the regional areas along, and around, its route.”

Truss said he thinks the rail line will “transform” freight movements through south east Queensland, across regional New South Wales and rural Victoria, resulting in national efficiency increases.

“We know Australia’s freight task will double by 2030 and triple along the eastern seaboard,” Truss said.

“Inland Rail will connect key production areas in Queensland, NSW and Victoria with export ports in Brisbane and Melbourne, with linkages to Sydney and Perth, boosting regional economic growth and driving national productivity.”

The first round of tenders concerns planning for some of the key segments of the Parkes to Narromine and Narrabri to North Star sections of the proposed lines.

“The Australian Government has committed $300 million to commence work on the Inland Rail project. These tenders are a clear demonstration that real progress is being made and that we are delivering against our commitment.

“I have charged the Australian Rail Track Corporation with developing a 10-year delivery plan for Inland Rail and appointed former Deputy Prime Minister John Anderson to head the Inland Rail Implementation Group, to oversee that work.

“We’re getting on with the job of delivering world-class infrastructure that secures Australia’s transport needs well into the future, while creating jobs, economic growth and opportunity for all Australians.”

Truss said regional suppliers will benefit throughout the 10-year delivery of the project, with any successful tenderer required to demonstrate regional participation.

“When complete, Inland Rail will deliver a road-competitive freight rail service from Melbourne to Brisbane via regional hubs in three states that will make a huge contribution to meeting Australia’s freight challenge,” he said.

Warren Truss

Albo asks, Truss answers: New IA chief named

Infrastructure and regional development minister Warren Truss has named the new chief executive of Infrastructure Australia, a fortnight on from his opposition minister, Anthony Albanese, questioning why the government body had been without a formal leader for over 12 months.

Truss named Philip Davies as the new chief executive officer of IA on March 5.

Davies, currently the leader of AECOM’s infrastructure advisory practice for Asia Pacific, will take over as chief executive in April from acting chief Stephen Alchin, who himself replaced John Fitzgerald in the acting role.

Fitzgerald was hired as acting CEO following the departure of former head Michael Deegan, who left IA in February 2014 to join South Australia’s Planning, Transport and Infrastructure Department.

A year on from Deegan’s departure, former (and now shadow) minister for transport and infrastructure Anthony Albanese asked why no formal replacement for Deegan had been announced.

“It is extraordinary that more than 12 months later there is still no head of Infrastructure Australia,” Albanese said on February 17.

“While Mr Truss has dithered over appointing a new head of Infrastructure Australia, Tony Abbott has recklessly ignored accountability by funding a range of new road projects without cost-benefit analysis – a direct breach of his explicit election promises.”

Just over two weeks on from Albanese’s comments, on March 5, Truss announced Davies as chief executive of IA, relieving Alchin from the acting role.

“Mr Davies is an expert in infrastructure and transport planning,” Truss said.

“The government has reformed the governance of Infrastructure Australia to free it of the ministerial meddling which abounded under the previous Labor Government to make it a truly independent board.”

Truss is calling Davies the ‘inaugural’ chief executive of IA. Deegan was known as the ‘IA coordinator’ during his tender. In mid-2014 the Infrastructure Australia Act was amended to create an independent board which could appoint its own CEO.

“Under the Rudd/Gillard/Rudd governments Infrastructure Australia was not allowed to appoint its own CEO,” Truss said.

“Worse still, the then infrastructure coordinator reported solely to the [infrastructure] minister… never to an independent board.”

Prior to his current role at AECOM, Davies was an executive at Transport for London. He has previously advised the federal government on high speed rail, and has also advised state governments on various transport projects.

As well as leaving AECOM, Davies will conclude his roles as board member of Infrastructure Partnerships Australia and for the Committee for Sydney.

“Mr Davies is a highly qualified engineer and infrastructure expert and has valuable experience in both the public and private sectors,” IA chairman Mark Birrell said.

Davies said he was excited to work in a role which would help “shape the long term plan for Australia’s infrastructure”.

“We can develop the evidence base to support the investment priorities for nationally significant infrastructure,” he added.

Aurizon’s December quarter down on 2013

Queensland-based rail operator Aurizon has announced a 2% decline in rail volumes in the December 2014 quarter.

Aurizon told the ASX last week that it handled 54.8 million tonnes of coal in the last three months of 2014, down from 56.2 million tonnes in the same quarter of 2013.

Haulage in Queensland was down 2% to 43.8 million tonnes, and haulage in NSW was down 4% to 11 million tonnes, according to the operator.

There was an 11% reduction in net tonne kilometres (NTKs) for Aurizon in its NSW coal business, and a 3% reduction in Queensland NTKs.

Aurizon’s smaller iron ore handling business saw a 22% year-on-year decline to 6.1 million tonnes handled, and the company enjoyed a modest increase in freight volumes.

“[Queensland] volumes of 43.8mt represent a 2% decrease compared to the pcp, reflecting the closure of Peabody’s Wilkie Creek mine in December2013 and the end of Rio Tinto’s Hail Creek contract in October 2013,” the company explained.

“If we removed the impact of these two customers, growth would have been flat.”

A number of operational incidents also contributed to the softer performance, including a fatal motor vehicle accident in October 2014 which impacted crew availability on the Blackwater network.

‘Near miss’ videos aim to shock

British Transport Police has made waves online with its new YouTube series featuring near misses around rail level crossings in the UK, as part of a new campaign to raise awareness to the dangers of rail.

‘Operation Look’ is the BTP’s program aimed at reducing the amount of accidents and near misses that occur every year at level crossings in Britain.

BTP’s YouTube channel has received thousands of views so far this week, as it has uploaded a number of videos from CCTV and other cameras, which have captured nearly catastrophic near-misses at rail crossings.

The series can be viewed here.

Also as part of Operation Look, BTP officers will be carrying out additional high-visibility patrols at a number of locations this week, but it’s BTP’s YouTube channel which is getting more attention.

During 2014, 337 motorists failed to obey warning lights or lowering barriers at level crossings in Scotland alone – where the BTP is focusing its awareness operation.

“Many of these drivers had got into the habit of deliberately misusing crossings, with figures showing people of all ages willing to risk their lives to shave a few minutes off their journey,” BTP said.

BTP’s inspector Becky Warren said: “All too often people get into the habit of taking risks at crossings and our message is simple. Use crossings safely.

“It may be tempting to jump a light to shave a minute or two off your journey, but every time you do, you endanger your life and the lives of other road and rail users. Fail to obey the signals and you may also end up with a driving ban or a criminal record. Is it really worth the risk?”

“Level crossings create a risk for people that we want to remove. Where possible we close them, and we have already closed more than 900 in the past five years,” said Darren Furness, head of level crossings for Network Rail, which is joining BTP in the awareness campaign.

“Those we cannot close we aim to make safer and awareness events like these mean we can meet and talk to motorists, cyclists and pedestrians about the dangers and how to stay safe.”

5 most important storylines from Queensland election

The scrapping of government plans to help fund a proposed shared railway through Queensland’s resource-rich Galilee Basin is just one of the major storylines for rail and resources industry to monitor in the fallout of Queensland’s election.

Shared Galilee infrastructure on knife’s edge

Campbell Newman’s plans to set aside a portion of taxpayers’ money for the development of a shared rail line and associated infrastructure through the Galilee is on the ropes, with its future dependent on the balance of power in parliament.

Prior to the election Newman said a re-elected LNP Government would work to provide miners in the Galilee Basin with a shared rail line that would connect their proposed mining projects with Abbot Point, or another export facility, on the coast.

The now ex-premier said his party would provide at least some of the funds for the development of that infrastructure.

But Annastacia Palaszczuk, leader of the opposition going into the election, and likely the next premier of Queensland, is against the funding.

Palaszczuk said in the lead-up to Sunday’s election that Galilee miners should have to be viable to succeed without government support, and that such financial assistance for a shared piece of infrastructure would not come from a Labor Government.

However, without a majority in parliament, Labor would need to ally itself with smaller parties and independents.

Katter’s Australia Party, led by Rob Katter – the son of polarising former federal politician Bob Katter – could be key to Labor getting its policies through parliament, should the party not hold the majority vote.

At time of writing (with roughly 85% of all votes counted), predictions have Labor winning 44 or 45 seats. With 45, the party would have all the power it needs to get its legislation through parliament.

But with just 44 seats, Labor would need to ally itself with Katter’s party (2 seats), or Nicklin independent Peter Wellington (1 seat), or with all three seats, to form a majority vote.

If Labor holds 44 seats after the election, and the LNP holds 42, however, the LNP could strike a deal with Katter’s party and the independent Wellington, giving it the 45 voting seats it needs to have its way in parliament.

If the LNP holds the balance of power, it could still go through with its plans for the Galilee. And experts are predicting that in order to strike a deal with Katter’s party, Labor might have to commit to a similar level of funding for the Galilee project.

Recognising 40 years of railway innovation

Australia’s premier applied research centre in railway technology last week celebrated four decades of innovative solutions in mining and commuter rail systems.

A Celebration of 40 Years of Railway Research andTechnology was held last Thursday at the Park Hyatt, Melbourne, to celebrate the 40 years of railway research and technology by Monash University’s Institute of Railway Technology (IRT).

Originally part of research activities undertaken for the companies now known as BHP Billiton Iron Ore and Rio Tinto Iron Ore, IRT is now an applied research centre at Monash University. It provides technical assistance to the world’s three biggest iron ore producers, BHP Billiton, Rio Tinto and Vale (Brazil), and more than 90 other railway entities, including leading commuter rail authorities.

IRT, which has clients in several countries, specialises in providing comprehensive solutions to technical issues in existing rail systems, whether they transport iron ore, freight or commuters. IRT is also a leader in remotely monitoring tracks and rolling stock using cutting-edge technology to detect faults before catastrophic failures occur.

Monash University’s senior deputy vice-chancellor and deputy vice-chancellor (research) Professor Edwina Cornish, congratulated IRT on leading the Australian railway technology field for four decades.

“The Institute of Railway Technology is a great example of how universities and industry can collaborate to develop solutions that drive technology forward,” Prof Cornish said.

“IRT was born out of industry need and now real-world problems continue to drive its agenda.”

Director of IRT, Ravi Ravitharan, said the institute was set to build on its success.

“IRT is continuously developing new technologies to support increasing productivity and safety requirements of the rail industry,” Ravitharan said.

“Being part of Australia’s largest university, IRT is well-placed to continue to lead the railway research and technology needs of the rejuvenated railway industry.”

The Victorian minister for public transport Terry Mulder, delivered the keynote address at the gala dinner and general manager of infrastructure at the Hong Kong rail authority MTR, Richard Keefe, and rail engineering manager at Rio Tinto Iron Ore, Leland LeBreton, both long term clients of IRT, also spoke at the event.

Heavy Haul Rail
28th – 29th August 2012 | Newcastle City Hall
www.informa.com.au/heavyhaulrail

IRT: leading technology development for mining

While the Australian economy is enjoying a fortunate position due to the thriving mining industry, research and technology have been integral factors which have enabled the mining industry to reach its current position.

As part of one of the main technology service providers for the railway industry, the personnel at the Institute of Railway Technology (IRT) at Monash University have been supporting the mining industry’s railway operations over the last four decades. IRT is continuously developing new technologies to support increasing productivity and safety requirements at the same time as reducing risks and costs, ultimately improving the bottom line of their clients.

The latest technology IRT has developed is the instrumented revenue vehicle which is a fully flexible automated measurement platform to continuously monitor and provide feedback on both rail condition and train operation. This technology is designed to be installed in standard vehicles which are embedded within a normal operation.

The IRT instrumented vehicle technology has several key advantages over previous maintenance inspection methods. With the objective of increasing production rates, mining operations are often under pressure to reduce railway track downtime. The ramifications of reducing track downtime are that it would minimize traditional track measurements and maintenance activities. This could result in a significant increase in operational risks because of a lack of maintenance and an inability to identify deterioration of track condition in a timely manner.

IRT’s instrumented vehicle technology measures the condition of a railway system during normal rail operations without requiring any track downtime. In addition, IRT’s technology measures the dynamic responses of normal vehicles during loaded and empty operating conditions under standard speed profiles. Unlike previous track recording vehicle measurements, IRT technology measurements are a direct indication of the loads being imposed on the rail network in a usual operating environment.

By Ravi Ravitharan*

It is also important to note that the information collected using the IRT’s instrumented vehicletechnology is available for railway operations within a twelve hour period. It is anticipated that in the near future real time reporting of track and train related issues would be also available.

The above technology is widely used in railway systems in mining operations and now available to all railway operations including passenger and freight, to assist with both track and rolling stock management.

The IRT instrumented vehicle technology measurements have shown an excellent correlation with track inspector findings. Now these measurements are being used extensively for track maintenance activities, and to restrict line speed to mitigate damage to and risk from deterioration of the track structure.

Assessment of the effectiveness of maintenance operations, operational planning and maintenance programming are other benefits of the new technology IRT has developed.

IRT’s instrumented vehicle technology has also been used for analysis of train driving strategies and in-train forces, train driver training, derailment investigations, analysis of the dynamic effect on bridges, dumper indexing for minimization of coupler loads and assistance with the design of new rolling stock.

IRT, the premier track and vehicle railway engineering research centre in Australia, focuses on developing new technologies that could be integrated into existing processes to provide rail operators with the ability to effectively manage their resources.

*Ravi Ravitharan is director, Institute of Railway Technology, Monash University

Heavy Haul Rail
28th – 29th August 2012 | City Hall Newcastle
For more information email: kara.clifton@informa.com.au

Level crossing Victoria - Photo: Creative Commons

New technology to dramatically improve level crossing safety

A new $4m technology being developed at Victoria’s La Trobe University could significantly reduce and help to eliminate collisions, injuries and fatalities at Australia’s level crossings.

By Jennifer Perry

The technology could warn vehicles as they’re approaching a level crossing by using “mobile phone style” wireless networks that are integrated with GPS.

“The technology will have cars and trains ‘talking to each other’ and be able to warn of approaching danger from up to one kilometre away,” Victorian roads and ports minister Tim Pallas said upon launching the research project.

“Nowhere else in the world is the trial of this particular technology being proposed to the extent that we are doing in Victoria and focusing on its level crossing safety applications.”

Pallas said the research team at the university’s Centre for Technology Infusion estimated the technology could save around 37 lives at Australian road level crossings every year, as well as about $100m by eliminating rail crossing collisions.

The project is being funded by the Victorian Government, road industry research group AutoCRC and a number of rail industry partners.

The research team hopes to have the technology available within three years.