Glencore to sell haulage assets

Glencore has announced it intends to sell its Hunter Valley coal rail assets. 

The sale is reportedly part of the miner's plan to pay down its approximately US$8 billion worth of existing debt levels.

According to the miner, the potential sale of the assets (Grail) "is in response to a strong global demand for high quality infrastructure assets and forms part of Glencore's wider global debt reduction program".

While a valuation has not been given the potential sale, it is understood the business generated approximately $100 million EBITDA last year, and over the last few years has had revenues around $160 million annually.

Glencore initially set up GRail in 2010 due to what it believed were high levels of access and cost from existing coal haulage operators in the Hunter Valley.

Since that time it has reportedly grown to become the third largest coal haulage business in Australia, hauling around 51 million tonnes last year. 

According to a source close to the matter, Glencore's coal will likely be hauled by the new owner of the rail assets, although it is understood the details of the coal movement will be discussed in the new agreements.

While the locomotives, wagons, and support equipment are understood to be part of the potential deal, Glencore's refeulling stations -located on its mines -will not be part of the sale.

New super-quad road train trials begin

Western Australia has begun trials of a new range of “super-quad” road trains, billed to enhance cost efficiencies in the mining sector.

Developed over the past two years by manufacturer Bruce Rock Engineering, the 60 metre long road trains have the potential to reduce the impact of heavy road traffic on road infrastructure in WA.

Bruce Rock managing director Damion Verhoogt said the company had made considerable investment in developing the international top line patented product.

“To date, we have invested more than $100,000 in engineering R&D into the trial process, however we are delighted to be able to proactively contribute to the industry a premium product that will not only save on costs for our clients but will reduce truck movements by up to 20 per cent which is a massive gain for the industry and general community,” he said.

The first tests were carried out in September, loading product from client Mineral Resources subsidiary Process Minerals, and transport contractor Fusion Contracting.

The first two full loads to be delivered by the new road trains were received on October 7.

Process Minerals transport manager Ken Walsh said, “We can see that this new technology will be of huge benefit to us and the resources sector, particularly with regards to productivity and cost efficiencies from our operators.”

“It will also positively impact road infrastructure with less vehicles on the road and more tonnage being loaded.”

Infrastructure funding needs overhaul – Opinion

Amid the mountains of briefs prepared on GST for this week’s COAG Leaders Retreat, one of the other fiscal issues that deserves equal, longer term consideration will be in Jay Weatherill’s back pocket.

The South Australian Premier will take to the meeting a bold plan to reform the federation, including long overdue reforms to how our national highways and roads are funded.

In a speech to the National Press Club earlier this month, Premier Weatherill proposed the establishment of a national heavy-vehicle road-user charging system run by the Commonwealth.

In his speech, he lamented the lack of a market-based funding system for roads, despite similar systems being in place for almost all other forms of infrastructure.

Under his plan, state-based registration and federal-based fuel excise charges would be replaced by a more transparent pricing mechanism that more closely links road use and investment.

He also offered up South Australia as the test site for different elements for the new heavy vehicle road user charging regime.

From the perspective of Australia’s freight and logistics industry – the sector to be most directly impacted by Premier Weatherill’s proposal – we believe his plan requires serious consideration by all levels of government.

Seen through the political lens, his proposal is a direct policy response to growing pressure on state budgets for road infrastructure projects.

The fact is there are growing demands on the government purse requiring the use of taxpayer’s money, particularly in the areas of health and education.

Premier Weatherill’s blueprint echoes similar calls for reform made in recent times by the Productivity Commission, Infrastructure Australia, the Harper Review and the National Commission of Audit.

These and other reports also flagged the concept of extending the heavy vehicle road reform, over time, to all vehicles, to send a more direct price signal and to help address congestion in our cities.

There is a growing consensus that the infrastructure funding system in Australia requires a major overhaul.

The key will be delivering reform that improves long term funding sustainability of key freight routes in a transparent and equitable manner.

Currently, funds raised through registration and fuel excise are smeared across the network, and not returned to the key freight routes carrying high levels of traffic.

A system where funds are arbitrarily applied across the system, with no real linkage to where the freight has come from, or is going to, is one requiring reform.

Nor is it a system that supports improved productivity levels in the industry.

Industry’s support for this reform will hinge on the extent to which it supports supply chain efficiency and reliability.

It is critical, however, that funds collected are invested in the infrastructure used by the vehicle.

In other words, the revenue follows the freight, and not lost to consolidated revenue.

ALC has long argued that funds from heavy vehicles should be hypothecated for investment in productivity enhancing infrastructure.

For this initiative to succeed, Treasuries need to drive the process forward.

Not only will it be quicker, it will be more effective if part of a broader set of reforms to change the infrastructure revenue stream.

And importantly, having Treasuries take carriage of this initiative will help to ensure a greater level of national coordination.

This is important, because in the long run, road reform needs to be national, it needs to be consistent and it needs to be coherent.

This is a reform a long time in the making.

In April 2007, COAG set out a three-phase ‘COAG Road Reform Plan’ to consider alternative models of heavy vehicle road pricing and funding.

The plan’s objective was to promote the more efficient, productive and sustainable provision and use of freight infrastructure.

Now, more than eight years later, governments have taken only tentative steps to deliver on these worthy objectives.

With studies showing the national freight task will increase by 100 per cent between 2010 and 2030, all policy proposals to improve the long term efficiency of the freight logistics network need to be on the table.

Otherwise the living standards of all Australians will be reduced.

These studies into Australia’s rising freight task coincide with a report by the Australian Logistics Council and ACIL Allen, which showed a 1% improvement in productivity would yield a $2 billion a year benefit to the national economy.

As American economist Paul Krugman said, ‘productivity isn’t everything, but in the long run, it’s nearly everything.’

ALC hopes COAG leaders has Krugman’s productivity mantra at the forefront of their minds when they sit down this week to discuss Wetherill’s reform to fix our flailing federation.

Michael Kilgariff is the managing director of the Australian Logistics Council, the peak body for Australia's freight logistics industry.

New Toll investment in servicing ESS

Freight transporter Toll has launched a new refrigerated fleet which has been co-branded with support services company ESS.

The investment of $11 million in prime movers, refrigerated trailers and pantechnicon by Toll means that the company will have greater flexibility for providing cold transport to the biggest mining camp services provider in Australia.

The new fleet will be used to make 70,000 deliveries of fresh food, laundry and heavy equipment each year to more than 125 remote ESS sites around Australia.

ESS is a subsidiary of Compass Group, which selected Toll as their primary logistics provider in WA in 2002, which in turn has expanded Toll’s remote haulage operations through Queensland, Northern Territory and South Australia.

Compass Group executive director (supply chain) Chai Alexiou said it was fantastic to see ESS and Toll co-branded trailers delivering goods exclusively to ESS sites. 

“This will extend our ability to provide the freshest food possible to our clients, their employees and customers while maintaining the highest safety standards and maximising the economies of scale made possible by a fully integrated logistics model,” he said.

ESS locations include remote mine camps, corporate headquarters, universities, cultural venues and hospitals.

Toll Express General Manager Larry O’Regan said the investment made in servicing ESS sites was part of a long term commitment to improve business efficiency.

“Toll works with more than 190 different suppliers daily on a JIT (just in time) basis to ensure food and equipment are delivered to ESS sites in a timely manner,” he said.

“By working directly with ESS at our upgraded depots, we have been able to average a 99 per cent DIFOT for our deliveries.”

Toll and ESS have also implemented a recycling product program which results in more than 138 pallets per month of cardboard, plastics, oil and glass being returned and properly recycled from West Australian sites, with a similar program also being rolled out in Queensland.

Managing heavy vehicle safety

What distinguishes a trucking company with a good safety record from one that performs poorly on safety? That’s the question which has focused the mind of UNSW academic Lori Mooren.

Mooren’s research is partly funded by Zurich Insurance Australian Limited, insurer for the transportation and logistics industry. She shared some of her findings at a Zurich customer forum on road safety held recently in both Sydney and Melbourne.

‘Heavy vehicle fatalities have decreased by 32% over the past decade,’ Mooren said.

‘The trucking industry is one where employers do know that there are serious risks to their employees, to their cargo and to their business in using the road.

“They have been a lot more proactive than most employers in managing risks of using the road.”

Mooren said road safety is a huge issue for businesses across the board, not just the trucking industry.

“Of all work fatalities, 67 per cent are vehicle related,” she said.

“That’s not surprising, when you think about it. There are lots of other workplace accidents but when you have a vehicle incident, it’s such a violent event that the injuries are pretty severe.”

It was also shown that a person is 50% more likely to crash in a company vehicle than a private vehicle. Why?

“When people don’t own their own vehicle, they don’t treat it as well. When they are travelling for work, they are often doing things like talking on a mobile phone, or they are in a hurry. The combination of distractions, speed and sometimes fatigue, are some of the reasons,” Mooren said.

She noted, however, that employers can strongly influence the safety of vehicles and cites the example of BHP Billiton which last year started purchasing passenger vehicles only with five-star safety NCAP ratings.

Mooren’s research in the trucking industry has shown that the ‘safety culture’ of the particular business affects the crash rates.

“You can measure things like the perception that workers have that their bosses are committed to workplace safety above other objectives. It’s a demonstration of clear commitment and a sense ‘safely is the way we do things around here’. When you have that culture of safety, then crash rates are likely to be lower.”

The converse is also true. “A lot of research has found that some employers haven’t fully embraced the problem of crashes. There is the attitude that someone else manages road safety, whether it’s the police or road authorities, and it’s really up to them to get people to follow the rules of the road. These employers are not owning the problem.”

In terms of the companies which have got on board with road safety, Mooren said that Dupont is a stand-out.

“They’ve always tried to encourage education of their employees’ families, as well as the employees themselves, about road safety and other safety issues.”

Another significant factor for truck safety is the pay system for drivers.

“Do they get paid for waiting time, for loading and unloading? That’s a big issue for fatigue. I’ve spoken to drivers who say they start at 6pm and then they wait for sometimes up to four hours for their trucks to be loaded, which means that when they start driving, they’re already not fresh when setting out to drive all night.

“A lot of the industry is still being paid on a piecemeal basis, and that can be per kilometre or per truckload. This encourages drivers to work longer hours and do more shifts. When drivers get paid a regular wage per hour, day or week, they are less encouraged to work excessive hours.”

Coal explorer in talks with Aurizon as mine development ramps up

Queensland coal explorer International Coal has announced it is in discussions with Aurizon over a rail access deal for its Consuelo project in the Bowen Basin.

The project, located just 25 kms from an existing rail haulage line on the Blackwater system, is slated to start production in late 2016, with an exploration target of between 800 million and 1,700 million tonnes of high grade coal.

International Coal says one of its main advantages over other explorers is its proximity to existing rail infrastructure.

“Planning and negotiation of infrastructure access often requires extensive lead times. In order to keep on track with our exploration and development schedule, we need to move early to shore up access to infrastructure either through direct means or through secondary contracts,” chief executive officer Glenn Simpson said.

“We are not locking anything in yet but we need to start a dialogue so that it is all systems go if our exploration comes up as expected.”

Consuelo has open–cut and underground potential and the company hope to achieve rapid development of the project, International Coal said.

The company also confirmed talks have commenced with key proponents associated with the Wiggins Island Coal Export Terminal which is currently under construction.

Aurizon to cut 50 jobs in Queensland

Aurizon has announced it will cut 49 jobs from its Redbank and Ipswich workshops in Queensland.

The rail freight company said 85 positions at its Redbank facility in Ipswich will become surplus with 15 new positions set to created.

While at Rockhampton, 23 new positions will be created, while two will be made redundant.

The company said there will be no forced redundancies, with workers in affected roles able to seek redeployment to new roles that have been created or take voluntary redundancies.

Aurizon said the changes were made as its coal and freight haulage business operates from central Queensland and the company is seeking to align maintenance on freight rollingstock in the area.

While reduced activity at workshops is a result of ongoing rationalisation, improved maintenance strategies and changed maintenance schedules, it said.

Earlier this year the company announced plans to cut costs by more than $230 million over the next two years in a move which signalled the loss of jobs and property sales.

The company formerly known as QR National announced it would move to cut $70 million in labour costs over the next 24 months.

In a presentation to analysts, chief Lance Hockridge said the cost cutting measures were aimed at delivering positive outcomes for shareholders and customers.

Aurizon has made a number of job cuts over the past few years with most coming from voluntary redundancies.

Hockridge has previously said that company had staff levels that were higher than needed, which results in “high corporate overheads and bureaucratic structures”.

“Our cost base is too high when compared to competitors and rail industry peers,” he said.

Depots in Bundaberg, Gympie Murgon, Mundubbera, Gayndah, Monto, Biggenden, Biloela and Tully are set to close.

New truck provides haulage of B Double with single trailer handling

Waste management company Ellwaste called on the expertise of Freighter to build a vehicle that would perform like a B-double combination, but handle like a single trailer.
 
Having long understood that versatile equipment was key to improving productivity in the field, Ellwaste sought to add an extra hooklift container bin to each of their loads.
 
Voted the ‘Best Trade Business’ at the 2004 Gannawarra Business Excellence Awards, Cohuna-based Ellwaste in Northern Victoria sees itself as an innovator in the waste industry, with recycling at the forefront of its operation. But the subsequent need to boost the performance of its fleet prompted the company to explore ‘left field’ options including the concept of PBS, which factors in the trailer’s actual performance on the road instead of focusing on size and length alone.
 
According to Stephen Elliott, Operations Manager at Ellwaste, the company had been discussing the concept of a larger skel trailer that could hold multiple hooklift container bins, but built in such a way that the vehicle would perform like a B-double combination, and handle like a single trailer.

To read the rest of the article and how the vehicle operates, click here,
 
 

Stop fighting and share infrastructure, Barnett tells mining companies

In what comes as a reproach to iron ore companies fighting over rail access in the Pilbara, Colin Barnett said the warring between resource companies was holding projects up more than government red tape.

Barnett said resource companies fighting over sharing infrastructure is one of the biggest hurdles in keeping projects to time and on budget.

Barnett said the Department of State Development spent more time dealing with disputes between resource companies than it did solving regulatory delays, the West Australian reported.

"People talk in the resources industry about frustrations with government delays and approvals and red tape, and I concede there is still more work to be done," he said.

"But the biggest obstacle to timeliness and keeping costs down is disputes and lack of agreement and a lack of sharing infrastructure in the mining and the petroleum sectors. And the companies need to look at themselves – and (the rail access dispute) is an example."

The rebuke by Barnett comes amid revelations that Fortescue Metals is seeking to charge junior Brockman up to $576 million a year to access part of its Pilbara rail line.

Analysts say the price is well above $17.50 to $20/t figure FMG is charging BC Iron for haulage, which also includes port handling prices at Port Hedland.

The junior iron ore explorer is seeking access to FMG’s rail infrastructure in the Pilbara and wants to haul up to 20 million tonnes of iron ore per year from Marillana to a proposed rail spur near Port Hedland.

But Brockman has requested that the Western Australian Economic Regulation Authority step in to set an access price after private negotiations between the companies failed to result in an agreement.

Barnett said the dispute was a commercial matter, but still "concerning".

"Ultimately, Government could introduce legislation I suppose, but I would just appeal to companies to be sensible," he said.

Image: abc.net.au

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