BHP to load its own coal trains

Artist illustration of a new rail locomotive planned to service BMA’s new coal mines.
Artist illustration of a new rail locomotive planned to service BMA’s new coal mines.

BEING charged too much? Maybe it is time to go into competition with the seller.

That appears to be the view of BHP Billiton Mitsubishi Alliance, which will begin loading its own coal trains from late next year or early 2014.

BHP has released an illustration of a blue, yellow and orange locomotive that it will use to ship coal from its new Caval Ridge and Daunia mines.

Although still tied to commercial contracts with freight powerhouse QR National, these snaking trains will deliver some of BMA's coal to the port while QRN takes care of the rest.

The logic, according to BHP Billiton coal chief executive Marcus Randolph, is that once its trains begin running next year, the miner should be able to swing a better deal when it renegotiates its QRN deal in 2015.

"Because the great majority of our rail contracts roll over in fiscal year 2015, we're creating another way of ensuring that we have competition in that basin and - this is in our words - we're putting a ceiling on what we expect to pay for rail transport to get the coal from our operations to our port," Mr Randolph told a conference in Sydney this week.

"Having our own rail system, operating it in your own port system is a hell of a strategic advantage in terms of making choices as you go forward."

The trains will be run and owned by BMA, with its staff in the cockpits.In July, BMA signed a deal to have Siemens supply 13 locomotives delivered, capable of hauling up to 15 million tonnes of coal per year.

Bradken Resources - a firm founded by former BHP steelworkers in 1922 - will supply the coal wagons.

Pacific National has agreed to provide maintenance for BMA's four train sets.

A BMA spokeswoman said the trains would deliver coal from Caval Ridge, Daunia and potentially other mines to Hay Point Coal Terminal while operating on the current rail network.

BMA declined to comment on its commercial arrangement with QR National.

Topics:  bhp billiton mitsubishi alliance coal train

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