Mount Isa Line Rail Infrastructure Master Plan - Queensland Rail

Mount Isa LineRail InfrastructureMaster Plan2012

CEO statementI am proud to present theQueensland Rail Mount Isa LineInfrastructure Master Plan 2012 toour customers, industry, governmentand other stakeholders.The Mount Isa Line is unique.Unique in its history, unique in itsoperating characteristics and uniquein its unprecedented potential.Significant new mineral depositscoupled with the discovery ofcoal in the Northern Galilee Basinindicates that the Mount Isa Line ison the cusp of exponential growthopportunities. Queensland Railis committed to transporting theforecast tonnage anticipated to berailed on the Mount Isa Line.It’s not only the Mount Isa Linethat is changing; Queensland Rail istransforming too.During 2011, Queensland Rail wasawarded International CustomerService Standard recognition.Queensland Rail is now the firstfully integrated rail transportcompany in the world to achievethis certification. Our customers areour absolute priority.We remain committed to developingthe company from its previous assetbased focus to a fundamentallycustomer centric operation. Asthe asset manager of the MountIsa Line, Queensland Rail is notonly in the business of providingaccess to our network. We havethe expertise to design, construct,maintain and manage any networkconfiguration deemed necessary byour customers.We are working closely with ourcustomers to understand theirindividual markets and growthopportunities and we will be thereto help grow and improve theirbusiness. The current and futureneeds of our customers remain ourkey priority.We are focused on continuing ourproud history within the region.We will continue to support thecommunities along the Mount IsaLine and remain a dominant driverof economic activity in North andNorth West Queensland.Jim BensteadA/Chief Executive Officer

IntroductionExciting opportunitiesThe Mount Isa Line is 1032kilometres of track which extendsfrom Stuart (near Townsville)to Mount Isa and includes thePhosphate Hill branch. The lineservices a number of communitiesalong the line through passengertransport, the conveyance ofgeneral freight and remains a majoremployer along the corridor. Theline is the critical link from the NorthWest Minerals Province to the Portof Townsville where the majority ofbulk productsare exported.The Mount Isa Line is of particularnational interest as it runs alongsome of the world’s largestdeposits of copper, lead, zinc, silverand phosphate rock. The regionsurrounding the Mount Isa Lineproduces 75% of Queensland’snon-coal mineral output. As a resultof strong international demand forcommodities, exploration in theNorth West Minerals Province hasincreased significantly in recent years.Current interest in developingsubstantial coal deposits in theNorthern Galilee Basin underwritethe unprecedented growthopportunities for the Mount Isa Line.These opportunities will ensure theregion continues to make significantongoing contributions to the local,state and national economies.The Queensland Rail Mount IsaLine Rail Infrastructure Master Plan2012 aims to clarify our strategicplanning for specified growthscenarios to assist customers,regional and local planningbodies and other stakeholders inpreparing and developing their owndevelopment strategies. The planpresents options to enhance thecapacity of the system to cater forbase, medium and high tonnagegrowth scenarios.Whilst it is difficult to forecastthe success of potential miningventures, Queensland Rail hasundertaken significant analysisto develop three potential growthscenarios and to provide a broadvision of the rail infrastructurerequired to underpin the forecastgrowth. Capital investmentestimates have been determinedto provide a basis for planning.Indicative timelines for constructionhave similarly been included.Queensland Rail is confident of thepotential of the Mount Isa Line. Thebase case forecast growth scenariosees an increase to approximately 8mtpa on the system; a 43% increasefrom current levels.Queensland Rail is focused on beingan active supply chain partnerto assist our customers to growand improve their business, whilstproviding a safe and reliable networkfor the passage of bulk goods to thePort of Townsville and beyond.3

Queensland RailA new eraOn 1 July 2010, Queensland RailLimited was established as anintegrated passenger and railinfrastructure business servicing thepassenger, tourism, resources andfreight markets.Although Queensland Rail is a neworganisation, it has more than145 years of history and over thattime has become an irreplaceablepart of communities throughoutQueensland. Queensland Railhas played a major role in thestate, providing the backbonefor economic, social and regionaldevelopment across Queensland.Strengthening these links andsupporting the growing state ofQueensland is a core focus of thenew Queensland Rail.Underpinning the business strategyare the five pillars of Safety,Customer, People, Commercial andCommunity.Safety: Safety remains QueenslandRail’s top priority, focusing onstrengthening the safety culturewithin the organisation and thesystems and processes that supportit. Queensland Rail is focused onmaintaining Zero Harm for allemployees, customers and thegeneral public.Customer: Queensland Rail isdedicated to working with ourcustomers to meet and exceedtheir expectations. We are formingclose relationships with customersto understand individual markets,key drivers and the growth potentialof businesses. Queensland Railis focused on helping to growand improve the business of ourcustomers.People: We recognise that ourpeople are our greatest asset.Queensland Rail is an accountableorganisation fostering a highperformance culture throughencouraging and growing talentand providing continuous learningopportunities.Commercial: The commercialobjective centres on building asound foundation for QueenslandRail’s governance frameworks,systems and processes andproviding a financial return for thestate of Queensland. Historically,Queensland Rail has providedthe necessary funded capitalenhancement to the Mount Isa Lineto ensure available capacity existsfor market growth. This is a strategywe aim to continue.Community: As the only railpassenger transport provider inQueensland and manager of morethan 7000 kilometres of the state’srail networks, Queensland Rail playsa role in almost every Queenslandcommunity. Queensland Rail willpartner with the community tostrengthen its ties with the peopleof Queensland and make a truedifference in their lives.theofQueensland4

A new focusIn October 2011, Queensland Railbecame the first fully integratedrail transport company in the worldto achieve International CustomerService Standard certification. Asan International Customer ServiceCertified organisation, QueenslandRail’s strong and committed effortscontinue to transform the companyfrom its previous asset based focusto a fundamentally customercentric orientation.Our customers needs are ourabsolute priority. Queensland Railwill continue to focus on improvingcustomer service levels which willtranslate into more tonnes on theMount Isa Line and a better returnfor the state of Queensland.Regulatory environmentIt is important to note theregulatory environment in whichwe operate. Queensland Rail, asone of the monopoly owners of raillines in Queensland, has obligationsunder legislation and is regulatedby the Queensland CompetitionAuthority. This includes QueenslandRail providing open and transparentaccess to its rail network foroperators, which includes access tothe Mount Isa Line.Queensland Rail is operating underthe QR Network Access Undertaking(2008) June 2010 which providesguidance for access seekers lookingto obtain access to the QueenslandRail network. Queensland Rail isin the process of preparing a newvoluntary Draft Access Undertakingwhich is expected to be finalisedand replace the current AccessUndertaking during the second halfof 2012.All rail operators must have avalid Access Agreement withQueensland Rail in order to operateon the Queensland Rail network.The Mount Isa Line now hasthree accredited rail operators:QR National, Pacific NationalQueensland and Queensland Rail.As Queensland Rail’s constitutionprecludes it from running aregistered freight rail operation (weare only registered as a passengeroperator), we are able to maintaincompetitive neutrality for alloperators on the Mount Isa Line.Queensland Rail looks forward tothe continued growth of the lineand potentially the introduction ofmore customers to this diverse andprosperous region.5

The Mount Isa Rail corridorFast facts:Asset replacement value:$12.8 billionLength: 1032 km Current tonnages railed: 5.8mtpaRail:41, 47, 50, 53 and60kg/mGauge:NarrowAxle load: 20 tonne Mainline sleepers: Concrete 75%; Steel 25%Maximum line speed: 80km/hr Max train length 1000mSafeworking system: Direct Traffic Control Train Control Centre: TownsvilleRegional mineral production: AUD $6.67 billion Maintenance personnel: 115Seasonal considerations:Extreme heat and heavy monsoonal rains during the summer monthsProducts railed:CopperSulphuric acidGeneral freightLeadCementFertiliserZincLivestockPassengersMagnetiteSulphurRecent enhancementsQueensland Rail continues toexplore ways of using technology tofurther improve the reliability of theMount Isa Line. Since the release ofthe 2009 Infrastructure Master Plan,Queensland Rail has achieved thefollowing safety and performanceenhancements:Installation of concrete sleepersAn additional 64km of concreteresleepering has been completedbetween Rifle Creek–Mount Isa;Malbon–Bungalien and Julia Creek–Undina. This work continues theupgrade to concrete sleepers inthe more challenging areas whichare complicated through difficultgeographic conditions coupled withthe isolation of the area.Automated GeometryMeasuring SystemThe AGMS is an unmanned trackrecording machine incorporatedinto a train consist which completesa weekly assessment of the track.The machine measures the trackgeometry and the profile of the railwhilst also capturing video of therail. The data captured is transferredback to Network Regional engineersvia the 3G network for analysis. Thesystem additionally sends out alertssuch as high priority defects to fieldstaff that require urgent attention.Weather monitoring stationsA total of 32 weather monitoringstations have been installed alongthe Mount Isa Corridor in locationshistorically impacted by seasonalflooding. These provide critical realtime information on temperature,rainfall and the height of rising wateraround the fixed infrastructure.Alerts are sent to both field staff andthe Townsville Control Centre as awarning for increased monitoring.This comprehensive data is nowbeing shared with the Bureau ofMeteorology to assist with weathermonitoring and seasonal modelling.6

Hot Box detectors have beeninstalled at Rifle Creek and Tibarri.These provide a simultaneous alarmto the train driver and TownsvilleControl Centre that detect bearingson rollingstock that are projectingheat and noise signatures outsidenormal operating parameters. Thisis an indicator of potential failure,allowing intervention by train driversand train control to reduce the riskof bearing failure and derailments.By The Mount Isa Rail Corridoridentifying defective componentson rollingstock we can proactivelyreduce the cause of derailments,delays to services or damageto below rail infrastructure androllingstock.Overload detectorsQueensland Rail is currently triallinghigh speed overload detectorsat Pymurra and Rifle Creek. Thedetectors monitor the weight ofindividual wagons and additionallyhighlight any loading irregularitieswhich can increase the risk ofderailments and have serious safetyconsequences for both the railoperator and the network.Level crossing upgradesLevel crossings on the Mount IsaLine have been upgraded withthe installation of flashing lightsand boom gates at Malbon andMount Isa. These upgrades werepart of Queensland Rail’s strategicsafety pillar, ensuring the safetyof its people, customers and thecommunity.7

Current rail operatorsQR National is the largest railfreight haulage operator inAustralia by tonnes hauled,operating in key freight sectors andsupply chains across the country.QR National is focused primarilyon large, heavy haul rail tasks suchas the transportation of coal, ironore, other minerals, agriculturalproducts and general freight as wellas containerised freight.GPO Box 456Brisbane QLD 4001Telephone: 13 23 32qrnational.com.auPacific National is Australia’slargest private rail freight business.Operating in all states and theNorthern Territory, Pacific Nationalis a transport leader, deliveringinvestment, innovation and growthin rail to provide the competitiveanswer for transport customers.Pacific National is fully owned bythe Australian Stock Exchangelisted entity Asciano.PO Box 95Stones CornerBrisbane QLD 4120Telephone: +61 7 3426 5800pacificnational.com.auQueensland Rail is the state’snumber one passenger serviceprovider, carrying more than 55million passengers a year andconnecting people and destinationsthroughout Queensland.The Inlander passenger service runsfrom Townsville to Mount Isa twiceevery week.Queensland Rail TravelPO BOX 1429Brisbane QLD 4001Telephone: 1800 872 467queenslandrail.com.au8

Growth potentialA region of possibilitiesFollowing favourable increases tocommodity prices, exploration inthe North West and North EastMineral Provinces has significantlyincreased.Sizeable deposits are beingidentified that will potentially addconsiderable additional tonnages tothe Mount Isa Line. These productsinclude phosphate rock, copper,lead, zinc and sulphur.Minerals are currently the keyproduct transported on theMount Isa Line and expansions ofexisting mines and developmentof additional deposits are likely inthe future. Exciting opportunities inthe Northern Galilee Basin are alsoemerging with interest developingin significant coal deposits. Coalhaulage by rail may fundamentallychange the operations of the MountIsa Line.Whilst it is difficult to forecastthe success of potential miningventures, Queensland Rail hasundertaken significant analysisto develop three potential growthscenarios and to provide a broadvision of the rail infrastructurerequired to underpin the forecastgrowth. Capital investmentestimates have been determinedand indicative timeframes forconstruction have similarly beenincluded.The development potential forthe Mount Isa Line is enormous.The Base Case growth scenariorepresents a 43% increase oncurrent tonnages on the network.Queensland Rail is keen to work withprospective customers with a viewto increasing tonnages transportedon the Mount Isa Line.9

Mount Isa corridor capacityThe rail perspectiveThe static method used to calculatecontractible capacity in theprevious Mount Isa System RailInfrastructure Master Plan 2009has been retained for this plan.Currentusage(mtpa)Stuart toHughendenHughendento CloncurryCorridorCloncurryto FlynnFlynn toMount IsaFlynn toPhosphateHill4.7 4.7 2.9 2.7 2.1On a single track corridor such asthe Mount Isa Line, QueenslandRail uses a simple principle thattheoretical capacity on a given dayis calculated by the total number ofminutes in the day divided by thelongest sectional run time.This theoretical calculation impliescontinuous occupation of thelongest section, which in reality isunsustainable. Other factors needto be taken into consideration toprovide a more practical calculationof capacity. Queensland Rail appliesa reduction factor of 30% to thetheoretical capacity to take intoaccount operational issues such assafeworking requirements, speedrestrictions, different train typesand transit times. A maintenanceallowance of four hours per dayis also applied to ensure theappropriate time is allocated tomaintenance activities whichare necessary for the continuedreliability and safe operation of thenetwork.The 2012 Mount Isa Line MasterPlan provides an additional capacityanalysis by individual corridor fromthe 2009 Plan. This reflects thatnot all traffic on the Mount Isa Linetraverses the entire line from MountIsa to Townsville.There is currently capacity availableon the line for the contractedtonnes. Whilst capital investmentmay not be required for a slightincrease in tonnes, any growth fromcurrent levels will be accompaniedwith increased maintenance coststo cover the impact of additionaltonnages on the network. Thisincrease in maintenance will berecovered through access charges.Historically, Queensland Railhas provided timely capacityenhancements to aid the growthin tonnages on the Mount IsaCorridor. In the future, capacityenhancements will continue tobe delivered for future projectsprovided that contracted tonnages:• are sufficient to justify thenecessary investment oncommercial terms• adequate notice is givenfrom the time of contractingcapacity to deliver the requiredenhancements.To ensure that capacity andtrack condition is appropriateto accommodate demand fornew projects, Queensland Railencourages rail operators, miningcompanies and/or processors toengage with Queensland Rail at theearliest possible opportunity. Thiswill allow sufficient time to workthrough detailed capacity analysisand to determine the capacityand network upgrades necessaryand negotiate all commercialagreements including an accessagreement.Queensland Rail acknowledges thatoperational capacity is an outputof the interaction between rail trackinfrastructure and our customers’rollingstock. We are encouragedby the recent capital investmentour customers are making in theirbusinesses and are excited by thenew generation rollingstock beingdeveloped by global manufacturers.Ensuring our infrastructure canmeet technological enhancementsin rollingstock design will remain acentral pillar of business strategyinto the future.10

MaintenanceEnsuring a safe andreliable networkMaintaining the network in a fit,safe and reliable state is a safetypriority for Queensland Rail.Maintenance costs have beenincluded in all growth scenariosas any significant increase intonnes will translate into highermaintenance requirements.These costs will be funded throughaccess charges. Queensland Railhas developed a planned programto upgrade infrastructure on theMount Isa Line to increase thelong term stability of the networkwhich includes:• Replacing steel sleepers withconcrete sleepers• Replacing light rail with heavy rail(60kg/m).At present there is 380km of trackwith 41kg/m or 47kg/m rail onsteel sleepers remaining, consistingof 116km in crossing loops and264km on open track which needto be addressed. Queensland Railaims to continue the resleeperingand rerailing to complete thetransformation of the entire systemto concrete sleepers and heavier rail.The current timing of the programis dependant on sufficient growthoccurring on the line to provide theadditional funding for these works.Should significant additional tonnesbe contracted on the network,the works program will need to beaccelerated to coincide with theincreased traffic.“Transportation Technology CentreInc considers the current level oftrack maintenance adequate for thecurrent duty. Evidence for this is theconsistently good track geometryfor several years and the controlbeing shown over speed restrictionsand track buckles.”(extract from ‘Mount Isa Line Review’ P-10-036. Preparedby John Tunna, Transportation Technology Centre, Inc. Asubsidiary of the Association of American Railroads, Pueblo,Colorado, USA. Sep 8 2010.)11

Forecast growth scenariosUnlocking the potentialMount Isa Line growth scenariosDeveloping tonnage forecasts forthe future is difficult and reflectsthe challenges of precise calculationof mine start timeframes andfluctuation in demand arisingfrom global commodity prices.There are many methodologies,trends and assumptions thatmay be valid in the short term.However fundamental shifts inMillion tonnes per annum605040302010HighMediumBasethe market may quickly makesuch approaches invalid.0Time2011/12The 2009 Master Plan identifiedthree growth scenarios: 7.8mtpa, 12.5 mtpa and 20 mtpa.Queensland Rail has redevelopedthe series of traffic flow scenarioson the anticipated and potentialoutputs from various miningand processing projects in theregion. Due to the discovery andsubsequent proving of coal reservesin the Galilee Basin, the high growthscenario from 2009 (20 mtpa) nowconstitutes the medium growthscenario for 2012. The high growthscenario in 2012 sees in excess of50 mtpa moving along the MountIsa Line.The Stuart to Hughenden corridorhas the greatest potential forgrowth with the discovery of coaldeposits in the Galilee Basin. Thesedevelopments will deliver significanttonnage growth on the corridorrequiring considerable capacity andnetwork upgrades.Base Case: 8 mtpaThe base case scenario seeksto provide the capacity neededto accommodate a reasonableprojection of growth whilst ensuringthe sustained reliability of thenetwork.This scenario overlays the currenttraffic with anticipated changes to:• Increased copper concentratesfrom Cloncurry and Mount Isa• Increased zinc concentrates fromMount Isa• Alterations to acid and sulphurtonnage flows across the corridor.The Base Case constitutes a realisticscenario of business as usualwith the continued operation ofrail freight and bulk haulage intothe Port of Townsville along theexisting rail corridor. A minimal levelof investment will be required toincrease the capacity of the line.Capacity enhancementsAn increase to approximately8 mtpa will require a smallamount of user funded capacityenhancements. These includeadditional crossing loops andholding roads. Depending on thetraffic task, tonnage level and loadlocation, approximately two newcrossing loops for 1000m trainsand four new holding roads willbe required. This increase affordsimprovements to not only capacity,but improved cycle times andoperational flexibility.Crossing Loop: $5.6 million per loopHolding Road: $5.2 million per roadOperational improvementsIn order to transport 8 mtpa alongthe Mount Isa Line, Queensland Railwill be working with rail operatorsto facilitate the operation of longertrains to approximately 1000metres where possible. The increasein tonnages able to be hauled oncurrent train paths will provide thepotential for an increase in systemcapacity from the same number of12

available train paths.Network condition upgradesThe Mount Isa Line in its presentconfiguration is suitable for thecurrent traffic task. To almost doublethe current railing on the line to8mtpa would require an upgrade tosome parts of the line. This includesreplacing steel sleepers to concretesleepers and replacing all 41kg/m railto a heavy duty 60kg/m rail.• Resleepering: $1.05 million per km• Rerailing: $0.7 million per kmThere is currently 380km of steelsleepers remaining (includingcrossing loops) on the network. Anyupgrades to the current structurewould be user funded investment.Medium growthscenario: 20 mtpaSignificant reserves of coal havebeen confirmed in the NorthernGalilee Basin and the MediumGrowth Scenario introduces aconservative initial railing of 10mtpa of coal between Hughendenand Stuart. This increases thetonnage level to almost fourtimes the current volume on theMount Isa Line. At this heightenedtonnage level, coal trains have beenmodelled as longer trains (nominally1500m).The Medium Growth Scenario alsoincludes increases in:• Copper concentrates fromCloncurry• Phosphate Rock from Mount Isa• Sulphur from Townsville.Capacity enhancementsSignificant capacity enhancementswould be required betweenStuart and Hughenden (thepotential loading point for coal).All enhancements would be userbased investment. Depending oncustomer requirements, duplicatinga significant portion of the linebetween Hughenden and Stuartmay be more economical thaninstalling individual crossing loops.The optimal capacity configurationwill be established with customersonce all requirements and operatingparameters are confirmed. Existingcrossing loops would need to beextended to cater for 1500m trains.• Extension of Crossing Loop to1500m: $2.1 million per crossingloop• 1500m Crossing Loop: $7 million• Duplication of Line:$3.5–$6 million per kmQueensland Rail will consultwith customers on capacityenhancements for their individualprojects to ensure these align withbusiness requirements and maintainor improve supply chain efficiencies.Operational improvementsAt increased tonnages, QueenslandRail will investigate the use of:• New Generation Rollingstock –including increased locomotiveperformance and electronicallycontrolled pneumatic (ECP) brakingas a standard specification inaccess agreements• Contractual alignment toperformance• Reconfiguration of network;with an evolving form of trainmanagement system to improvecycle times and the efficiency ofoperations. Any investment wouldbe funded by the access seekeron the basis of the cost savingsfrom more efficient operationsbeing greater than the cost of thereconfiguration.Network condition upgradeA substantial increase in themaintenance program would also berequired to maintain the reliabilityof the track at this heightenedtonnage level.Additional considerationsA significant increase in traffic (>10mtpa) on the Mount Isa Line tothe Port of Townsville will increasecommuter traffic congestion aroundthe Townsville City Centre. At thispoint, the Townsville Eastern AccessCorridor would be required toredirect the Mount Isa Line servicesto the dedicated rail corridor foruninterrupted access to the Port ofTownsville, relieving impacts on thenumerous level crossings within thecity centre.13

High growth scenario:50+ mtpaThe high growth scenario builds onthe medium growth assumptionsand includes:• 30+ mtpa of coal from Hughenden• 5 mtpa of additional product fromCloncurry• 3 mtpa of additional productfrom/to Phosphate Hill.At this tonnage level, QueenslandRail would undertake a detailedcollaborative consultation withcustomers to determine the best fitfor operations and tonnage flows.This would include full alignmentwith supply chain partners.Potential suggestions may include:• Full duplication of line betweenHughenden and Stuart• Introduction of new train controltechnologies• Construction of a dedicated coalcorridor between Charters Towersand Kaili (for access to the AbbotPoint Coal Terminal).Queensland Rail will work withcustomers to design, construct,maintain and manage any networkconfiguration, built to satisfy theirrequirements and maximise theefficient tonnage throughput ofthe line.Queensland Rail is keen to capitaliseon the growth of the Mount IsaCorridor and will provide thecapacity and network upgrades forany realistic demand requirementsgiven sufficient funding andadequate time to deliver theenhancements.14

Potential growth scenariosIndicative capacity enhancements, costings and timeframesGrowth scenariosCorridorStuart–Hughenden Hughenden–Cloncurry Cloncurry–Flynn Flynn–Mount Isa Flynn–Phosphate HillBase caseTonnes (mtpa) 7.8 7.8 5 2.5 3Capital enhancements required2 crossing loops;2 holding roads2 holding roads - - -Indicative capital cost $22m $11m - - -Construction timeframe 18 months 18 months - - -Maintenance requirementsResleepering/ rerailing;bridge upgradesResleepering/ rerailing;bridge upgradesResleepering/rerailing Resleepering/rerailing -Indicative cost $67m $354m $27m $6m -Construction timeframe 2 years 5 years 18 months 12 months -Total cost $89m $365m $27m $6m -Medium growth (includes costs from the base case) All access to the Port of Townsville is through the Eastern Access Corridor.Tonnes (mtpa) 20.9 10.9 7.8 5.3 3Capital enhancements requiredDuplicate 60km4 holding roadsExtend all crossing loops2 crossing loops2 holding roadsExtend all crossing loopsExtend all crossing loops Extend all crossing loops Extend all crossing loopsIndicative capital cost $395m $55m $6m $4m $2mConstruction timeframe 3 years 3 years 18 months 18 months 18 monthsMaintenance requirementsResleepering/rerailingResleepering/rerailing;Bridge upgradesResleepering/rerailing Resleepering/rerailing Safety improvementsIndicative cost $236m $463m $119m $11m $8mConstruction timeframe 3 years 5 years 2 years 12 months 12 monthsTotal cost $631m $518m $125m $15m $8mHigh growth (includes costs from the medium growth and base case)Tonnes (mtpa) 49.2 19.2 11.1 5.3 3Capital enhancements required2 crossing loops - -Indicative capital cost $17m $4m $2mConstruction timeframe To be determined by customer To be determined by customer 18 months - -Maintenance requirements requirementsrequirementsResleepering/ rerailing Resleepering/ rerailing Safety improvementsIndicative cost $137m $34m $9mConstruction timeframe 2 years 12 months 12 monthsTotal cost TBD TBD $153m $38m $11mInformation provided in the growth scenario table does not constitute a commitment by Queensland Rail to complete these works. The suggested improvements are based on detailed capacity analysis with set operating assumptions undertaken byQueensland Rail. Any infrastructure alterations will be determined with customers once all requirements and operating parameters are confirmed for any tonnage increase. Queensland Rail will design, construct, maintain and/or manage any networkconfiguration, built to satisfy customer requirements and maximise the efficient tonnage throughput of the line. We encourage open and transparent dialogue with our customers to ensure this is achieved.15

An integrated supply chainWorking togetherThe system currently operates athigh levels of asset utilisation formany components of the supplychain and there is potential forimprovement through innovativesupply chain operations andcollaborative planning with allsupply chain stakeholders.Queensland Rail is focused on threekey priorities with regards to theMount Isa Line Supply Chain:1. Maximising tonnage levelsusing current assets2. Aligning asset capabilitieswith supply chain partners3. Aligning capital investmentwith supply chain partnersThe first priority concentrates onshort term operational improvementsto increase tonnage levels using thecurrent assets. Such operationalimprovements focus on:• Reducing system variability• Increasing planning disciplines• Increasing system reliability• Increasing communicationto foster transparency andaid decision making: In 2010,Queensland Rail introduced aregular supply chain forum for allstakeholders. These open forumsare aimed at informing supplychain partners and stakeholders ofplanning activities, maintenanceupdates and other relevantinformation.• Investigating differing operatingmodels eg longer trains: Longertrains enable the same numberof tonnes to be moved betweenany two points with fewer trainsand therefore potentially uses lessnetwork capacity. Queensland Railwill be working with rail operatorsto facilitate the operation oflonger trains on the Mount IsaLine to approximately 1000 metresin the first instance where possible.The second supply chain priorityaligns the capacity capabilities ofassets in the medium term. Thisinvolves investigating the throughputof each supply chain facility – mineload out, rail, haulage operator, portunloading, shipping facilities.• Ensure bottlenecks in system canmaintain the required throughput• Ensure asset capability throughthe system remains balanced.The longer term priority is to aligncapital investments across the entiresupply chain.The implementation of moreintegrated planning acrossthe supply chain is a fantasticopportunity for Queensland Railand other supply chain stakeholdersto realise the potential benefitsof operational efficiencies onthe Mount Isa Line. Processimprovements will encouragediscipline in planning and executionthroughout the supply chain fromall stakeholders.17

The Port of TownsvilleA critical linkThe Port of Townsville is a criticalsupply chain partner on theMount Isa Line and is the primarydestination for the majority ofproducts hauled on the line.Queensland Rail maintains andfosters a close working relationshipwith the Port of Townsville todevelop and align capacityenhancement plans.Together Queensland Rail and thePort of Townsville are working tocreate the optimum supply chainenvironment to meet the futureneeds of industry, unlocking thepotential of the region.Integrated planning is welladvanced for the establishment ofadditional capacity and removal ofsupply chain bottlenecks.Guided by the Port of TownsvilleMaster Plan (2007), key initiativesbeing investigated include theestablishment of Common UserFacilities and infrastructure toefficiently manage the exportof coal through the EasternReclamation Area. This process willensure that export trade throughthe Port of Townsville remains thekey economic driver for Townsville;cementing Townsville’s position asnorthern Australia’s fastest growingeconomic region.18

Abbot PointProviding options forour customersThe anticipated coal tonnages to bemined in the Galilee Basin adjoiningthe Mount Isa Line are significant,particularly when compared to thecurrent traffic task. QueenslandRail is therefore investigating alloptions for customers in order todeliver the required coal tonnagesto port. This includes the possibilityof constructing a new rail lineconnecting the Mount Isa Linein the vicinity of Charters Towersdirectly to the North Coast Line foraccess to Abbot Point.This option may provide customerswith greater economies of scalethrough the provision of directaccess to the expanding deep waterbulk commodity export port ofAbbot Point.19

Enabling infrastructureInnovative businesssolutionsQueensland Rail welcomes innovativeand unique business models thatwill facilitate tonnages to match theneeds of our customers. Historically,Queensland Rail has funded, built,maintained and managed all railassets. Moving forward, QueenslandRail is seeking to engage with newstakeholders in a variety of differingbusiness solutions.A number of different businessmodels are currently beinginvestigated for enabling assetsalong the corridor including:• Assets owned and operated bythe customer• Assets owned and operated by athird party• Multi user funding variations• Multiple mining companiesproviding equity and jointlydeveloping rail infrastructure• Multiple third party equityproviders developing railinfrastructure for miningcompanies• Multiple third party equity providersdeveloping rail infrastructure formultiple mining companies.Some potential projects which arecurrently being scoped are:• Townsville Eastern Access Corridor• Common User Facility at the Portof Townsville• Various load-out facilities alongthe corridor.Eastern Access CorridorShould tonnages significantlyincrease, one major project whichwill be required is the TownsvilleEastern Access Corridor. The EasternAccess Corridor is an 8km greenfield rail line which if developed,would provide a dedicated railcorridor for the Mount Isa Lineallowing uninterrupted access to thePort of Townsville. The project is inthe vicinity of approximately $280million with construction expectedto take two years once approvals arereceived.The key objectives of the EasternAccess Corridor are:• Increase volumes transported onthe Mount Isa Line through thePort of Townsville• Improve efficiency with longerand faster trains• Reduce bottlenecks in and aroundthe Port of Townsville• Improve urban amenity, includingincreasing safety and reducingtraffic delays by diverting bulkfreight transport away from busyTownsville suburbs.Existing RailExisting RailCommon Future LinkFuture RailTSDAThe Eastern Access Corridorbecomes essential with tonnagelevels beyond 10 mtpa due to thetraffic congestion caused by a largenumber of trains servicing thePort of Townsville across numerouslevel crossings within the TownsvilleCity Centre. Queensland Rail ismindful of the negative impactsuch traffic flows may have on theTownsville Community. All supplychain stakeholders are workingcollaboratively to determine themost suitable location for industryand the Townsville Community.Three potential options areillustrated above.The Eastern Access Corridor,as part of the Mount Isa Line,was placed on the InfrastructureAustralia Priority List in 2010and was declared a nationallysignificant project in 2011.The project is currently in thePreliminary Evaluation stageof the Queensland StateGovernment’s Project AssuranceFramework which is aimed atevaluating the economics of theproject and delivery options.20

Unlimited potentialQueensland Rail welcomesopportunities to work withcustomers with a view totransporting additional tonnageson the Mount Isa Line.We encourage rail operators,mining companies and/orprocessors to engage withQueensland Rail at the earliestpossible opportunity. This will allowsufficient time to work throughdetailed capacity analysis and todetermine the network upgradesnecessary and negotiate appropriatecommercial arrangements.Capacity enhancements willcontinue to be delivered for futureprojects provided that contractedtonnages:• are sufficient to justify thenecessary capital investment oncommercial terms• adequate notice is givenfrom the time of contractingcapacity to deliver the requiredenhancements.We invite all current and prospectivecustomers to discuss their accessrequirements with us.We will continue to work closelywith our customers to understandtheir individual markets and growthopportunities and we will be there tohelp grow and improve their business.Our customers are our absolutepriority.21

Key contactsWe’re here to helpGroup General Manager Network BusinessGPO Box 1429Brisbane 4001Phone: 07 3235 5325General Manager Network CommercialGPO Box 1429Brisbane 4001Phone: 07 3235 3609General Manager Customer Service NorthPO Box 1102Townsville 4810Phone: 07 4772 887222

Queensland Rail Limited ABN 71 132 181 090_QR4159.1_A4_0812