QR concessions allow 'missing link' deal to be signed

Bowen Central Coal (the Aquila-Vale Australia joint venture) and Lake Vermont (the Thiess Mining project ultimately owned by Leighton) have agreed to become foundation customers of the GAP expansion.

The project includes construction of the "missing link" — a 69 km connection of the Goonyella coal rail system to the Newlands rail system — along with upgrades to the Newlands system and will have a capacity of 50m tonnes a year (mtpa).

It will support the $845m expansion at the Abbot Point Coal terminal, which is underway and committed to by coal companies, premier Anna Bligh said on Friday.

Aquila said the project was central to the joint venture's Eagle Downs hard coking coal project, which is now in its definitive feasibility stage with final approval due in mid-2011 and first production set for late 2014 at a rate of up to 4.6mtpa.

"The joint venture has been negotiating an agreement with QR for more than a year to achieve a logistics solution for its Eagle Downs hard coking coal project," Aquila executive chairman Tony Poli said.

"Initially the commercial conditions were considered by industry insufficiently competitive to warrant commitment but QR has since restructured its original proposal to construct a 50mtpa capacity railway line to Abbot Point Coal Terminal.

"Under the revised conditions, QR has accepted a more appropriate share of the commercial risk and revised the terms to smooth out the initial project costs for foundation customers, which now more closely match contract terms to the port contracts."

However, there were still "significant negotiations" to be conducted to achieve the final contract with QR, Mr Poli added.