In an announcement to the ASX on Tuesday, Aurizon Holdings (ASX:AZJ) announced an 11-year deal with Chinese miner Caledon Coal. The long-term, performance based contract will see the haulage of up to $4m tonnes per annum (mtpa) of coal with a ramp-up profile from Caledon’s Cook mine in Central Queensland to the new Wiggins Island Coal Export Terminal (WICET). “The new-form contract will deliver a modern and flexible agreement for both companies and cement a long-term relationship between the two companies for the haulage of coal,” the report said. The 11-year contract is effective from May 2015, when WICET commences shipping for customers and will run until June 2026. The contract is contestable and supersedes Aurizon’s existing contract for 500,000 tonnes per annum.
The Chinese state-owned company Guangdong Rising Assets Management (GRAM) owns Caledon. It recently made a bid for the Australian copper and gold miner PanAust, but the deal was rejected as “inadequate.” The contract will involve 80 per cent coking coal and 20 per cent thermal from the Cook underground mine. The board members of Australia’s largest rail freight operator hailed on contract as an “exciting” prospect for future growth. “Aurizon is delighted to renew and extend its relationship with Caledon through to 2026,” said Executive Vice President of Commercial & Marketing Mauro Neves. “With these significant expansion tonnages, Caledon is showing great confidence in the strong future of the Queensland coal sector. Aurizon is pleased to secure this contract and partner with Caledon in this growth.”
Shares of AZJ are down 13.5c, or 2.7 per cent, at $4.87 per share around 2:51pm on Tuesday. AZJ has fallen 6.5 per cent in the last 12 months but has risen 5.4 per cent so far this year.
Author: Simon Herrmann
Apr 28, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.