Indonesian nickel ban saves Aurizon after CRT shortfall

Bad weather in NSW in April and May, and the sale of CRT Group at the end of 2014 were to blame for a 31% decline in fourth quarter intermodal tonnages, Aurizon said last week.

After acquiring it in 2005, Aurizon sold CRT to Qube Logistics in a deal effective from December 1, 2014. Bad weather and flooding knocked out key rail lines in northern NSW for 18 days in April and May. And on top of that, Aurizon says it suffered through “continuing soft market conditions impacting the broader market,” during the fourth quarter.

Together, those factors combined to cut 900,000 tonnes off Aurizon’s intermodal freight figure in the quarter, a drop of 31% year-on-year.

But the 900,000 tonne intermodal drop was countered by a 900,000 tonne increase in bulk freight (bulk freight excludes coal and iron ore volumes), which rose 10% year-on-year.

Aurizon said this was due to improved nickel volumes, thanks to Indonesia’s embargo on nickel exports, as well as improved performance from a fertiliser customer in QLD, and stronger grain and sugar volumes.

The bulk freight growth worked to deliver Aurizon a 4% increase in overall freight volumes (i.e. all of the company’s business outside of coal and iron ore) for the fourth quarter, to 11.3mt.

It wasn’t enough to counter a soft third quarter, where volumes were down 9%, however, and Aurizon saw a 0.65% drop in freight volumes for the 2014/15 financial year as a whole.

In the major bulk sectors of coal and iron ore, Aurizon reported mixed results.

It saw more growth in coal volumes in NSW in the fourth quarter, but volumes stagnated in its home state of Queensland, where it does the majority of its business.

The operator hauled 41.6mt of coal in Queensland in the quarter, bringing its total to 168.3mt for the 2014/15 financial year – down 1% from 2013/14.

But Aurizon’s market growth south of the border continued, with 11.0mt in the fourth quarter bringing the financial year total for NSW coal volumes to 42.9mt – up 6% year-on-year.

While the Queensland figure was down slightly, the significant growth in NSW meant Aurizon’s national total rose slightly, from 210.4mt in the prior period, to 211.2mt in 2014/15 – a rise of 0.4%.

Coal haulage in terms of net tonne kilometres (NTKs) was in line with volume figures: Aurizon saw a 2% decline in both the June quarter and 2014/15 financial year for its Queensland coal business, and a 19% and 11% increase – in the fourth quarter and full financial year respectively – in terms of NTKs for its NSW business.

Aurizon said June quarter volumes were down year-on-year in Queensland because of weaker Goonyella volumes, and the loss of a 2mt per annum contract from Anglo American in November 2014.

Volumes were driven up in NSW, in contrast, by the commencement of a long term deal with Whitehaven, worth 6.4mt per annum, which commenced on March 1, 2015.

“NTKs [in NSW] increased 19% [in the June quarter], reflecting the longer haulage distances associated with the Whitehaven volumes from the Gunnedah Basin,” Aurizon explained.

The rail company’s smaller iron ore haulage business experienced a 12% decline in volumes and a 13% decline in NTKs, to 6.5mt and 2.7bn NTKs, in the fourth quarter. 25.6mt of iron ore were hauled in the full 2014/15 financial year, down 14%. Iron ore NTKs for the full financial year were down 15%, to 10.4bn.