Australian Coal Miners Push to Join Aurizon Review Against QCA

- June 27th, 2018

The judicial review application was filed by Aurizon in an effort to scrap a draft Queensland Competition Authority ruling limiting its business revenue.

After months of heated debate, 10 of Australia’s largest coal producers want to have their say. The 10 miners want to join a judicial review application filed by Aurizon Holdings (ASX:AZJ) against the Queensland Competition Authority (QCA) in the Supreme Court of Queensland.

Aurizon, Australia’s largest rail freight operator and the primary transport company for much of the country’s coal sector, began the judicial review application in late April.

It cited “apprehended bias” and conflict of interest by QCA Chairman Professor Roy Green as its reasons for doing so; Green is also chairman of the Port of Newcastle in New South Wales, which is part of the Hunter Valley coal supply chain.

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The judicial review application is Aurizon’s effort to scrap a draft QCA ruling limiting its business revenue. The QCA ruling allowed for AU$3.89 billion in network revenue for the rail operator, a number which Aurizon claims is AU$999 million less than it wanted.

“Aurizon is seeking Judicial Review of the Draft Decision on the basis that it was affected by legal error because the Queensland Competition Authority did not afford procedural fairness to Aurizon Network due to Professor Green’s conflict of interest and the apprehension of bias,” the company said at the time.

According to Aurizon, the almost AU$1-billion deficit will jeopardize the transport of as much as 20 million tonnes of coal a year, with 10 million tonnes lost from the Goonyella line, 8 million tonnes from the Blackwater line, 1.5 million tonnes from the Moura line and 300,000 tonnes from the Newlands line. That represents approximately 10 percent of total exports for the country.

This is where the country’s coal miners come in. Because they rely on Aurizon to transport their coal, they retain a vested interest in the company’s ability to make routine and timely deliveries.

The 10 companies that want to join the judicial review are some of Australia’s largest coal producers, including Anglo American (LSE:AAL), BHP Mitsubishi Alliance, BHP Mitsui Coal, Coronado Coal, Glencore (LSE:GLEN), Idemitsu Kosan (OTCMKTS:IDKOY), Jellinbah Mining, Lake Vermont Resources, Peabody Energy (NYSE:BTU) and Yancoal Australia (ASX:YAL)

Last year, when Aurizon first sought legal intervention, the QCA urged stakeholders to work towards a collaborative resolution, stating that it “encourages Aurizon Network and its customers to engage with each other in order to reach a pragmatic consensus on these matters.”

Despite wanting in on the judicial application, the coal miners are outspokenly opposed to Aurizon’s operation reduction. The nearly dozen coal producers placed a full-page ad in the country’s major newspapers on Wednesday (June 27) urging Aurizon to revert back to its regular maintenance practices.

The ad accuses the rail operator of damaging the reputation of Queensland’s coal industry while also causing a loss of royalties for the state, disregarding its customers and putting its shareholders’ investments at risk. It calls for Aurizon to “get back to the regulatory process.”

At this time it remains unknown if the coal miners’ application will be heard by the court. Aurizon has yet to set a court date for the original application.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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