Pacific National tracks forwards

A bullish position on Queensland coal underpins Pacific National Coal's big spend on a new train maintenance facility. It's a vastly different approach to major competitor QR National.

Amid a raging debate over the apparent demise of the coal boom, Asciano’s Pacific National Coal today launched its much anticipated train maintenance and provisioning facility in regional Queensland.

The $180 million Nebo maintenance facility is intended to support Pacific National Coal’s haulage operations and increase the efficiency of its services in the region.

As the fastest growing coal haulage operator in Queensland, Pacific National Coal transports coal to the Dalrymple Bay Coal Terminal, the Port of Gladstone and the Port of Abbott Point. The rail freight operator boasts contracts with a wide range of clients that include Xstrata, Rio Tinto, Macarthur Coal, Anglo American, and BHP Mitsui Coal.

In a statement accompanying the launch, Pacific National Coal director David Irwin said that with Queensland coal exports expected to grow strongly, the investment is "critical to delivering the most efficient, effective and sustainable coal haulage services".

But with the price of coal falling sharply in the past six months, the timing of the launch is unfortunate.

Against the backdrop of softer demand for coal, Pacific National Coal is optimistic for its Queensland growth strategy. The haulage company remains bullish in predicting strong growth in Queensland coal exports and is committed to ensuring efficient and viable services that reflect this strategy.

The new Nebo train maintenance facility is evidence of this commitment. The facility is the first of its kind in the country, and reflects the innovation that the group has become known for in past years. It has capacity to support 25 coal trains and includes eight bays and two tracks for wagon maintenance.

"We see the future of rail as somewhat difference," Pacific National's general manager of Queensland operations, Geoff Featherstone, told Business Spectator.

"We found a much leaner approach (in constructing) this kind of facility. These leaner type of facilities are going to change the face of rail."

The facility forms part of Pacific National Coal’s growth strategy as it looks to move the business forward in the current environment. By showcasing its innovative technologies such as that seen at Nebo and also at its upcoming Greta facility in the Hunter Valley, expected to be operational in the second half of 2013, Pacific National is setting itself apart from its main competitor, QR National.

While rival QR National is focused on finding cost efficiencies and improving productivity, Pacific National has already established itself as a leader in both of these aspects. The benefit for Pacific National is that it can use this expertise to secure new contracts (and has been doing so), ensuring its longevity in the industry.

The result of this persistence was clear in Asciano’s full-year figures announced last week. The group confirmed it had retained existing contracts while also bringing in new business during the year.

In the past year, Pacific National Coal secured a 10-year contract with Rio Tinto to haul coal from both its Hail Creek mine and its Kestral mine from November 2013. It also secured a new contract with Bandanna Energy to haul coal from its proposed Springsure Creek mine in Queensland.

By focusing on new business opportunities as well as retaining existing business, Pacific National can expect to drive continued growth in Queensland in spite of the difficult environment. Its Nebo train maintenance facility also reinforces the group’s commitment to the long-term prospects of the Queensland coal market.

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