Heavy Haul Rail Conference

31st July 2013

Simon Smart

Vice-President Rail Assets and Operations Development

Unlocking Queensland coal reserves through the joint development of rail

and port infrastructure

2

Introduction to Aurizon

Global Coal Markets & Logistics

Aurizon’s Galilee Solution

Questions

1

2

3

4

Today’s Presentation

Introduction to Aurizon

Aurizon bulk operations

Aurizon rail network

Track Aurizon does not own/operate

Queensland Bulk, regional freight and

intermodal

Queensland Coal Operations

New South Wales Coal Operations

North – South Intermodal

East – West Intermodal

Western Australia Bulk & Freight

Queensland Coal Rail Network

Aurizon is Australia’s largest rail freight transporter

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*as at 1 June, 2013

• Australia’s largest rail

freight hauler

• Top 50 ASX-listed

company

• Market capitalisation of

>$9 billion*

• More than 100 sites

across Australia

• Employing more than

8000 people in hundreds

of communities across

Australia

• We move products worth

more than

$50 billion in export

earnings every year

Aurizon:

5

• The worlds largest

rail transporter of

export coal from

mine to port

• Hauls on average

>500,000 tonnes of

coal each day,

hauling over 180

Mtpa

• Hauls 60 Mtpa of

bulk minerals and

commodities

including Alumina,

Bauxite, Nickel,

across road and rail

• Supply chain

solutions

• 18 strategically

located

maintenance depots

across Australia

• Operates the 2,670

kilometre open

access Central

Queensland Coal

Network (CQCN)

• Construction of

Brownfield and

Greenfield rail

expansion projects

• Additional network

and rollingstock

services

• First third party

haulage provider to

the iron ore industry

in Western Australia

• Headquartered in

Perth with six iron

ore depots across

Western Australia

• Hauling near to

20 Mtpa of iron ore

across 1,300km

of track

Aurizon operates nationally across four main business areas

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Aurizon operates in one of the world’s largest and most complex bulk

heavy-haul supply chains

Central Queensland Coal Network

• 145 years of experience

• More than 50 coal mines

• 2,700 km of common user track

• 5 independently operated export

terminals

• Responsive to fluctuating export

demand

• Manages within regulated

environment

• Copes with extreme weather

events

Overview

Global Coal Markets & Logistics

Coal demand growth will be largely driven by economic growth in China and India

Attractiveness of Australian Coal

Source: Wood Mackenzie 2013

Despite challenging short term conditions, demand for seaborne

thermal and metallurgical coal is projected to more than double by 2030

Key

China India

SE Asia

NE Asia Europe

Rest of World

2012a 2030f

-22% +270%

+340%

+305%

+6%

+91%

8

9

Australia has some of the most competitive bulk commodity supply

chains in the world

$24

$0

$6

$36

$30

$12

$18 35

36

24 20 19 18

12

7 5

2013 Metallurgical, Thermal & Iron Ore Transportation Costs – Leading Export Countries1

Australia

Tra

ns

po

rt C

as

h C

ost

(US

$ p

er

ton

ne

– n

om

ina

l d

olla

rs

Source: Wood Mackenzie Cost & Margin Tool 2013, February 2013 dataset & Internal Analysis, CRU 1 Australian transport cash costs are a weighted average between Aurizon and Australian contestable and non-contestable costs

• Facing challenging global economics

• Cutting costs and increasing productivity

• Focussing on remaining globally competitive

• Large scale and complex Greenfield and Brownfield projects

• Rising capital costs in slowing markets

• High Australian Dollar

• Operating within highly regulated rail and port environments

• Creating alignment across disaggregated supply chains

• Improving operational efficiency to maximise throughput

Enabling growth in the current Australian market remains challenging

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Customers

Costs

Capability

Aurizon’s Galilee Solution

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•The most advanced port

development in QLD

•Majority of environmental

approvals secured

•Realisation of rail-port

efficiencies

Creating one of the worlds largest co-ordinated coal development

projects to unlock and sustain Galilee growth

Rail Port

•Combination of two advanced

Galilee projects:

•Central Queensland

Integrated Rail Project

•GVK Rail Project

•Construction of multi user rail

infrastructure

• Innovative technologies to

improve operational efficiency

• Infrastructure optimisation to

increase system capacity

•Above and below rail

innovations maximise

throughput efficiency

Asset Innovation

Potential Aurizon/GVK Partnership

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Taking advantage of scalable infrastructure to improve

capital efficiency is the key to unlocking new basins

» Connects the most advanced Galilee mines

with Queensland ports

» Combines Aurizon’s CQIRP with GVK Rail

» Staged development aligned to mine ramp-up

» Consolidate Galilee tonnes along a single

corridor

Proposed Aurizon and GVK Greenfield

*Indicative map only – not to scale

CQIRP Brownfield Upgrade

GVK South to North Alignment

Existing Rail Line

CQIRP Greenfield

LEGEND

Alpha

China First

Kevin’s Corner

Degulla

Carmichael

China Stone

Proposed Rail Corridors

RAIL

» Highly scalable for future growth

» Significantly reduces capital intensity

» Reduces environmental and community

impact

CQCN Brownfield

Expanding the Brownfield CQCN is a commercially sensible

solution to facilitate staged growth in the Galilee C

ap

ita

l E

xp

en

ditu

re (

$M

)

>$1bn

Y5 Y4 Y3 Y2 Y1 Y0

Greenfield Standard Gauge

CQIRP Brownfield-Greenfield

Ability to stage investment to

match mine ramp-up volumes

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Below Rail Capital Expenditure Comparison for the Galilee Basin

Year

RAIL

Longer Trains New

Generation Rollingstock

Higher

Axle Loads

Increased Grade Easing

Signalling

Technology

Technology Optimisation

Extracting higher value from existing assets creates extra

capacity and lifts efficiency

Lower unit cost/NTK

Aligning Above and Below Rail Capex

Reduced Infrastructure

Costs

Efficient use of capital

Reduce Operating

Costs

Train lengths from 2km to

4km

Increase system capacity

Payloads from 10,000t to

20,000t

More powerful locos

Reduced number of locos

per consist

Increased train capacity

Track upgrades from 26.5 TAL to

30 TAL

Track capable of handling heavier

payloads

Increase grade easing

Increased fuel efficiency

Extending the life of assets by

lowering wear and tear

Latest scheduling systems

Driver assist technology

Trackside condition

monitoring maintenance

In-Cab signalling

Minimises trackside signalling

requirements

Improved communication

systems

1 2 3 4 5 6

INNOVATION

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Aurizon’s Galilee solution will provide projects with a lower unit

cost across a range of production ramp-ups and peak tonnages

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Payloads from 10,000t to 20,000t

Tonne Axle Loads from 26.5 TAL

to 30 TAL

Technology Optimisation

Source: Aurizon Team Analysis

90 60 30

CQIRP Brownfield-Greenfield

Greenfield Standard Gauge

Target Throughput (Mtpa)

Un

it C

ost/

To

nn

e

Note: Key variables ramp-up profile, discount rate

Indicative Rail Unit Cost Comparison for the

Galilee Basin

New Generation Rollingstock

Key Aspects of Aurizon Solution

INNOVATION

Increased Grade Easings

Train lengths from 2km to 4km

(Double Goonyella length)

The Port of Abbot Point represents enormous opportunity for

the Bowen and Galilee Basins

The Abbot Point Opportunity

» Staged development of coal, minerals and

freight terminal infrastructure

» Deep water access and scalable footprint

» Alignment of rail investment and

operations

» Proposed Aurizon and GVK joint

development of 60mtpa Terminal (T3)

» Aurizon and Lend Lease Join Proposal:

NorthHub Consortium

» NorthHub announced as a Preferred

Proponent for AP-X development (T4)

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Updated

map from

Ruby6

Queensland Ports

T3 Port

T4 Port

PORT

Coordination across the supply chain provides opportunity to maximise

value returns for all proponents

Align capital

management

ALIGNED SUPPLY CHAIN OPERATING MODEL

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Integrate planning &

scheduling

Align contractual

obligations

Optimise supply

chain design for

effective

deployment of

capital

Improve asset

utilisation for

reduced cycle times

and system

congestion

Common incentives

linked to supply

chain performance

to maximise

throughput

Aurizon has plans to run longer trains (4km) with heavier payloads (>20,000t) enabled by a series of innovations

Staged development that extracts maximum value from existing rail assets, is required to unlock this growth in Queensland

Long term coal market fundamentals remain robust with demand from China and India to drive future coal growth

The alignment of rail and port development and operations to Abbot Point presents an enormous opportunity for Queensland Coal that

Aurizon is excited to participate in

Recap

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Questions?