Clean Coal Day presentation

Mike CarterMike CarterExecutive Vice President, Network

September 2013p

1

Aurizon overviewAurizon overview• Australia’s largest rail

f i ht h lfreight hauler• Top 50 ASX-listed

company• Market capitalisation• Market capitalisation

more than AU $9 billion*• More than 100 sites

across Australia • Employing

approximately 8000 people in hundreds of

iticommunities across Australia

• We move products worth more thanworth more than $50 billion in export earnings every year

* at 12 August 2013

2

* at 12 August 2013

K tKey revenue streams

• Haul on average >700 000 tonnes of coal

• Hauling 49.3 Mtpa of bulk minerals and

• We operate and manage the 2 670

• First third party haulage provider to>700,000 tonnes of coal

each day, hauling over 194 Mtpa

• Servicing near to 50 mine sites in

bulk minerals and commodities including Alumina, Bauxite, Nickel, across road and rail

manage the 2,670 kilometre open access Central Queensland Coal Network (CQCN)

• Construction of

haulage provider to the iron ore industry in Western Australia

• Headquartered in Perth with six iron50 mine sites in

Queensland and New South Wales

• Supply chain solutions

• Strategically located maintenance depots across Australia

Construction of brownfield and greenfield rail expansion projects

• Additional network

Perth with six iron ore depots across Western Australia

• Hauling 24.7 Mtpa of iron ore across 1,300km

services of track

3

L d t A t liLeveraged to Australian resources

Aurizon FY12 CommodityRevenueMixAurizon FY12  Commodity Revenue Mix

18%

Coal

54%10%

6%Bulk Minerals

Agricultural Products

13%

Iron Ore

Other

4

Japan is a strong long-term Queensland and Aurizon partner We encourage continuing Japanese involvement and commitment to the growth of g g p g

Australian coal 

Thermal coal exports (volume) by destination FY12

Metallurgical coal exports (volume) by d ti ti FY12

11%

8%18%

28%

destination, FY12destination, FY12

11%

18%

44%6%

28%

Japan So th Korea 18%

18%1%

12%

15%20%

Japan

ChinaTaiwanIndiaSouth Korea

Other

Source: Australian Bureau of Statistics, customised report

5

, p

Aurizon rail tonnagesg

FY11 FY12 FY13

Network – Tonnages (million) 164.0 166.7 182.3

Coal – Tonnages (million) 181 6 185 6 194Coal Tonnages (million) 181.6 185.6 194

Iron Ore – Tonnages (million)NA

13.6 24.7

Freight* – Tonnages (million) 53.0 49.3

Aurizon transports ~60% of all Australian export and domestic coal

6

Strong financial and operational performance for FY13 highlights transformation underway

Safety • 60% improvement in LTIFR; 54% improvement in MTIFR

Earnings • Underlying EBIT up 29%

O i i 3 6 i f 83 4% 9 8% O k f % iOperating ratio • 3.6ppt improvement from 83.4% to 79.8%; On track for 75% in FY15

Coal contracts • ~120 mtpa contracted tonnes secured under new form contractsCoal contracts 120 mtpa contracted tonnes secured under new form contracts during FY2013

• Key customer contracts won include – BHP Billiton Mitsubishi Alli d BHP Billit Mit i C l C k t C l J lli b hAlliance and BHP Billiton Mitsui Coal, Cockatoo Coal, Jellinbah Group, Rio Tinto, Whitehaven and Glencore Xstrata

7

CQCN coal haulageCQCN coal haulageIn 2013, 44 operating coal mines in the Bowen Basin were linked to the CQCN. These mines transport both metallurgical and thermal coal via the network on which coal volumes have increased by 38% since FY02metallurgical and thermal coal via the network, on which coal volumes have increased by 38% since FY02

Volume breakdown (2013, mtpa)1

100%

26%

61%

89%

27%

Moura

74%

Blackwater

39%

Goonyella

11%

Newlands

73%

Thermal CoalMetalurgical Coal

200

150

+38%

CQCN historical coal volumes (FY02 – FY2013, mtpa)2

MouraBlackwaterGoonyellaNewlands

150

100

50

8

0FY13FY12FY11FY10FY09FY08FY07FY06FY05FY04FY03FY02

8Goonyella

BlackwaterMoura

NewlandsGAPE

More than 70 Mtpa of committed extra coal capacity in Queensland

+76 MtpaMtpa

CQCN capacity under construction

310

capacity in Queensland

229 234272

Additional capacity by 2015

FY15FY12FY11FY10

GAPE (NML) +33 Mtpa

Wiggins Island Rail Project +27 Mtpa

Hay Point +11 Mtpa

Other +5 Mtpa

Total +76 Mtpa

9

p

Update on major committed growth projectsUpdate on major committed growth projects

Wiggins Island • Construction commenced in FY12Wiggins Island Rail Project (WIRP)

Construction commenced in FY12• $341m spent to end FY13• Final commissioning expected in late CY15 in line with mine development• WICET port construction delayed by approximately nine months

QLD

Hay Point Rail Expansion

• Expansion of Goonyella system to support Hay Point port upgrade• Revised target of ~$130m investment to add a further 11mtpa below rail capacity – project

on time and on budget• First railings expected in CY14

QLD

Hunter Valley Hexham

• Progressing Train Support Facility (TSF) to support growth in NSW coal • Final design has amalgamated earlier plans for three stages of construction into a

multipurpose facility servicing locos & wagons, provisioning and unit train maintenance• An Environmental Assessment submitted to Department of Planning and Infrastructure

NSW

currently awaiting approval• Commissioning expected in CY14

Whitehaven• Up to $280m approved for investment in locomotives and wagons• Aurizon is working closely with Whitehaven and ARTC to expand the capacity through Whitehaven g y p p y g

heavier track axle load capability• Expect full ramp up of tonnages by third year after project commencement.

Below Rail Coal Above Rail Coal

NSW

10

The Central Queensland Coal Network is very expandableexpandable

…the Central Queensland Coal NetworkOptions to expand…

1

Additional passing loops1.

2Duplications/Triplications

I f t t

2.

3 Infrastructure enhancements e.g. Re-signalling, Grade easing

3.

New rolling stock technology/operating mode

4.

Greenfield network connections

5.

11

Securing further growth opportunitiesSecuring further growth opportunities

Coal – Queensland & New South Wales• Bowen Basin and Hunter Valley - continue to investigate opportunities within existing operating

footprints• Surat Basin

– Aurizon is a JV partner in Surat Basin Railway, with ATEC Rail Group & Glencore Xstrata Coal to support potential thermal coal developments

• Galilee Basin– Queensland Government endorsed two rail corridors, including proposed Aurizon GVK Hancock

Infrastructure solutionA i i l h l l d l– Again to support potential thermal coal developments

Iron Ore – Western Australia• Continue to investigate opportunities within existing operating footprints• Pilbara - Joint study with Atlas Iron and Brockman Mining into a multi-user open access iron ore

railway in the East Pilbara has been completed; discussions with a number of parties are ongoing.

12

Transformation strategyTransformation strategy

• Embed a high performance culture through safety and leadership

• Improve operational performance and accountabilityPerformance Based Culture

• Drive improved performance based contracts• Improve volume throughput and customer satisfaction• Differentiated solutions that are valuable for our customers

Customer Focus• Differentiated solutions that are valuable for our customers

• Build commercial capability with return driven benchmarks• Improved fleet availability & reliabilityCommercial Capability Improved fleet availability & reliability• Whole of Life Asset Management

Commercial Capability

• Embed industry leadership by benchmarking against North• Embed industry leadership by benchmarking against North American Class1 railroadsIndustry Leadership

13

Operations will deliver productivity improvementOperations will deliver productivity improvement

• Completing the final steps in the functional reorganisation and building capability

Strategic Themes

reorganisation and building capability

• Leveraging an integrated approach to the businessg

in theOperations

• Reducing and variabilising the Operations cost basep

Transformation • An intense focus on assets will unlock significant value – fleet plans are being reworked to reflect the new opportunities e o ed o e ec e e oppo u esnow being identified

14

Building a culture of performance – getting the balance right

Service People• Delivering what • Accountable

we promise -consistently

• Productive• Clear metrics

DisciplinedProductivity & Efficiency

Cost Control

• Intense focus on

Disciplined Execution Of

The Integrated Operating Plan

Safety

• Unit costs a focus

assets and capacity• Continuous

improvement

• Underpins everything we do

15

World class Network utilisation is not possible ith t ld l i twithout world class maintenance

Reactive to preventative to predictive

Harden and modernise the assetpredictive asset

Transform infrastructure maintenance toTransform infrastructure maintenance to world class

Greater utilisation of technology in diagnosis of

requirements

Continue to improve resource flexibility and

efficiency

16

The main game – lift Network utilisation for theThe main game lift Network utilisation for the benefit of all

Next generation technology to drive precision planning

Next generation technology to drive precision executionto drive precision planning to drive precision execution

Optimise Network capacity to world classOptimise Network capacity to world class utilisation

The Network Development Plan leveraging low cost

options to increase volumes

Collaboration to enhance decision making and supply

chain effectiveness

17

Coal veneering in central Queensland

Aurizon is part of a coordinated effort by the supply chain to address coal dust onthe supply chain to address coal dust on the rail corridor

We are working in cooperation with the Q l d G t t i l tQueensland Government to implement a Coal Dust Management Plan

A biodegradable polymer is sprayed onto g p y p ythe surface of the loaded coal

The veneer forms a crust and reduces coal dust emissions by up to 85% Thecoal dust emissions by up to 85%. The product has no adverse human or environmental impacts

All t l Q l d i t b fitt d All central Queensland mines to be fitted by the end of CY 2013; work underway also to veneer on South West System

18

Excellent outcome for the community and industry

Trackside monitoringgVIPA

Transmit Unit

VIPA Receive

Wind Speed Sensor

Central Unit

UnitUnit

Sensors:RH. Temp Rain

Weather Station

p

19

Improved planning and optimisation benefits all by facilitating higher tonnagesby facilitating higher tonnages

Benefits Minimising scheduling changes

Planning Alterations

Reduced from 40 at it’s highest point to 2 per day in Goonyella system (J l 2012 to J n 2013)

50

60

40

Disciplined PlanningRegime implemented

(Jul 2012 to Jun 2013)

Total Speed R t i ti

Prior to implementation, TSR avg. 50 days duration (Jun-Oct 2012) 10

20

30

40

95% Improvement in schedule variation

40

2Restrictions (TSR)

y ( )Since implementation avg. 15 days –70% decrease (Oct-Jun 2013)

B l R il Goonyella avg. BR delays reduced by

-10

02/07/2012 30/07/2012 27/08/2012 24/09/2012 22/10/2012 19/11/2012 17/12/2012 14/01/2013 11/02/2013 11/03/2013 8/04/2013 6/05/2013

2

Improvement in below rail delaysBelow Rail Delays (>15mins)

Goonyella avg. BR delays reduced by 38% from FY11/12 Newlands avg. BR delays reduced by 29% from FY11/12

612,598

450,000

500,000

550,000

600,000

650,000

-38%

Act Var Mins FY11/12Act Var Mins FYTD

Path Availability

Increased pathing availability through better alignment of asset activities and smoothing constraints creating 745 additional paths for Goonyella 200,000

250,000

300,000

350,000

400,000

20

additional paths for Goonyella

0

50,000

100,000

150,000

Jul-12 Jun-13

Unlocking new productivity and efficiency b fit f h li ti i f il tbenefits from an holistic view of rail assets

Network Development Plan Energy savings through regenerative braking p

• Will allow existing infrastructure to support more train services

gy g g g g

Time(hr /

Train rate

Train density

(tonnes /

Throughput(tonnes / • Conservative cost savings of $2 5m from 6 5% less(

year) (m / hr) (tonnes / m)

(year)

Improvements f lli

Improvements for all traffic

• Conservative cost savings of $2.5m from 6.5% less feeder station power usage as well as lower CO2emissions

• Commenced adaption of all locomotives in the for new rolling stock and track

Train separationAvailability

Goonyella System

ving With Pacific National

Higher axle load

Train lengthUtilisation

tage

Ene

rgy

Sav locomotives included

With Aurizon Blackwater locomotives included

Closer axles

Train speedAlignment

Per

cen

Aurizon Goonyella locomotives

21

No. of locos equipped with regenerative braking

Conservative forecastPotential upside

Contact DetailsContact DetailsAurizon Pty LtdAurizon Pty Ltd175 Eagle Street, BRISBANE QLD 4000Phone: +61 7 3019 7480Email: michael.carter@aurizon.com.au

Trade and Investment Queensland Japan OfficeQueensland GovernmentPhone: 03 6841 0595Email: tokyo@trade.qld.gov.au