Australian rail freight operator Aurizon has secured exposure to mining major BHP’s plan to double its South Australia copper output over the next decade with a circa-A$1.5 billion, 10-year contract due to start in October this year.
ASX-listed Aurizon said the “aggregate logistics task” involved about 1.3 million tonnes per annum of materials including BHP’s 320,000-plus tonnes of current copper shipments.
“Aurizon’s integrated logistics solution is scalable and positions the company to capture additional volumes should BHP’s Copper SA asset grow further in the years to come,” the company said.
BHP has said it plans to increase copper production to c650,000tpa next decade, subject to competitive energy, water and capital availability. It has the Olympic Dam, Carrapateena and Prominent Hill mines, plus the Oak Dam project, on SA’s Gawler Craton north-west of Adelaide, as well as Olympic Dam copper refining assets. SA’s proposed $6 billion Northern Water Project is integral to long-term copper expansion in the state.
Tom Koutsantonis, SA’s minister for energy and mining, and for infrastructure and transport, told a recent mining conference in Adelaide the major water desalination project in the Spencer Gulf region would “help realise the ambitions of BHP and unlock other mines”.
“BHP’s proposal for a second copper smelting furnace at Olympic Dam could double copper production and make South Australia finally a tier one copper province,” he said.
Aurizon says copper concentrate and cathode transport between Pimba in the middle of the BHP mines and Port Adelaide on the southern coastline would switch from road to rail, along with inbound freight movement. It is investing about $40 million in a rail freight terminal at Pimba amid c$100m of new capital deployment. The company would be responsible for all services connected to BHP’s Copper South Australia supply chain including rail haulage, road transport, terminal management, port management and stevedoring, with road transport subcontracted to existing BHP contractor, Symons Clark Logistics.
Aurizon CEO Andrew Harding said about 11,500 long-haul truck movements a year – some 13 million kilometres per annum – would move to Aurizon’s rail network. “The shift to more rail transport means fewer trucks on public roads, delivering improved safety and reduced congestion, a significantly smaller carbon footprint and an ability to scale up quickly with the potential for additional train services as BHP continues to expand its SA Copper operations,” he said.
Harding said two years ago after the company’s $2.35 billion acquisition of One Rail (now Aurizon Bulk Central) the deal opened up significant mineral-resource-related growth potential for the company.
“We see major growth opportunities in central Australia, with 2500km of rail infrastructure and a line that runs directly into the Port of Darwin,” Harding said at the time. “There are more than 250 projects for new-economy commodities in South Australia and the Northern Territory, in various stages of exploration and pre-production, including copper, magnetite, phosphate and rare earths. Many of these projects sit adjacent to the rail corridor.”
Anna Wiley, BHP Copper South Australia asset president, described the Aurizon partnership as a “critical step for Copper South Australia [which strengthened] the link between our operations in the state’s far north and our path to market at the Port of Adelaide”.
“It supports safer roads, lower emissions, and new opportunities for local businesses, while helping deliver South Australian copper to the world,” she said.
Aurizon’s current market capitalisation is circa-A$5.5 billion. The company’s share price has risen more than 3.5% in the past week.
