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Aurizon has forecast the continued growth of Australia’s coal sector to 2030, after which point a decline in the commodity may appear.

Australia’s largest rail freight operator delivered 202 million tonnes of coal for its customers during the 2021 financial year, which was down by 6 per cent on the previous year due to COVID-19 and Chinese import restrictions.

Aurizon managing director and chief executive officer Andrew Harding said he expected this number will rebound over the coming year thanks to a number of new contracts.

“We expect haulage volumes to grow by around 5 per cent this financial year,” Harding said at the company’s 2021 annual general meeting.

“During financial year 2021, the coal business was successful in extending its long-term contract book with a number of contract wins, including Anglo American for the Dawson, Moranbah North, Grosvenor and German Creek mines, and Glencore as the primary hauler for the majority of its requirements in Queensland.”

While the pipeline remains strong for the near to mid-term, Aurizon chief financial officer George Lippiatt said the long-term remains uncertain.

“When focusing on Australian exports and looking out 10 years, we have reasonably good insights into coal demand whether that be thermal coal used for energy or metallurgical coal used for steel making,” Lippiatt said.

“Beyond the next decade demand becomes less certain, particularly for thermal coal given the increasing demand for renewable energy.”

The company has been modelling six in-depth scenarios for the coal market for a number of years, which consider a number of ways the market could turn over the next 20 years.

These six scenarios are labelled commodity strong, current economics, port constrained Australia, mine/regulatory constrained Australia, carbon constrained Asia, and rapid decarbonisation.

While not ranked in any order of likelihood, Lippiatt said almost all of the scenarios were promising to 2030.

“We model these scenarios over 20 years to 2040 because it’s short enough to enable detailed assumptions to be used, but long enough to align with some of our key assets – such as rollingstock and the depreciation period used to calculate regulatory tariffs in our network business,” he said.

“Although there is a wide range of outcomes between the scenarios, in the first 10 years all but one scenario (rapid decarbonisation) models positive growth.

“The second decade however, 2030 to 2040, naturally sees greater divergence – with export volumes modelling a fall in four of six scenarios over that 10-year period.”