$225 million lost in two years
MANAGEMENT ranks slashed by 20% and foray into mining a disaster.
Wednesday 27 July 2016
One in five middle managers and around 200 blue collar workers at the region's biggest coal logistics business will be made redundant in the coming months.
The total number of jobs lost is expected to be around 300, with most positions lost from depots in Gladstone, Rockhampton, Mackay and Townsville.
Rail operator Aurizon announced the losses at the same time as they advised investors that their $225 million investment in coal and iron ore miner Aquila Resources in 2014 is now worthless.
Ironically the job losses and write-downs come at a time when actual coal prices are improving, and Aurizon has moved a record 226 million tonnes of coal across the four major systems of the Central Queensland Coal Network.
While rail operators have to some extent been shielded from the impacts of the downturn because of take-or-pay contracts signed at the height of the boom, the announcement recognises that the pain has moved away from the coalface.
“Clearly, we’re operating in a tough and volatile market with lower growth conditions for our customers,” Managing Director Lance Hockridge said.
“While the coal market remains challenged, we are sustaining tonnages in our above-rail business and have seen strong below-rail volumes across the Central Queensland Coal Network.
“Work is underway in reducing management roles, in driving down corporate and support costs and ensuring workforce numbers are aligned to forecast customer demand.”
Nonetheless, the bad news has failed to stop a rally in the share price of Aurizon, which has increased nearly 20% in the last three months. Since last January the share price has improved nearly 40% and reversed most of the damage done when their share price collapsed by more than a third over Christmas.
Aurizon paid $225m for 15 per cent of Aquila in 2014 as a minor party in a deal led by China’s Baosteel, who paid $1.4 billion for the entire Aquila business.