AURIZON (ASX:AZJ) has signed an agreement to buy Keswick, South Australia-based One Rail Australia (ORA) for $2.35 billion from Macquarie Asset Management on behalf of its managed fund and its client, a Netherlands pension fund.
ORA bulk and general freight assets include the Tarcoola-to-Darwin rail infrastructure, SA regional infrastructure, five rail yards, 68 active locomotives, more than 1000 active wagons and approximately 400 employees.
These will be integrated into Aurizon’s existing business.
ORA’s East Coast Rail (ECR) assets in Queensland and New South Wales will operate independently of Aurizon with a separate chief executive officer and management team until the unit is sold or demerged to address potential concerns from the Australian Competition and Consumer Commission.
ECR includes a long-term coal haulage contract with Glencore for its mines in the NSW Hunter Valley, and assets in the Queensland coalfields.
“The One Rail acquisition delivers a step change for Aurizon Bulk as a new entrant in the SA and NT region, and supports the ongoing growth of non-coal revenue in the Aurizon portfolio,” Aurizon managing director and CEO Andrew Harding said.
“It is fully aligned with Aurizon’s strategy to grow our bulk freight business into new markets and new geographies in Australia.”
Mr Harding said the the ORA bulk infrastructure and operations in SA and the Northern Territory provided a path to market for numerous existing commodities and growth opportunities in base metals, agriculture and iron ore, and “new-economy metals” such as manganese and copper.
ORA was previously known as Genesee & Wyoming Australia, and in 2016 bought Glencore Rail in a partnership with Macquarie Infrastructure and Real Assets.
The deal included a 20-year contract to haul coal from Glencore mines in NSW and Central Queensland.
Aurizon expects to complete the acquisition of ORA by 2022 subject to approvals.
Aurizon was formed in 2010 with the privatisation of Queensland Rail, and already hauls to all of Queensland’s coal ports and to Newcastle in NSW under existing contracts.
Increasing grain stake
Bulk handler CBH Group in August announced that Aurizon had been awarded a minimum six-year contract to haul grain in WA using the CBH-owned fleet.
Aurizon’s purchase of ORA will make it the key service provider for Viterra, South Australia’s dominant bulk handler, the agricultural arm of Glencore.
In a statement provided to Grain Central, Viterra said One Rail Australia transported grain from Viterra sites at Bowmans, Crystal Brook, Gladstone, Keith, Port Pirie, Snowtown, Tailem Bend, and Wolseley to its port terminals.
“We have a long term relationship with One Rail Australia where it operates, and look forward to working with Aurizon going forward,” a Viterra spokesperson said.
Source: Aurizon, Viterra