Asciano signs $600m contract with Whitehaven Coal

Ports and rail operator Asciano Ltd has signed a $600 million contract with...

Ports and rail operator Asciano Ltd has signed a $600 million contract with Whitehaven Coal Ltd, for coal haulage services at its loadpoints in the Gunnedah Basin in New South Wales. The deal will more than double the rail haulage for Whitehaven Coal over the next two years. It is expected to return on capital for Asciano in line with the benchmarks achieved on recent coal haulage contracts. "This long haul, take or pay contract is expected to generate at least $600 million of revenue for Asciano over the term of the agreement," the company said in a statement. As part of the deal, one new train set will be ordered immediately for the project, and will be part of Asciano’s $160 million capital commitment announced in June 2009. Whitehaven Coal owns one train set itself, which will be leased and operated by Pacific National as part of this contract. Pacific National will invest further in the trains as the project grows. Whitehaven Coal managing director Tony Haggarty said the company was pleased with the partnership. "Entering into a contract with performance based hurdles is extremely important for Whitehaven Coal as we expand our operations significantly in the Gunnedah Basin,” he said. Asciano managing director and chief executive officer Mark Rowsthorn said the contract was a significant achievement for Asciano. "This is a great outcome for the Pacific National Coal business as it delivers growth in volumes, and high quality earnings for the next 10 years," he said. "At the same time, we have committed to providing Whitehaven Coal with superior customer service to support their long term objectives.” At 1231 AEDT, Asciano shares had risen 2.91 per cent to $1.765, against a 0.66 per cent rise in the benchmark index.