Published on March 12, 2014
AN EXPORTABLE INDUSTRY 2013 Heavy Haul Rail Conference Newcastle
OBJECTIVES The objectives of this presentation are to: Quantify the achievements of our industry Propose the concept of “super” clusters as export leaders. Outline potential products for export Prioritise target customers Propose a roadmap
WORLD’S BEST HAULAGE RECORDS The highest tonneage heavy haul networks in both narrow, and standard gauge. Aurizon 180 Mtpa Rio Tinto 253 MT 2012/3 Target, Up 6% H1 2013/4 Plans 360 Mtpa by early 2015 BHP 170 MT 2012/3, Target 207 MT 2013/4 Fortescue 82 MT 2012/3, Target 130 MT 2014
WORLDS BEST ENGINEERING Standard Gauge (Iron ore) The longest revenue trains (3 km +) The heaviest trains in the world (38,000 T) The highest axle loads (40 TAL) The lowest costs/tonne/km (CIC) Narrow gauge (Coal) Largest coal tranport from mine to port Upgrading axle loads, train lengths, technology Massive capacity upgrade – approx 20 times
INDUSTRY CLUSTERS Definition Industry clusters are groups of similar and related firms in a defined geographic area that share common markets, technologies, worker skill needs, and which are often linked by buyer-seller relationships. Firms and workers in an industry cluster draw competitive advantage from their proximity to competitors, to a skilled workforce, to specialized suppliers and a shared base of sophisticated knowledge about their industry.
“SUPER” CLUSTERS Nation Near Monopolies Key Switzerland Luxury watches Precision engineering Italy High fashion, Supercars Design France Wine, Tourism, Food Marketing Germany Cars Engineering China Consumer goods Cost - economies of scale Australia Bulk resources Availability – reducing
“SUPER” CLUSTER FACTORS A “super” cluster of national industry must be deep, export oriented, innovative, and value adding “Super” clusters are perceived as world’s best by nationality first and product second eg Swiss watches, German cars Australian heavy haul rail qualifies on all counts in its own niche While other countries developed their “super” products over decades, ours will need planned national development in today’s world.
DEPTH OF INDUSTRY Safety, health, environment, quality management Proven feasibility, economics, approvals, gov’t relations Lead innovators – (Automation, remote control centres, etc) Remote area preparation, early procurement, logistics Proven contracting strategies Proven engineering, operational standards and procedures Proven competition and multi user agreements Precision engineering – procurement, construction, maintenance, operations Proven capex and opex cost improvement Differentiation by multi discipline framework - logistics, engineering and operation
POTENTIAL MARKETS China transports massive quantities of both iron ore and coal. Africa has massive mineral deposits needing transport solutions. There are existing lines and ports just requiring upgrading Indonesia has huge coal deposits requiring efficient transport – rail and port Russia/Mongolia/Tibet/’stans. Minerals near China
CURRENT EXPORT ACTIVITY Several Australian rail, port, and mining consultants are working in these markets Austrade is now preparing marketing material for rail Worthy progress has been made The next steps include empowered leadership, a business plan, a goal driven program, and support Support from companies, government, industry bodies, universities, research centres, professional bodies, and most importantly, industry leaders will keep us in the lead. The window is not going to be open forever
THE FUTURE Both iron ore and coal “low hanging fruit” has been picked. Future mines will be further from ports, have higher strip ratios and lower quality product, face greater approval and land acquisition costs and times, and/or face higher sovereign risk. Ports will be shallower or cost more for dredging or very long jetties to access deep water. Barging will become more common. Rail corridors and their capex and opex will in future dictate whether mines will be developed. Multi owner/user rail, or one owner multi mine rail will become necessary to combine mine outputs and obtain economies of scale The capacity of heavy haul rail lines, especially single lines, will need to be pushed to the limit with every tool at our disposal in financing, management, above and below rail engineering, technology, operations, scheduling, control, operations, and reliability. Australia has an innovative heavy haul industry which has thirty years of experience in increasing capacity and reliability of heavy haul rail.
RECOMMENDATIONS Better incentives through tax breaks for “super” clusters of export industries. Reduce barriers to entrepreneurship and outside venture capital Increase funding and support for education and training Develop a Heavy Haul Cluster Steering Committee? Develop goals, plan, program, and resources
CONCLUSION The Australian mining industry has picked the low hanging fruit. Mines are now further from the coast, have lower product quality, higher strip ratios or underground, face higher approvals hurdles, and greater sovereign risk New export industries are needed to maintain our competitiveness and our lifestyles Heavy haul rail is such an industry.
Brian Marsden Director: TRAC Services Pty Ltd General Manager: AQES Pty Ltd Ph: +61419544432 Email: email@example.com QUESTIONS?
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