ASR Expands SA Rail Operations

AUSTRALIA SOUTHERN EXPANDS SA RAIL OPERATIONS

Chief Executive of Australia Southern Railroad (ASR), Mr Charles Chabot said today that the signing of a five-year service agreement with BHP for the management and operation of BHP Whyalla Steelwork's rail network was a fitting conclusion to what had been a successful and profitable year for ASR.

The five-year renewable agreement with BHP for the operation of two narrow gauge iron ore lines and in-plant shunting operations at Whyalla is worth in excess of $30 million.

Under the terms of the agreement, ASR will obtain a five-year renewable lease over 190 kilometres of mainly narrow gauge track and a fleet of 113 ore wagons. It will also purchase outright, BHP's existing fleet of eight diesel locomotives.

ASR has committed to a $3.5 million track upgrading program over the period of the agreement and will also provide more powerful and reliable locomotives to operate the narrow gauge ore trains.

The service agreement covers the operation of two narrow gauge rail lines from Whyalla to BHP's mines at Iron Duke and Iron Knob - supplying the Steelworks with up to 3.0 million tonnes of iron ore per year. In addition, the agreement covers significant tonnages of pelletised ore, hot metal and finished steel products that are moved within the Whyalla Steelworks site.

Maintenance of the locomotive fleet will be subcontracted to Clyde Engineering, who also maintain ASR's mainline locomotive fleet, while track infrastructure will be maintained by ASR's infrastructure partner, Transfield.

Mr Chabot said, "Our RailLink subsidiary in the United States has many years of experience providing industrial customers with specialised in-plant rail haulage and shunting services. We look forward to our association with BHP and in delivering productivity gains to them as a result of our experience in running short-haul railways and through improved maintenance capabilities."

"The new agreement again demonstrates our commitment to the South Australian economy in providing low-cost reliable transport services. We are definitely here for the long haul."

ASR has a strong association with the Iron Triangle and Eyre Peninsula regions in South Australia. In 1999, ASR will move approximately 2 million tonnes of grain and gypsum over its narrow gauge Eyre Peninsula rail network. Its locomotive maintenance partner, Clyde Engineering, continues to overhaul locomotives and build new wagons at the Port Augusta railway workshops.

Leo Selleck, Vice President BHP Whyalla Steelworks, said that signing a service agreement with Australia Southern Railroad represents the culmination of two-year investigation.

"The agreement with ASR will bring specialist rail management skills and resources to our business's rail network," Mr Selleck said.

Mr Chabot said that the signing of the agreement with BHP came on top of what had already been a successful year for the company, the highlights of which were:

• A two-year contract with Patrick Rail to supply locomotives, crew and wagons for Patrick's expanded services on the Adelaide to Melbourne corridor.
• The introduction of Port Shuttle services on behalf of Western Mining Corporation (WMC) for the transport of containers through the Port Adelaide central business district by rail rather than road.
• Continuing cooperation with the South Australian grains industry, resulting in a greater proportion of the export harvest being moved by rail. New rapid loading facilities commissioned at Gladstone and Bowmans have significantly increased productivity and asset utilisation through ASR's ability to operate heavier and longer trains.
• ASR through its sister company Genesee & Wyoming Australia is part of the Asia Pacific Transport consortium announced earlier this year as the preferred tenderer to build own and operate the Alice Springs to Darwin Railway.

Mr Chabot concluded by saying, "It is now just over two years since ASR took over the loss making South Australian freight operations of Australian National. Since then, by working closely with our customers, we have consistently delivered a profit from our operations here."

Australia Southern Railroad is the largest operation, in terms of tonnage and revenue, of US based Genesee & Wyoming Inc (GWI), a leading operator of regional freight railroads in the United States, Canada, Australia and Mexico.

Charles Chabot or Anthony Mogytych on 08 8343 5455

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