Struggling coal miners lose multimillion-dollar court battle
A PLEA for financial relief by struggling coal miners has been dismissed by the Supreme Court, after it ruled in favour of Aurizon in a multimillion-dollar battle.
The Supreme Court of Queensland has upheld Aurizon's decision to charge above regulatory fees for the construction of the $900 million Wiggins Island Rail Project.
The decision relates to proceedings issued in March 2016 by the rail giant, after miners using Wiggins Island Coal Export Terminal attempted to reduce their fees to Aurizon.
A financing deal for the project, Wiggins Island Rail Project Deeds, was signed by Aurizon and the eight miners at the height the coal boom in 2011.
But Aurizon has not received any repayments, because in 2015 when construction was completed on the rail loop, the company received notices from seven of the eight terminal owners claiming they had a right to reduce their financial exposure.
Unable to reach a new agreement with the seven miners, including Glencore, Aurizon took the matter to the Supreme Court of Queensland.
Four years on during a hearing at the Supreme Court of Queensland in Brisbane last week, Justice David Jackson dismissed counter-claims made by the miners.
The original deal allowed Aurizon to receive payments above normal regulatory returns it obtains for the rail lines.
In return Aurizon agreed to develop the rail project, which included new and upgraded links from Blackwater and Moura, on time and for lower-than-forecast cost.
Judge Jackson said conditions of the take-or-pay agreement showed coal miners engaged in a "superficially bizarre game of musical chairs" in avoiding fees.
The miners had a clause allowing them to reduce their payments by essentially offloading their fees on to remaining customers using the rail links to WICET.
Judge Jackson said the defendants did not act in good faith when they gave notice for a reduction in payments to Aurizon as part of the WIRP deed.
It found Aurizon had no obligation to fund or construct the extension to the rail network to increase capacity at Wiggins Island Coal Export Terminal, had the WIRP deed not been in place.
Aurizon estimated in October 2015 non-payments on the deeds could cost the company up to $27 million every year for 20 years.
The court estimated at September 30, 2015, the eight miners that originally signed the deal would have been required to pay about $482 million to Aurizon over 20 years.
Glencore, as the largest mining company involved, had the highest repayments of $185 million.
But since these estimates were made three of the eight companies involved have gone bust - Caledon Coal, Cockatoo Coal and Bandanna Energy.
In and Australian Stock Exchange announcement the company said it was assessing the detail of the decision, including the financial benefits.
Analysts from Morgans estimated the ruling could result in a $60 million one-off boost for Aurizon, in catch up revenues, and $18 million annually in ongoing revenues.
The other mining companies involved in the court dispute are Yarrabee Coal, Wesfarmers Curragh and Washpool Coal.
The seven defendants and Aurizon were given 21 days to provide submissions to the Supreme Court on costs.