Aurizon Network Annual Maintenance Presentation Appendix 2 13 March 2017
Agenda Topic Presenter Safety Share Ryan Bell FY2016 Network Performance Jason Livingston Maintenance cost trends: UT3 to UT5 Michael Bray Overview of Maintenance Cost Report for FY2016 Rob Cumberbatch FY2018 Maintenance and Capital Plan Jason Livingston Next Steps Michael Bray 2
Safety Share
Standard Work Practice Review – Scheduled Patrol Inspections Legacy Inspection Regime • Hi-rail patrol inspection every 96 hours (min. frequency) • All on track within the Danger Zone Current Inspection Regime • Hi-rail patrol inspection every 192 hours (min. frequency) • Retained 96 hours on NCL and timber & steel track Risk Assessed • All Stakeholders engaged, principally Infrastructure Maintenance • Reviewed all defects identified via Hi-rail Inspections • No defects identified that would ordinarily manifest themselves within a 192 hour window • Change Management Plan developed and Endorsed by the ORR Benefits • Removing (SFAIRP) personnel from the Danger Zone • Freeing up train paths, enabling additional services and flexibility 4
FY16 Network Performance
FY2016 Network Performance Highlights � Continued to have a Lost Time Frequency Rate of 0 � Completed 123 kms (linear) of ballast undercutting (based on 300mm standard depth); � Improvement in performance plan from 89% to 92% � 133km delivered on a volumetric equivalent � Reduction in derailments from 29 to 23 Performance to Plan Below Rail Delays Below Rail Cancellations 95% 96% 509 10.5% 10.3% 92% 91% 91% 91% 89% 86% 86% 86% 9.6% 8.2% 6.9% 6.7% 6.3% 304 5.5% 5.2% 243 4.8% 178 169 82 53 44 21 23 Blackwater Goonyella Moura Newlands CQCN Blackwater Goonyella Moura Newlands CQCN Blackwater Goonyella Moura Newlands CQCN 2014/15 2015/16 2014/15 2015/16 2014/15 2015/16 6
CQCN Performance Indicators - OTCI quality. As an index, the OTCI is used as an indicator of abnormality only as it cannot reflect all variations within a coal system. The OTCI reports on the quality of Aurizon Network’s track by individual Coal System. The lower the indicator, the better the track 20 25 30 35 40 45 50 55 60 20 25 30 35 40 45 50 55 60 Jul-10 Jul-10 Nov-10 Nov-10 Mar-11 Mar-11 Jul-11 Jul-11 Nov-11 Nov-11 Mar-12 Mar-12 Jul-12 Jul-12 Blackwater Nov-12 Nov-12 Moura Mar-13 Mar-13 Jul-13 Jul-13 Nov-13 Nov-13 Mar-14 Mar-14 Jul-14 Jul-14 Nov-14 Nov-14 Mar-15 Mar-15 Jul-15 Jul-15 Nov-15 Nov-15 Mar-16 Mar-16 20 25 30 35 40 45 50 55 60 20 25 30 35 40 45 50 55 60 Jul-10 Jul-10 Nov-10 Nov-10 Mar-11 Mar-11 Jul-11 Jul-11 Nov-11 Nov-11 Newlands / GAPE Mar-12 Mar-12 Jul-12 Jul-12 Goonyella Nov-12 Nov-12 Mar-13 Mar-13 Jul-13 Jul-13 Nov-13 Nov-13 Mar-14 Mar-14 Jul-14 Jul-14 Nov-14 Nov-14 Mar-15 Mar-15 Jul-15 Jul-15 Nov-15 Nov-15 Mar-16 Mar-16 7
CQCN Performance Indicators - BRTT Below Rail Transit Time: Section Run Times, Below Rail Delays, Train Crossing, Force Majeure and Delays due to Operational Constraints. % calculated by dividing the BRTT by the relevant nominated section running times (in the direction of travel) as specified in the Train Service Entitlement. Moura Blackwater Goonyella 1.4 1.4 1.4 1.2 1.2 1.2 1 1 1 0.8 0.8 0.8 0.6 0.6 0.6 0.4 0.4 0.4 0.2 0.2 0.2 0 0 0 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Newlands GAPE 1.8 1.8 1.6 1.6 1.4 1.4 1.2 1.2 1 1 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 8
Maintenance trends: UT3 to UT5
CQCN continues to deliver record volume throughput Annual volume forecasts for UT5 are on average: • 45% higher than UT2 • 31% higher than UT3 • 3% higher than UT4 10
While reliability, volumes and size (track km) have increased, Aurizon Network’s costs have remained relatively stable 11
MAR per NT driven by major network expansions and major weather events 12
Cost trends UT3 to UT5: Mechanised maintenance 13
Ballast Undercutting UT4 scope performance to date: FY14 to FY16 Approved Delivered Variance Mainline (km) 380 403 23 Turnouts (#) 122 147 25 • Aurizon Network is delivering UT4 scope • UT5 scope to be refined through regulatory process once GPR analysis is completed Costs ($m) FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Allowance - Real $FY2015 53.0 58.0 58.8 60.4 61.3 61.3 64.9 64.9 Allowance – Nominal 54.6 61.6 64.5 69.6 64.5 65.7 70.8 72.1 Actual Cost 54.6 61.7 73.6 Difference to allowance (0.0) (0.1) (9.1) Under / (Over) 14
Resurfacing UT4 scope performance to date: FY14 to FY16 Approved Delivered Variance Mainline (km) 6,201 6,384 183 Turnouts (#) 1,101 1,218 117 • Cost uplift for UT5 linked to replacement of life expired equipment • Long lead time items with useful life of ~15 years • QCA will conduct detailed review of rationale of this investment Costs ($m) FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Allowance - Real $FY2015 19.5 19.0 18.2 20.1 23.3 23.8 24.2 24.3 Allowance – Nominal 20.1 20.3 20.0 23.3 24.5 25.5 26.4 27.0 Actual Cost 19.1 21.2 21.7 Difference to allowance 1.0 (0.9) (1.6) Under / (Over) 15
Rail Grinding UT4 scope performance to date: FY14 to FY16 Approved Delivered Variance Mainline (km) 10,188 10,101 (87) Turnouts (#) 2,025 1,948 (77) • QCA didn’t publish rail grinding scope in the UT4 final decision • Scope performance reported above reflects NSAP scope based on a volume forecast which was ultimately higher than the UT4 final decision Costs ($m) FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Allowance - Real $FY2015 13.6 13.7 12.8 12.3 17.9 17.8 17.7 17.6 Allowance – Nominal 14.1 14.6 14.0 14.2 18.8 19.1 19.3 19.6 Actual Cost 14.6 17.4 18.2 Difference to allowance (0.6) (2.8) (4.2) Under / (Over) 16
Despite higher volume throughput, costs are stable • Unit costs of most non-mechanised activities are reducing in real terms • Increase in “Structures” attributable to initiative which improve resilience against extreme weather events (e.g. culvert cleaning) 17
Blackwater System: UT4 to UT5 • Higher volume throughput has the effect of reducing fixed unit costs 18
Goonyella System: UT4 to UT5 • Uplift in FY2020 and FY2021 due to greater ballast undercutting scope and flat volumes. Scope to be refined through UT5 regulatory process 19
Moura System: UT4 to UT5 • Ballast undercutting increase in FY2016 the result of additional scope delivered while network was closed due to flooding 20
Newlands and GAPE System: UT4 to UT5 21
Driving efficient outcomes in UT5 Objectives for UT5: • Promote safe and efficient utilisation of the CQCN • Focus on continuous improvement (including work practices) and cost control, and • Harnessing technology to improve our data capture and reporting capability Experience to date: • For most maintenance products, real unit costs have decreased or remained stable over an extended period of time • Delivering maintenance scope, in conjunction with improvements in network performance and record volume throughput • Condition based assessment – “the CQCN is in overall good condition” 22
FY16 Maintenance Cost Report
FY16 Network Maintenance Costs • Record equalling tonnes of 226 million which exceed forecast by 8.3m • The spend of $209m, was an overspend / under-recovery against the QCA approved allowance by $13m. As the allowance was approved in May of the Financial Year. We lost the opportunity to meet the cost challenge • Ballast undercutting program reflected a $9.4m under recovery of our costs following the QCA’s capping unit rates at $400k / km 11 month’s into the year. During the year we delivered an increased amount of scope via excavator undercutting. This activity is less cost efficient than the RM900 undercutting machine • General Track Maintenance, resurfacing and rail grinding activities under recovered by $3.6m. Which reflected changes in the assumptions around volumes and fixed and variable costs 209 210 228 Millions Millions 226 205 224 Net Tonnes (nt) Dollars ($) 200 220 196 218 195 216 190 212 185 Net Tonnes Maintenance Cost UT4 Actual UT4 Actual NB: The last year of rail renewals being treated as Operational expenditure. From FY17, rail renewals 24 will be treated as capital.
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