Whitehaven Coal, which has been a customer of Pacific National in the Gunnedah Basin for more than a decade, initiated discussions about a new haulage agreement in an effort to be more efficient.

“Coal producers are out there looking to take their unit cost of production down by moving as much coal as they possibly can,” Pacific National director for coal, David Irwin, said.

“Rail track infrastructure in the Gunnedah Basin was designed for trains carrying lighter loads of grain, and is only meant to carry axle loads of 25 tonnes. 

“It was built as a grain network. It was never envisaged 50 years ago to be hauling significant tonnes of coal.” 

Track infrastructure in other parts of the Hunter Valley is designed to carry heavier loads of 30 tonnes, while railways in Western Australia’s Pilbara region can carry up to 40-tonne loads.

However, the Gunn- edah railway tracks have been upgraded over the past decade, and will be able to carry 30 tonne loads from next year.

Pacific National says the rise in load capacity will allow it to haul 11.5 million tonnes of coal annually for Whitehaven. At present it can carry 9.5 million tonnes.

The increase in loads will allow Pacific National to transport more coal on each train, and thereby run fewer trains and reduce costs.

Over the past five years, Pacific National has been buying trains capable of carrying 30-tonne loads in preparation for the rise in capacity.

The new haulage agreement with Whitehaven, which starts this month and expires in June, 2026, enables Pacific National to replace its two 20-year old trains, which can only carry loads of 25 tonnes.

The agreement comes as Pacific National’s rival Aurizon expands in the Gunnedah Basin this year after securing a deal with Whitehaven to haul up to 16 million tonnes of coal a year to Newcastle port from four sites, including the new Maules Creek project.

Maules Creek, one of the largest coal deposits in Australia, is expected to start producing coal in the first quarter of 2015.

Aurizon has also been working with Whitehaven and the Australian Rail Track Corporation to increase axle loads and is building a new $110 million maintenance facility at Hexham, near Newcastle.

The Hexham facility will help improve the efficiency of all trains operating in the Hunter Valley, Mr Irwin said, adding that he remained confident on the outlook for coal exports.

“We’re very clear that the amount of coal exported out of Australia is going to increase over time and it will probably increase every year, year-on-year,” he said.

A record 150.5 million tonnes of coal was exported from Newcastle this year, with the port shipping almost 17 million tonnes more than last year. The annual growth rate of 12.5 per cent is the fourth consecutive year of higher than 10 per cent annual growth for coal exports from Newcastle, says the NSW government, which is in the process of privatising the port.

The government has already struck a deal with Port Waratah Coal Services and the Newcastle Coal Infrastructure Group, which own the port’s export terminals, to expand the port’s coal export capacity amid expectations that exports could rise to as much as 270 million tonnes annually by 2025 due to rising demand by China and India for the commodity.

Under the deal, known as the Hunter coal export framework, coal terminals will be expanded and a new terminal will be built on Kooragang Island.

This will increase Newcastle’s export capacity to 211 million tonnes annually by next year. 

The sale of the port, expected to reap between $700 million and $1 billion for the government, is expected to be completed by April.has struck a deal with Australia’s second biggest independent coal producer.