Rail freight group QR National will expand its coal haulage capacity by more than 70 million tonnes after agreeing with a consortium of coal companies to build a rail link to the new Gladstone export terminal.

 

The $900 million Wiggins Island rail project is expected to deliver a further 27 million tonnes a year for QR National and will add to its key growth programs, including the Goonyell-to-Abbot Point Expansion project and the Hay Point coal terminal expansion.

 

Chief executive Lance Hockridge described the project as one that "would substantially increase capacity of the central Queensland network", and that together with GAPE and Haypoint, it would add 71 million tonnes to its base of 200 million tonnes.

 

It is likely to provide a solid counterpoint to investor concerns over the lingering impact on QR National of the floods in the state earlier this year that reduced overall coal volumes.

 

QR National is expected to achieve higher returns than the current regulated base of 9.96 per cent from the Wiggins Island deal, but the project will increase its capital expenditure commitments by about $200m this financial year. The extra capex is likely to be met from uncommitted facilities of $700m that has been flagged for growth projects.

 

QR National's Network division has struck an agreement with eight coal companies, including Xstrata Coal, Aquila Resources and Wesfarmers Curragh, to build the first phase of the project, with construction scheduled to begin early next year.

 

First exports are likely by the middle of 2014 and potential future phases on the project could add a further 70 million tonnes of capacity.

 

The project, which will include the construction of a 13km balloon loop near Gladstone and several upgrades to other sections, is expected to be completed by March 2015.