Is the Mount Isa-Townsville railway line pricing itself out of viability?

Transport insiders are sounding the alarm over the Mount Isa-Townsville railway, which they say is so focused on squeezing money out of miners, it is unintentionally killing the industry.

Queensland Rail owns the tracks and charges customers an ‘access fee’. Aurizon owns the trains (otherwise known as ‘rolling stock’) and charges customers transport fees.

Transport insiders are sounding the alarm over the Mount Isa-Townsville railway, which they say is so focused on squeezing money out of miners, it is unintentionally killing the industry.

The concerns come after junior miner Centrex entered voluntary administration on March 4, after failing to keep up with the running costs of their Ardmore phosphate mine project near Dajarra.

Centrex CEO Robert Mencel had publicly warned in January that exorbitant rail freight costs were a serious issue for the mine, which used the Mount Isa line to transport phosphate to the Port of Townsville.

Mount Isa to Townsville Economic Zone (MITEZ) president Maria James said the uncompromising way the transport price was structured on the Mount Isa line meant the railway was losing customers to road trains, which are actually faster than the trains (driving Mount Isa to Townsville takes 10 hours, rail takes 21 hours).

“Volumes have been declining on the Mount Isa line because we can put road trains on the Flinders Hwy, and the trucks are getting more competitive,” Ms James said.

Trucks delivering product to Incitec Pivot Limited's Townsville Port from Phosphate Hill, Mount Isa.

“A good example is fuel. The fuel used to get brought in on the train but now it’s by road.”

Every time the Mount Isa line loses a customer, its prices go up.

This is because the line’s access charges are governed by the Queensland Competition Authority (QCA), which has set the government-owned Mount Isa line up as a “total cost recovery” operation.

“This means all the cost of maintenance, fixing and operation all falls onto the users,” Ms James said.

“If there are 10 users, it is split 10 ways.”

MITEZ CEO Maria James at the official opening of the CopperString Experience Centre. Picture: Shae Beplate.

Because of this it costs Queensland Rail and the taxpayer nothing to keep the Mount Isa track in operation - but it also backfires if the expenses of the entire 977 km long track are reliant on a shrinking pool of users.

“The less users, the more expensive the costs,” Ms James said.

“To fix this, you need more users and more volume on that line.”

Aurizon was originally the bulk-haulage division of QR before it was privatised in 2010.

Ms James said the exit of Centrex’s phosphate mine was the perfect example of the track’s pricing system backfiring.

“They were a great company, they’d opened up a new market in India and they still have nine months of contracts to fill,” she said.

“They were producing a good product the world needs, but they literally ran out of money trying to get to the port.”

Phosphate rock being loaded in Townsville. Because Centrex was a junior miner and hadn’t constructed its own berth and conveyor belt at the Port of Townsville yet, they were forced to transport their phosphate in “half-height” carriages that the port’s crane can lift and “shake out” over ship cargo bays. The half-height carriages meant Centrex was having to pay more to transport less on the railway, and also pay more at the port due to the slower nature of the shake out method. Picture: Port of Townsville

Glencore’s conveyor belt allows them to transport their commodity in full size ‘bulk’ carriages and very quickly load up ships, reducing their rail and port fees. Pictures: Port of Townsville CEO Ranee Crosby and Glencore Manager of Port Operations Greg O'Shea touring Berth 8.

Ms James believes if some flexibility was written into the QCA’s regulations regarding how they charge junior miners on the Mount Isa line in their first few years, the Centrex situation would’ve been avoided.

“They very nearly made it, but they literally ran out of money,” she said.

“By not tweaking the QCA regulations, they just lost a phosphate mine that was looking to transport two to three million tonnes.”

The phosphate rock processing plant established by Centrex at Ardmore.

How the costs break down is a little complicated - Queensland Rail owns the tracks, but it doesn’t run any trains, that job is performed by Aurizon, a former QR company that was privatised in 2010.

A mine looking to use the track must first budget for trucking costs to get their product to the track, must pay QR a ‘below the line’ fee, pay Aurizon an ‘above the line’ fee, and pay the Port of Townsville to load the product onto a ship.

Queensland Rail head of regional Scott Cornish said QR continues to work with companies in the North West to “retain and build as much freight business on rail as possible”.

QR head of regional Scott Cornish. QR has been vocal about shifting road freight onto rail, but its success rate is spotty.

“Queensland Rail receives access charges from train services which operate on the line. This revenue is used to cover the capital and operational costs of running the railway,” Mr Cornish said.

“Queensland Rail’s access services are regulated by the independent Queensland Competition Authority (QCA) and rail access charges must comply with pricing principles contained in its undertaking.”

The Queensland Rail network.

An Aurizon spokesperson said while Queensland Rail charges customers an ‘access fee’ for using the track, Aurizon charges the customer a fee for carrying their freight.

“Aurizon has been working with Centrex since November 2022 to provide services to the Ardmore mine project,” a spokesperson told the Townsville Bulletin.

“We have supported their business through investment in both onsite and offsite logistics services to move their product to their customers.”

An Aurizon train on the Mount Isa line. Despite Aurizon running the trains, QR is still responsible for scheduling train movements. Credit: Queensland Rail

In March 2024, Aurizon, Centrex, Cement Australia and North West Phosphate joined forces and raised concerns about the pricing structure of the Mount Isa line.

In a joint submission to the QCA, the four companies expressed their concerns over declining performance, high fixed charges that were “undermining the viability” of rail freight, and an unwillingness from QR to “promote rail market growth”.

The four companies all called for the QCA to amend its regulations to allow Queensland Rail more flexibility in how it charges customers, in order to grow rail volumes.

Traeger MP Robbie Katter has been pushing for better rail freight for years.

Member for Traeger Robbie Katter said the Mount Isa line is “three to four times” more expensive to use than the second most expensive track in Australia, and was the only Queensland track to not receive subsidies.

“It’s unfair that the only track in Queensland that isn’t subsidised is this one,” Mr Katter said.

“The North West is going to collapse if they don’t manage the power, water and rail prices better. But if we fix it, we could really flourish.”

The Mount Isa line pricing is controlled by the QCA’s Queensland Rail Access Undertaking (AU), which is a mandatory code of conduct placed on the state-owned asset.

The QCA is currently investigating a new AU, which is due to replace the current AU on June 30, 2025.

Originally published as Is the Mount Isa-Townsville railway line pricing itself out of viability?