Glencore wants to get back aboard Aurizon’s rail

An Aurizon coal train travelling through Toowoomba. Picture: Kevin Farmer

Glencore is understood to have been among the groups that put forward an offer for Aurizon’s $1bn East Coast Rail business, along with Brookfield and Oaktree Capital Management.

Glencore was understood to have initially showed interest in East Coast Rail before the process started but offered a price below Aurizon’s hopes, say sources.

Now it has once again tried to buy the rail network, although sources suggest it has put forward a low-ball offer.

Sources say they believe that although there were 10 parties showing interest in East Coast Rail, they consisted of three consortiums.

Glencore owns coal mines and had previously owned the business.

It serviced most of Glencore’s coal haulage requirements in the Hunter Valley under a 20-year contract for the haulage of export coal to the Port of Newcastle.

Glencore sold is GRail business to Genesee & Wyoming for $1.14bn in 2016 and that business was later sold to Macquarie and renamed One Rail Australia.

Macquarie last year sold One Rail Australia for $2.35bn, which it finalised on July 29. East Coast Rail, which was part of One Rail Australia, has been subjected to a sale process by Aurizon, run through Goldman Sachs.

The Queensland-based haulage company is expected to reach a decision between November and December on whether to sell or demerge the operation.

East Coast Rail will carry about $500m of debt with a BBB- rating and has funding in place from eight banks and the US private placement market.

East Coast Rail operates in NSW and Queensland.

For 2021, the unit generated $227m of revenue and $137m of underlying earnings and hauled close to 50 million tonnes during 2021 – the most in a decade.