WestNet Rail
WestNet Rail is a rail infrastructure owner and rail access provider operating in Western Australia with a long term arrangement to lease track from the Western Australian government. Its track infrastructure serves as a crucial transport link in the region. At 30 June 2008 BBI owns a 76% share of WestNet Rail and has announced that it will exercise (by the end of the 2008 claendar year) its call option over the remaining 24% minority interest in WestNet rail.
WestNet Rail is a regulated monopoly with largely stable revenue streams through long term access agreements with its customer base. The below-rail business revenue is derived from access charges paid by above rail operators or directly by underlying customers. Security of revenue is underpinned by:
- rail transport being a small part of the overall production cost of the commodities transported;
- the fact that resources customers typically seek long term contracts (like those already in place) to ensure adequate access to the supply chain;
- the existence of some take-or-pay and flagfall arrangements; and
- the critical nature of the minerals and grains industries to the West Australian economy overall, which ensures strong governmental support.
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Description
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A rail infrastructure owner and access provider
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Asset Class
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Transport Infrastructure
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Location
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Western Australia
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BBI % ownership
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Currently 76% (with call option over remaining 24%).
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Regulatory Environment
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Line segment regulation based on revenue ceilings;
Gross Replacement Value calculation utilising a regulated WACC and efficient annual overhead and operating costs.
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Customer Base
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Access agreements with strong blue chip customers (including long term agreement with Queensland Rail)
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Asset Age & Condition
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Varies across line segments.
Maintenance and renewal obligations are mandated by the lease with the WA Government and are being complied with.
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Utilisation
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Varies across line segments. Ample spare capacity on lighter gauge lines, and ability to increase capacity to meet demand.
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Key Drivers
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WA economy (GSP)
Global economic activity and commodity demand
Mine expansion activities of current users, and addition of new users.
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See the ASX Announcements, Presentations and Related Sites section of this website for more information on this asset.