Aurizon shares lift as RBC calls BHP deal a 'very positive step'
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More news: Aurizon shares climbed after the rail freight operator secured contracts to provide an integrated rail, road and port logistics solution for BHP’s South Australian copper operations.
Shares were up 1.8% to $3.12 at 2:40pm AEST.
RBC Capital Markets analyst Owen Birrell said the new integrated contract is a "very positive step" in the evolution of Aurizon's bulk business.
What they said: "A long dated contract, signed with a very high quality counterparty should go a long way to offsetting the current narrative of short dated contracts with lower quality counterparties," said Birrell.
"While a positive for the narrative, we note that the key value in today's announcement is what has not been stated in [Aurizon's] release. We are referring to the potential volume upside over the coming decade if BHP is successful in its strategy to double its SA copper output."
Aurizon wins 15-year logistics contract for BHP copper operations
The news: Australia’s top rail freight operator Aurizon has been awarded contracts to provide an integrated rail, road and port logistics solution for BHP’s South Australian copper operations, for a term of up to 15 years.
The numbers: The contracts are expected to generate revenue of around $1.5 billion over the initial 10 years.
The context: Under the arrangements, the transport of copper concentrate and cathode from BHP's Olympic Dam, Carrapateena and Prominent Hill mines, as well as inbound freight, will shift to rail between Pimba and Port Adelaide.
Aurizon will be responsible for services across the Copper South Australia supply chain, including rail haulage, road transport, terminal management, port management and stevedovering.
The shift to an integrated rail, road and port solution will effectively replace an estimated 13 million kilometres of truck movements annual on South Australian roads.
What they said: "Aurizon is delighted to secure these large-sclae long-term contracts with BHP's Copper SA, supporting the success and expansion of one of the nation's most significant resources," said Aurizon managing director and CEO Andrew Harding.
The source: ASX
