TO arrest sliding profits and restore investor confidence, Australia’s largest rail freight operator, Aurizon, is considering selling a 49% stake in its Network Access business which manages access to the Central Queensland Coal Network (CQCN).

According to the Australian Financial Review, the transaction could be valued at up to $A 4bn ($US 2.62bn).

The 2670km multi-user CQCN connects more than 40 coal mines to five major export terminals and is a vital asset for Queensland’s coal mining industry. In the 2024-25 financial year, 208 million tonnes of coal were carried on CQCN, down 1% on the previous year.

CQCN operations are governed by a 99-year lease agreement between Aurizon and the State of Queensland. Access to the rail network for third-party operators, including Aurizon’s own trains, is overseen by the Queensland Competition Authority.

A sale of a minority stake in the network or spinning it off via a demerger would be the biggest shake-up at Aurizon since it was privatised by the Queensland government in 2010.

The Australian Financial Review also suggests that private infrastructure investors and hedge funds have been invited to inspect the business. One of the key coal export port owners, Dalrymple Bay Infrastructure, is believed to be among them.

2024-25 results

While not going into detail, in its 2024-2025 results presentation to investors, Aurizon acknowledges that a review is underway and that an investment bank has been retained to assist with this process.

Ebitda of $A 956m from the Network Access business represented more than half of Aurizon’s total for the 2024-25 financial year.

Aurizon has struggled to reduce its dependence on on coal revenue. Volatility in the bulk and containerised freight markets resulted in a $A 56m hit increase in doubtful debt provisions in 2024-25 compared with the year before. The loss of a major Hunter Valley coal contract with Whitehaven from early 2026 will not help, resulting in the loss of traffic amounting to 10 million tonnes per year.

Traffic at Aurizon’s inter-state container business, a market which it re-entered in April 2023, has grown by 30%, over the last year but loadings are still only running at 65% of capacity. Launch customer TGE was originally expected to account for 70% of capacity, with the other 30% coming from new business.

While revenues for Aurizon’s combined Network Access and freight businesses were up 3% at $A 3.95bn for 2024-25, overall net profit after tax was down 14% at $A 348m.