January 10, 2011

Australia to fund grain rail network with US$134.6 million

The federal government will spend AUD135 million (US$134.6 million) to help rebuild and modernise Western Australia's grain rail network in partnership with the state government and the grains industry.

The modernisation of the rail network is being jointly funded by the federal government, with a further AUD179 million (US$178.47 million) coming from the state government and AUD175 million (US$174.48 million) from industry, Prime Minister Julia Gillard said Friday (Jan 7).

Restoring the reliability and efficiency of this infrastructure is vital to protecting the livelihoods of the state's primary producers and the nation's trade performance, as Western Australia usually produces about 40% of the national crop of which more than 90% is destined for export, Gillard said.

"All up, we're investing AUD3.5 billion (US$3.49 billion) over six years to maintain and modernise the state's road and rail infrastructure," she said.

Although Western Australia's wheat production this crop year slumped due to drought, the state usually is a major supplier of wheat, barley and canola to the global trade.

Acting Chief Executive of Cooperative Bulk Handling Ltd. Allyn Wasley said the commitments by the federal and state governments provide total funding of AUD350 million (US$348.95 million) for the state's grain rail network, which allow significant upgrades through re-sleepering and trackwork and much needed maintenance after decades of neglect.

The funding from governments was a catalyst for a recent move by CBH, the biggest grain company in the state, to invest up to AUD175 million (US$174.48 million) in rolling stock, he said.

In December, CBH awarded a long-term grain rail logistics planning services contract to US-based Watco Group, to create greater value, efficiency and safety for grain growers and the industry, he said.

This has resulted in the introduction of competition for the first time in the state grain rail freight market and the first major investment in new rolling stock for decades, Wasley said.

CBH operates nearly 200 upcountry grain storage sites and four coastal grain export terminals, dominating storage and handling in the state.