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Agreement to move Pike River Coal by Rail

Agreement to move Pike River Coal by Rail

Solid Energy investment, increasing annual capacity on the Midland rail line and at Lyttelton, Port of Christchurch over the last three years to more than 4 million tonnes, has secured the company the long-term transport supply contract with Pike River Coal Limited.

Solid Energy today signed an 18-year agreement with Pike River to use rail to carry its coal from a new load out, near Pike River underground mine, north of Greymouth, to Lyttelton for export. Following initial discussions on interim coal transport, Pike River approached Solid Energy earlier this month about its 2005 proposal to supply transport services from the mine to Lyttelton.

Under the agreement, Solid Energy guarantees Pike River capacity to transport up to 1.3 million tonnes a year on the rail line (up to three trains a day) from late 2008. As a result of the agreement Solid Energy is now planning further capital investment including in the rail line, rolling stock, an additional coal load out facility on the West Coast and increased capacity at Lyttelton.”

“This agreement is great news for a key transport connection that nearly disappeared four years ago,” says Solid Energy Chief Executive Officer, Dr Don Elder. “When the Government took back ownership of the rail network in July 2004, investing $25 million in the Midland line through On Track, Solid Energy committed more than $100 million to the line through our long term contract with Toll Rail and then spent a further $15 million on the new Cobden rail bridge over the Grey River.

“Solid Energy, On Track, Toll Rail and Lyttelton, Port of Christchurch have worked collaboratively since then to improve reliability and upgrade overall capacity. As a result coal and other freight on the line including dairy, cement and gold concentrate have increased significantly. Delivery of the proven annual capacity of more than 4 million tonnes gave Pike River the confidence to move forward with our transport supply proposal.

“When we entered a long-term agreement with Toll Rail, we recognised that all West Coast businesses should get the benefit of the Government’s investment in the Midland Line and that we had a responsibility to help provide capacity for other exporters and businesses,” Dr Elder says. “This is an excellent example of how public investment in long-term infrastructure can lever additional investment to create significant economic benefits for business and the local region.”

ENDS

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