Grain Infrastructure Group Review – Summary Points

1. Grain Infrastructure Group Review – Summary Points Presentation to Fuelling Food in WA. John Georgiades Executive Officer Grain Infrastructure Group John Georgiades, Executive Officer GIG 02 October 2008

2. Grain Infrastructure Group Review – Background HISTORICAL PERSPECTIVE • In 1997, the Minister for Transport established the Grain Logistics Committee. • In 2004 the Grain Infrastructure Group (GIG) was established • – a DPI initiative. • WA Strategic Grains Infrastructure Study (WASGIS) was initiated by GIG. • ARG and CBH initiated a ‘bottom-up’ supply chain evaluation of their • Networks known as Grain Network Review (GNR). • 2005 to present • DPI verification using GIG working party to model the supply chain • and estimate costs based on actuals from Bin to Port

3. WA Grain Industry Facts • Infrastructure • 197 receival points, 4 export grain ports • 3,350 km NG rail, 500 km SG rail • Established heavy haulage road network • Task • Current 10mt average, 15mt peak crop • 60% average task by rail • 80% WA grain bound for export • Half the nation’s export grain from WA • Impact • 25,000 jobs (directly & indirectly) • $5.5b pa contribution to economy • Importance to viability of regional communities

4. Rail Freight Grain Network

6. WA Grain Flows to Port LEGEND rail site to port road to rail road site to port road farm to port

7. GRAIN TRANSPORT RAIL OPERATION • In a “normal” grain year ARG will in general terms operate the following train sets to the 4 major rail ports in WA: • Albany narrow gauge 2 trains each of 50 wagons, each loaded to 54 net tonnes = 2,700 net tonnes each • Geraldton narrow gauge 1 trains each of 50 wagons, each loaded to 44 net tonnes = 2,200 net tonnes each • Kwinana narrow gauge 4 trains each of 50 wagons, each loaded to 44 net tonnes = 2,200 net tonnes each • Kwinana standard gauge 3 trains each of 58 wagons, each loaded to 70 net tonnes = 4,060 net tonnes each • each train usually averages one round trip per 24 hour day from port to country loading point and return • notional capacity all up is 28,000 tonnes per day to the ports.(560 truck trips)

8. GRAIN TRANSPORT RAIL OPERATION To put this in perspective, in the case of the Kwinana zone, ARG will deliver some 4.5 million tonnes in year at up to 21,000 tonnes or more per day. These trains travel down the Avon Valley, skirt around the Perth Metro area through Midland, Forrestfield, Canning Vale, Cockburn and down to Kwinana. All this while the majority of the people of Perth are totally unaware that it is even happening.  I’m sure that that awareness will increase dramatically were this task to divert to the roads.

9. GRAIN TRANSPORT DEMAND

10. Drought has suppressed this

11. Grain Infrastructure Group Review – Outcomes GIG REVIEW EXHIBIT 13: SUPPLY CHAIN RESOURCE COST PER TONNE

12. Grain Infrastructure Group Review – Outcomes GIG REVIEW 2006 $’s. Since that time there have been rate adjustments and fuel cost escalations which impact on both rail and road.

13. EXHIBIT 14: LIST OF PROJECTS GRAIN RESCUE PACKAGE NATURE OF NUMBER OF ORGANISATION FUNCTION PROJECTS PROJECTS TOTAL VALUE in 2007$'s million Lines open Lines Closed WESTNET RAIL 136.7 RAILWAY TRACK RESLEEPERING Up to 18 226.7 MAIN ROADS UPGRADING AND DEPARTMENT STATE ROADS MAINTENANCE 10 63.2 151.4 COOPERATIVE BULK INTERMODAL RAPID RAIL HANDLING TRANSFER LOADING 18 106.8 COOPERATIVE BULK COMMUNITY ROAD AND RAIL HANDLING SAFETY ACCESS 15 40.8 437.5 435.7 MAIN ROADS STATE ROADS NON UPGRADING AND DEPARTMENT RAIL AREAS MAINTENANCE 25 50 50 pro rated from PB LOCAL ROADS FARM GATE UPGRADING AND report GOVERNMENT ROADS TO RECIEVAL BIN MAINTENANCE 175 350 350 837.5 835.7 TOTAL VALUE OF INFRASTRUCTURE PROJECTS Grain Infrastructure Group Review – Outcomes GIG REVIEW

14. Grain Infrastructure Group Review – Conclusions GIG REVIEW CONCLUSIONS • 1 Returns insufficient to warrant reinvestment (based on 2006 conditions).2 Volume is being diverted from rail to road (variety of reasons) undermining network viability.3 Deregulation of Grain Marketing can potentially fragment the supply chain and lead to closure of the grain rail network.4 Infrastructure Investment is required: Resleepering $200m, State roads $50m, Loading $150m.5 If no investment then Requirement for roads could increase by $24m p.a. Logistic Resources will be diverted from grain to other industries – threatening industry viability. Significant environmental and community impacts

15. Supply ChainCoordination

16. Supply Chain Coordination

17. Supply Chain Coordination

18. Modal Impacts FUEL USAGE Rail uses an average of some 1.5 to 2 litres of diesel per net tonne.  The road equivalent is closer to 9 litres per net tonne.

19. Emission ImpactsGarnaut Garnaut’s Climate Change report

20. Emission ImpactsGarnaut Garnaut’s Climate Change report

21. Emission ImpactsGarnaut Garnaut’s Climate Change report Key points on Transport Transport systems in Australia will change dramatically this century, independently of climate change mitigation. High oil prices and population growth will change technologies, urban forms and roles of different modes of transport. An emissions trading scheme will guide this transformation to lower emissions transport options. Higher oil prices and a rising emissions price will change vehicle technologies and fuels. Governments have a major role to play in lowering the economic costs of adjustment to higher oil prices, an emissions price and population growth, through planning for more compact urban forms and rail and public transport.