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Qube, Aurizon invest $539m in Sydney intermodal terminal

The facility, located on the outskirts of Port Botany, will be the largest integrated warehouse rail terminal precinct in Australia once fully developed.

Australia’s federal government this week approved the agreement between Moorebank Intermodal Company (MIC) and the Sydney Intermodal Terminal Alliance (SIMTA) – a joint venture between Aurizon Holdings, Australia’s largest rail operator, and Kaplan Funds Management-backed developer Qube Holdings – to develop and operate the Moorebank Intermodal Terminal in southwestern Sydney.

The facility, located on the outskirts of Port Botany, one of Australia’s busiest export-import hubs, will be the largest integrated warehouse rail terminal precinct in Australia once fully developed.

“[The terminal] will help drive competitive advantage for Aurizon and Qube because of its strategic location, unprecedented scale and the seamless integration of port, rail and road. Coupled with the efficiencies available to greenfield operations, it will reduce logistics costs and provides greater opportunity for a sustained modal shift from road to rail,” said Aurizon managing director and chief executive Lance Hockridge.

Hockridge highlighted that the investment presented the opportunity to diversify the company’s general freight portfolio into a rapidly growing import-export market, connected by rail to one of Australia’s busiest ports.

He said Aurizon saw strong commercial alignment in the Moorebank joint venture with Qube because of its logistics capability and clear growth strategy.

SIMTA is a consortium comprising Qube Holdings and Aurizon, with participations of 67 and 33 percent respectively.

Under the contract, SIMTA will develop and operate the open-access freight terminals and associated warehousing on a joint precinct comprising land owned by SIMTA and an adjoining federal site, noted a company statement.

The SIMTA site, which covers approximately 83 hectares, is 27 kilometres west of the Sydney central business district (CBD), 17 kilometres south of the Parramatta CBD, five kilometres east of the M5/M7 interchange, two kilometres from the main north-south rail line and future Southern Sydney Freight Line and 600 metres from the M5 motorway.

The first stage of the project will see the construction of an import-export freight terminal with initial capacity of 250,000 containers per year and eventual capacity of up to 1.05 million containers per year. The facility is expected to be operational in late 2017.

The second stage involves the building of an interstate freight terminal with initial capacity of 250,000 containers per year and eventual capacity of up to 500,000 containers a year expected to begin operating in 2019. The project also calls for the development of associated warehousing for the site.

The total project cost for the terminals, precinct infrastructure and associated warehousing is anticipated to be about $1.5 billion over 10 years. SIMTA’s initial investment will comprise an estimated $700 million for stages one and two.

The remaining estimated $800 million investment for the warehouse development will involve commercial negotiations with prospective tenants and third-party funding.

Aurizon’s capital contribution is expected to be up to $235 million, commencing in financial year (FY) 2016 and weighted to the project’s first four years.

The federal government will provide funding for the rail connection between the terminals and the Southern Sydney Freight Line on which it will receive a fixed return.

The conditions precedent to commencement of the agreement include planning and environmental approvals for the MIC site and surrender by the Department of Defence of its leasing arrangements. These are expected to be satisfied by the first half of FY16.

Moorebank has a dedicated freight link to Port Botany, easy access to the North/South and East/West interstate rail corridors as well as the M5 freeway.