James Moutafis SVP Coal Business Development

Creating a World Class Supply Chain to Unlock the Galilee Basin

12th November, 2012

Creating a World Class Supply Chain to Unlock the Galilee Basin

12 November 2012

James Moutafis

SVP Coal Business Development

2

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3

Coal’s increase in its dominant share of the world’s energy future is driven by urbanisation trends in China and India

Source: United Nations Department of Economic and Social Affairs, IEA WEO 2011, World Bank 2012

Urbanised population Billions of people

2010 (a) 1990 (a)

2.5

5.0

4.5

4.0

2.0

1.5

1.0

0.5

0.0

3.5

+30%

Rest of

World

China

India

2025 (f)

3.0

4.1%

1.9%

1.9%

2.8%

3.0%

CAGR

2009-2030

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

21%

16%

13%

8%

2.8%

Coal

Gas

Hydro

Nuclear

Other

42%

2030 (f)

43%

22%

14%

11%

11%

21%

15%

12%

10%

2009 (a) 2020 (f)

41%

Global electricity generation TWh

4

Australian miners are pursuing cost savings and productivity improvements to regain competitiveness

Source: ABS, CSLS, Minerals Council of Australia, MCA PJP “Opportunity at Risk”, Sept 2012, QRC 31 May 2012.

Australian Mining Productivity vs Industry

Appreciating Australian Dollar

Increased labour, energy and transport costs

Rising capital costs

Development approval delays

e.g. 18 months in 2005 to 3 years currently

Multifactor productivity index (index, 1997 = 100)

2004 2002 2000 2010 1996

100

Australia

Canada

80

100

90

110

120

70

140

130

2012

0

2006 2008 1998

5

*Indicative map only – not to scale

Some of the Galilee Challenges

Alpha Mine (GVK Hancock)

Carmichael Mine

(Adani)

Degulla Mine (Vale)

China Stone Mine

(MacMines)

China First Mine (Waratah)

Kevin’s Corner Mine (GVK)

South Galilee Project Mine

(AMCI Bandanna)

• Rapid volume ramp-up to lower unit costs

• Infrastructure cost which supports

development

Delivery of new port capacity, ie

Dudgeon Point progressing, revised

Abbot Point process imminent

300-500km of rail from mine to port, eg

terrain, hydrology and ground conditions,

landowners, environmental issues

Other services e.g. water, electricity,

roads

• Logistics of remote locations

• Large upfront capital investment in

challenging capital market conditions

The Galilee Opportunity*

The challenges facing the development of the Galilee Basin are well recognised

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180km of new rail

construction

Upgrades to 220km of existing rail

Additional passing loops and

duplications

Level crossing

upgrades

Signalling and communication

upgrades

Technological innovations for

rollingstock and facility

optimisation

~2,500 jobs throughout construction

~750 operational jobs

Alpha Mine (GVK Hancock)

Carmichael Mine

(Adani)

Degulla Mine (Vale)

China Stone Mine

(MacMines)

China First Mine (Waratah)

Kevin’s Corner Mine (GVK)

South Galilee Project Mine

(AMCI Bandanna)

Indicative map only – not to scale

Central Queensland Galilee Rail Project (CQIRP)

QR National’s solution for unlocking the Galilee Basin

7

Y5 Y1

Year

>$1bn

Y0

Ca

pita

l E

xp

en

ditu

re (

$M

)

Y2 Y4 Y3

Greenfield Standard Gauge

CQIRP Narrow Gauge

When compared to greenfield standard gauge rail, CQIRP reduces upfront capital expenditures by >$1bn and provides flexibility in matching below rail capacity to mine ramp-ups

CQIRP reduces upfront capital

expenditures by an estimated

>$1bn

CQIRP matches below rail

capacity to eventual mine

ramp-up tonnages through

staged investments in the

brownfield network

This will ease the

financing requirements

of Galilee Basin projects and

reduce investment risk

Ability to stage investment to

match mine ramp-up volumes

Below Rail Capital Expenditure Comparison for the

Galilee Basin

Source: QR National Team Analysis

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CQIRP will provide Galilee Basin projects a lower unit cost across a range of production ramp-ups and peak tonnages

Increased train length

4km (Double Goonyella length)

Higher payloads > 20,000t

Flattened ruling grades in

the Newlands corridor

Above and below rail innovations

Lower upfront capex and

staged capacity expansions

Source: QR National Team Analysis

Indicative Rail Unit Cost Comparison

90 60 30

CQIRP Narrow Gauge

Greenfield Standard Gauge

Target Throughput (Mtpa)

Unit C

ost/

To

nn

e

Note: Key variables ramp-up profile, discount rate

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Outstanding safety standards and practices

Independent consolidator incentivised to maximise

throughput

Provide access to all Central

Queensland coal ports

Maximise asset utilisation through existing infrastructure

Innovative technological and operational developments

Reducing capital intensity through staged development aligning

expenditure to ramp up profiles

Long term sustainable economic growth for local communities

145 years of railway design, construction and operational experience

QR

National

CQIRP

Minimises environmental and community impact

QR National offers a coordinated approach to delivering Galilee and Bowen Basin coal to the central Queensland ports

10

Capital Expenditure ($m)

7231,139 877

1,030

200

FY11

1,339

296

FY10

307

FY12

Growth

Capex

Sustaining

Capex

1,173

Demonstrated ability to deliver supply chain benefits by leveraging core competencies

-22%

FY12

2.40

FY11

3.08

FY10

6.14

FY09

11.43

Lost Time Injury Frequency Rate

(LTIFR)

• Safety is our core value

• Performance is a reflection of operational discipline

• Winner of “Queensland Safe Work Award 2012”

• A continuing investment in capital growth

• 58% increase in operating cash flow delivered in FY12

• ASX top 50 company with market capitalisation of ~$8bn

Safety performance Experience and expertise Capacity and commitment

to grow

Average cycle time (hrs)

• Evidence of continued operational transformation yielding improved asset utilisation

18

19

20

21

22

23

24

FY12 FY11 FY10

Goonyella

Blackwater/Moura

11

Deliver on-time for first Galilee Basin coal

Efficient, low cost rail operations

Reduce capital intensity

Minimise environmental and community impacts

QR National is committed to growth of the Queensland supply chain with CQIRP a key component of meeting the requirements of Galilee Basin customers

Questions