FREIGHT rail transporter Aurizon has today (28 November) welcomed the decision by the Australian Competition and Consumer Commission (ACCC) to approve its proposed acquisition of Flinders Logistics.
Aurizon says it will work to finalise the acquisition of the bulk stevedoring company, with completion expected to occur on 6 December this year.
The acquisition is intended to support Aurizon’s presence in South Australia with rail and port solutions for its customers.
Flinders Logistics holds leases and, together with its subsidiary Pirie Bulk, operates at Port Adelaide and Port Pirie, including a stevedoring workforce of approximately 100 people.
The green light from the ACCC comes after the merger parties restructured the transaction to exclude the underlease for Berth 29, a critical berth for the import and export of certain mining products and mineral sands.
The ACCC said in an official statement that its initial concern was regarding the potential of the acquisition to limit competition of rail haulage services in the region.
“We were concerned that after the acquisition, Aurizon would have the exclusive right to load and unload trains and Berth 29, Port Adelaide,” ACCC commissioner Philip Williams said.
“Having this exclusive right was concerning to us, because it may have provided Aurizon with the ability and incentive to limit the access of competing rail haulage providers.
“This could have resulted in a substantial lessening of competition in the supply of rail haulage services for the import and export of containerized bulk minerals on behalf of customers in South Australia and western New South Wales and Victoria”.
The transaction restructure excludes the underlease for the berth 29 rail pad from the proposed acquisition, allowing third parties to load and unload trains themselves.
Dr Williams said that under the new transaction structure, rival rail haulage providers will no longer be required to rely on Aurizon to load and unload their trains, meaning other logistics companies will be able to compete to supply mining customers.
Flinders Port Holdings (FPH), parent company of Flinders Logistics, will reportedly retain control of the rail pad and operate it as a common user asset.
Dr Williams said the ACCC carefully examined and consulted on the changes in the restructure and concluded the acquisition is “unlikely to result in a substantial lessening of competition”.
In its own statement, FPH acknowledged the decision by the ACCC to approve the acquisition, commenting “The sale agreement for the divestment will unlock significant strategic value for FPH, while allowing it to reinvest in critical infrastructure and expansion projects to drive increased capacity and efficiency”.
“The divestment of Flinders Logistics and Pirie Bulk to Aurizon aims to promote trade growth through South Australia’s key ports, building a commercial relationship, while leveraging Aurizon’s extensive rail network and logistics expertise with Flinders Ports’ deep understanding of port operations and customer needs.”
Aurizon said that as it already operates rail services into Port Adelaide, the acquisition is a logical step in providing existing and future customers with additional options for rail and port services, including stevedoring and warehousing.
The key products serviced by these ports include mineral sands, iron ore, copper, concentrates and soda ash.
Aurizon will integrate Flinders Logistics into its existing bulk business following completion of the acquisition.
