Aurizon has sealed an eight-year extension to an existing coal haulage contract with mining giant BHP Billiton, giving the troubled freight rail operator some respite.
The company said its haulage contract for BHP's Mount Arthur coal mine in the NSW Hunter Valley, which was to conclude in 2020, will now run until June 2028.
The deal also allows for potential increase in coal haulage volumes, from the current 18 million tonnes per annum (mtpa) up to a maximum of 26 mtpa, Aurizon said.
The announcement provides some relief to Australia's largest freight rail operator, which has seen demand for its services slip amid a commodities slump that is forcing most mining companies to cut back volumes and slash spending.
In February, Aurizon swung to a $108 million half year net loss after taking impairments, and trimmed its outlook for coal volumes for the second time this financial year.
Shares in the company reacted positively to the news on Monday. The stock closed up eight cents, or 1.99 per cent, at $4.10.
Aurizon said the new contract provides flexibility for both BHP and itself.
The celebration could, however, be shortlived, with the Mount Arthur coal mine already struggling after the slide in global coal prices.
Earlier in March, BHP axed almost 300 jobs at the mine, the second time it has cut jobs at the site in two years. BHP chief executive Andrew Mackenzie has said Mount Arthur could be a candidate for closure if prices or costs do not improve.
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