WEST PERTH, AUSTRALIA — The CBH Group said on July 27 that it is extremely disappointed with the government’s decision not to support its proposal to retain Tier 3 rail lines.

CBH Group Chief Executive Officer Dr. Andrew Crane said the group’s case for Tier 3 lines to remain operational was compelling and their closure was a lost opportunity to keep more grain on rail and make Western Australia more competitive on the world market.

Crane said CBH utilized much of the information provided in the government’s own Strategic Grain Network Review report to conclude that, with its own significantly reduced operational costs, the lines were now economically viable without additional grain freight funding from Government.

“It is important going forward that we learn from this process,” Crane said. “We must ensure that the grains industry, the government and the rail track manager, Brookfield-owned WestNet Rail work together to make sure that the grain rail network does not deteriorate to such a poor level again that would necessitate closure of further sections.

“The WA grains industry exports up to 90% of its total annual production and the protection of current efficient rail and road pathways to port is vital.

“We accept that it is government funds that would be required to be switched from road upgrades to retain the Tier 3 and that the Minister’s decision today means the Brookton Strategy will be implemented.”

The Brookton Strategy outlines plans for grain to now move by road from sites on Tier 3 lines to the CBH Brookton receival site for transfer to rail to transport to port.

However, Crane said CBH estimated the existing Transition Assistance Package (TAP) will be required indefinitely at Brookton to ensure that maximum volumes of grain remain on rail into the future.

Additional rail infrastructure would also be needed at CBH’s Kellerberrin and Brookton receival sites which will require economic assessment prior to any firm commitment.

“Despite CBH’s strong commitment to rail ,as evidenced by our recent $175 million investment in new locomotives and wagons, there remains the distinct possibility that some growers and marketers operating in the Tier 3 region will choose to bypass Brookton and deliver by truck direct to port at Kwinana,” Crane said.

“Unless freight rates under the road-rail supply chain envisaged in the Brookton strategy are more competitive than going by road all the way to port, growers and marketers will go direct.”

“The CBH Group will seek further engagement with Government on these matters.

Crane said CBH remained prepared to work with the government in the short term if there was anything more that could be done to convince it of the case to keep the Tier 3 rail lines operating.

“However, if there is nothing more that can be done to salvage the Tier 3 lines, then CBH will need to start the conversion of 33 receival sites from rail to road, including building extra storage to manage harvest grain,” Crane said. “We will work with our new above-rail operator Watco to implement an operating model to reflect the grain movements from Brookton ready for operation on 1 May 2012.

“CBH will continue to work with Local Governments and Main Roads WA on progressing the upgrades of the designated road routes to ensure that the road transport of grain from Tier 3 lines is the most economical it can be.”