WEST PERTH, AUSTRALIA — CBH Group Chief Executive Officer Andy Crane on May 1 said CBH had no choice but to sign an interim rail access agreement with Brookfield Rail after all previous counter offers had been rejected by Brookfield.
Just two hours before announcing the agreement, CBH said it had been forced to remove its rail fleet from the grain freight rail network as the previous rail access agreement expired. CBH said it was going to move remaining tonnes of grain to port by road.
“CBH is extremely disappointed that the situation escalated to the point where trains were stopped. We were backed into a corner by multinational Brookfield Rail,” he said. “We remain of the view that renewing the agreement on like terms until an outcome is reached through the Railways (Access) Code 2000 process would have been a proper and appropriate outcome. Given the peak shipping demand over the next few months, we had no option but to sign this agreement, to protect the international reputation of Western Australia’s grains industry.”
Brookfield Rail has an exclusive lease over the state's grain rail network. The interim agreement goes through Dec. 31, unless the two parties reach a long-term agreement earlier.
Crane said the agreement will increase rail access costs across the network. CBH said Brookfield's offer is to increase access rates by an average of 25%. Brookfield said it prefers to quote the increase in the range of A$1 per tonne of grain transported on rail.
“This is far from an ideal situation for growers and for the state, but if growers can’t get their grain to port it would be irreversibly damaging for the WA grain industry,” Crane said.
Brookfield Rail CEO Paul Larsen said he was pleased the parties had reached an interim agreement which would allow CBH to continue to transport grain on the rail network.
“This will provide supply chain security and certainty for WA grain growers well into their next harvest and also allows us to concentrate on reaching a sustainable longer term deal with CBH,” Larsen said. “We remain hopeful that both parties will negotiate in good faith to agree a long term deal by the end of June deadline.”
CBH and Brookfield are continuing to negotiate a long-term access agreement through the Code process and are currently about halfway through a 90-day negotiation period.