UPDATE: QR National Opens A$1.1 Billion Rail Line To Coal Port

Rail freight operator QR National Ltd. (QRN.AU) Monday opened a A$1.1 billion (US$1.1 billion) line linking two rail networks in eastern Australia, boosting its capacity in Queensland and paving the way for significantly more Bowen Basin coal to be exported from the country's most northerly coal port.

The 69-kilometer stretch of track connecting the Goonyella rail system with the Newlands network adds as much as 50 million metric tons in capacity and builds a platform for potential further expansion of 200 million tons, QR National said in a statement. It also opens a new route to the Abbot Point port north of Bowen where some of the world's biggest mining companies are vying to take part in a planned A$9 billion expansion.

Australia is one of the world's largest exporters of coal, with the Bowen Basin accounting for close to 60% of global supplies by sea of the steelmaking form of the commodity. BHP Billiton Ltd. (BHP), Rio Tinto PLC (RIO), Xstrata PLC (XTA.LN) and others continue to ramp up production of coking coal to feed Chinese steel mills.

"The northern missing link had been on Queensland's infrastructure wish-list for over three decades," said Lance Hockridge, chief executive of QR National. "It will create a step change in Queensland's coal exports and generate significant stimulus for the economy."

Hockridge said the 20-month construction of the rail link was achieved on budget and one month ahead of schedule despite flooding that swept Queensland early in the year, fire, a cyclone and a small earthquake.

With the link, 50 million tons of coal a year can be railed to Abbot Point, double its present capacity.

The Queensland government early this month selected companies including Anglo American PLC (AAL.LN), Rio and Vale SA (VALE) to build six additional terminals for Abbot Point, which would make it one of the largest coal export facilities in the world with a capacity nearing 400 million tons a year.

-By David Winning and Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail] [e-mail]