Page 1© QR 2007 All Rights Reserved Unlocking Australia’s Export Supply Chain Bottlenecks Stephen Cantwell Group Executive General Manager, QR Freight

Overview Global Outlook Master Planning Investing in Growth Building Relationships Challenges for the Future

Page 3© QR 2007 All Rights Reserved GLOBAL OUTLOOK

The world is becoming smaller and transportation routes are longer, more complicated and the quality requirements are stronger.

Global demand continues to grow

So too are coal and mineral volumes in Qld, NSW and WA 7 Source: QR Coal and ARG

The Australian freight task is increasing at an exponential rate

Page 9© QR 2007 All Rights Reserved OPTIMISING EXPORT SUPPLY CHAINS

Supply chains are highly complex and interdependent

Opportunity for discontinunity

Efficient supply chains are influenced by many factors Type, scale and geography of infrastructure Whole greater than sum of the parts Mode of servicing infrastructure Service level requirements of users Consistency of operating methodology Information flows

Supply chain complexities Technical Institutional Commercial Regulatory

Technical

Institutional Does structure and ownership affect performance? Pilbara has vertical integration under dedicated ownership. East Coast coal has separation under mixed ownership Potential price to pay for improved performance from NCP reforms –Interfaces must cope with different incentives –Relationship driven

Commercial Overarching responsibility to deliver shareholder value –Penalties / incentives to optimise chain capacity Regular, independent and transparent analysis and forecasting Timing of investment –Investing too late: loss of opportunity to exploit excess demand –Investing too early: loss of competitiveness due to higher capital recovery costs

Regulatory Container Stuffing Intermodal Truck Transit Orign Terminals Ocean Transit Destination Terminals Intermodal Truck TransitContainer Delivery Intermodal Rail Transit

Page 18© QR 2007 All Rights Reserved QR’S ROLE IN EXPORT SUPPLY CHAINS

National network

Page 20© QR 2007 All Rights Reserved MASTER PLANNING

2006 Master Plan –First ever rail infrastructure plan –Outcome from consultation with industry –Followed by endorsement of $700m worth of projects Second Edition ( ) –Longer term focus (20 – 30 years) –Possible coal system expansions –Alternative capacity solutions –Impediments to growth Master Plans - Queensland

Mt Isa Master Plan –One of Australia’s vital export and supply chains –Approx $1.6 billion of base metal projects planned for next 10 yeas –Performance challenges on the Mt Isa Line –Master Plan consultation with industry Master Plans - Queensland

Master Plans provide forums that –allow parties to better understand the implications of decisions as they affect the supply chain –identify optimum solutions that could be achieved –allow consideration of mechanisms that might best support optimum outcomes Commercial arrangements

Page 24© QR 2007 All Rights Reserved INVESTING IN GROWTH

Investing in growth

Queensland coal market (below rail track & above rail rollingstock $3.75 billion Feasibility: Northern & Southern Missing Links$1.5 billion South East Queensland passenger market$2.5 billion Western Australian mineral market$325 million National intermodal expansion$255 million Over the next 5 years, QR will invest more than $8 billion

Page 27© QR 2007 All Rights Reserved BUILDING RELATIONSHIPS

Our strategic approach Agility –Short term strategies –Relationships Adaptability –Apply our learning across the entire business –Capitalise on engineering culture by blending with commercial Alignment –Understand the root cause of constraints –Dedicated project team for improving commercial framework –Improved communications and transparency

Page 29© QR 2007 All Rights Reserved CHALLENGES FOR THE FUTURE

Aligning interests is the key East coast coal systems have trade-offs –Benefits of diversity and competition –Also potential costs Can existing industry structure achieve Pilbara-like efficiency? –All parties committed to align interests –Supporting contractual framework –Industry co-ordinator can facilitate framework resolution QR committed to improvement –Little point in acting alone –Parties can’t be compelled

Supply chain accountability Supply chain accountability does not mean rigid mechanistic interfaces QR accepts need to improve transparency and accountability Acceptance of contingency more important as system become more complex

Global Outlook Master Planning Investing in Growth Building Relationships Challenges for the Future In closing

About QR: About QR Freight About COALRail: About Coal Master Plan: Like to know more?

Page 34© QR 2007 All Rights Reserved Thank you