Background of the ILC

In 2006/07 the then Queensland Government commissioned a report into the state of the Goonyella Coal Chain. In Financial Year 2008/09 the Dalrymple Bay Coal Terminal (DBCT) exported 47 million tonnes of coal making it part of a resources industry that plays a pivotal role in Queensland’s economy.

There was an inability to realise the full throughput potential of the DBCC resulting in excessive vessel queues, exceptionally high demurrage costs and reduced state royalties. In addition there was a considerable amount of bad press about the supply chain and how it was costing the Australian Economy, Queensland Economy and the Coal Producers many millions of dollars.

The industry responded by creating the ILC who would become the Central Co-ordinator to oversee and if necessary co-ordinate all activities which span the entire coal chain. The ILC would operate under the core principles of remaining independent and encouraging co-operation between participants for the betterment of the supply chain.

1. Independent Review of the Goonyella Coal System - 2007

In an effort to continue the government’s commitment to optimising export supply chains, an independent review of the Goonyella Coal Supply Chain was commissioned. A major recommendation of the O’Donnell Review was the appointment of a Board made up of the coal chain participants and the appointment of a Central Co-ordinator to oversee and if necessary co-ordinate all activities which span the whole of the supply chain.

2. Appointment of the ILC Board

The participants of the ILC Board encompass the Service Providers:

♦ Dalrymple Bay Coal Terminal Pty Ltd (DBCTPL)

♦ DBCT Management

♦ North Queensland Bulk Ports (formally Ports Corporation of Qld Ltd)

♦ Pacific National Queensland

♦ QR National

♦ QR Network

and all Coal Producers railing to Dalrymple Bay Coal Terminal:

♦ Anglo Coal Australia Pty Ltd

♦ BHP Billiton / Mitsubishi Alliance

♦ Bowen Central Coal Management Pty Ltd

♦ Macarthur Coal Pty Ltd

♦ Peabody Pacific Pty Ltd

♦ Rio Tinto Coal Australia Pty Ltd

♦ Vale Australia

♦ Xstrata Coal Australia Pty Ltd

3. Signing of a Memorandum of Understanding (MOU) of all ILC Board Members

The objective is to increase throughput of the coal chain by encouraging co-operation between participants. It included a number of key areas including:

♦ Appointment of a Central Co-ordinator to oversee the coal chain operations

♦ Identification of Improvement Initiatives

♦ Development of an integrated plan across the whole of coal chain

♦ Monitor and Report on whole of coal chain performance

4. Appointment of the Central Co-Ordinator

In 2008, a Central Co-ordinator was appointed who was required to report to the Board of the Integrated Logistics Company. The Central Co-ordinator would oversee a team of people that assist him in implementing initiatives to ensure the successful integration and transparency of the coal chain.

5. Establishment of a Leadership Team

The establishment of a Leadership Team whose purpose is to formulate supply chain improvements and provide recommendations to the Board was also formed. The Leadership Team includes a middle management representative from each of the MOU Participants.

6. Implementation of the Integrated Logistics Centre in Mackay

After months of planning and preparation the Integrated Logistics Centre (ILC) has opened its doors on 11 September 2009. The ILC will cover Master Planning, Long Term & Tactical Planning and Performance Management.

The Coal Chain Board, Leadership Team and the Central Co-ordinator are a co-operative decision making group to move the coal chain forward through common objectives under a current Memorandum of Understanding.

7. Incorporation of Integrated Logistics Company Pty Ltd

In October 2010, the Participants incorporated the company under the Australian Corporations Act 2001 and operate under a Shareholders' Agreement and Company Constitution.