West Coast Regional Council. West Coast Integrated Regional Transport Infrastructure Plan. Final Report. June 2005

Transcription

1 West Coast Regional Council Integrated Regional Transport Infrastructure Plan West Coast June 2005 June 2005

2 Contents Executive Summary 5 1. Introduction Study Objectives Scope of the Study Data Collection and Stakeholder Consultation Report Structure Setting the Scene Existing transportation infrastructure on the West Coast Demands on the West Coast Region s Transport Network Population, Demographics and Iwi Existing Economic Environment Economic Employment Sectors Economic Opportunities Stakeholder Strategies and Plans Land Transport Management Act New Zealand Transport Strategy National Energy and Conservation Strategy Road Safety National Rail Strategy to West Coast Regional Land Transport Strategy Transit New Zealand Strategies West Coast Ports Ports Overview Current Situation Greymouth Port Greymouth Port Issues Westport Port Westport Port Issues Options Rail Current Situation 42 1

3 5.2 Issues Options Road Network Characteristics Traffic Patterns Issues Options Cycling and Walking Current Situation Issues Options Airports Current Situation Issues Options Tourism Priority Issues Options Options Table Performance Criteria Evaluation Preferred Options Increase Rail Capacity Greymouth Port Redevelopment Westport Port Redevelopment Combination of rail, port and road options Economic Assessment of Preferred Options Economic & Transport Issues by Product Greymouth Port Options Economic Assessment Combination Options Evaluation Assumptions Results Combination Options A further Economic Comparison Ranking of Preferred Options 73 2

4 14. Funding Ministry of Economic Development (MED) Land Transport New Zealand (LTNZ) Private Equity West Coast Development Trust Implementation of Preferred Options Conclusion 79 Table Index Table 1 Table 2 Table 3 National Bank Composite Index of Economic Activity (Percent average annual growth) 16 National Bank Composite Index of Regional Economic Activity (Quarterly percentage change) 17 Employment by Sector in New Zealand and the West Coast Region (FTE s) 17 Table 4 Projected Real Growth in Tourism 20 Table 5 Coal costs 21 Table 6 Recoverable Reserves 21 Table 7 West Coast Coal Reserves 22 Table 8 Gas Reserves 23 Table 9 New Zealand Ports 32 Table 10 West Coast Rail Network 42 Table 11 Coal Route Capacities 44 Table 12 West Coast Road Network 52 Table 13 BCR 67 Table Heavy Vehicle Volumes 87 Figure Index Figure 1 New Zealand s coal resources 20 Figure 2 Delivered cost of Coal 21 Figure 3 West Coast coal outputs 24 Figure 4 Comparison of operating costs 68 Figure 5 Comparison of NPV of Operating Costs Relative to PIKE ROAD GM WGT 69 Figure 6 Capex Costs on West Coast 70 3

5 Figure 7 Total NPV of Costs Relative to PIKE ROAD GM WGT70 Appendices A References B West Coast Transport Network Map C District and Long Term Council Community Plans D Transit New Zealand Traffic Volumes E Transit New Zealand 2004 Heavy Vehicle Traffic Volumes F Options Table G Performance Criteria H Performance Criteria Evaluation Table I Combination Options: Costings J Greymouth Port Options: Economic Analysis K Opus Development Options Study Transport Options, Greymouth. L Land Transport New Zealand R Funding sheet M Potential Sources of Funding Front cover: South Island satellite image courtesy of NASA and Visible Earth: 4

6 Executive Summary The West Coast Regional Council (WCRC) has commissioned GHD Ltd and Option One Ltd to assess the current situation of the West Coast transport network and provide an integrated regional transport infrastructure plan. Recent studies confirm and indications show that there are likely to be significant increases in bulk volume production on the West Coast in the short to medium term, principally coal. Based on freight predictions, the West Coast may be facing acute transport investment demands for the immediate future. This report brings together information from past reports as well as updates and costings from stakeholders. It highlights the current West Coast transport issues and outlines a plan for potential ways to mitigate these issues including an economic assessment of options and ways to obtain funding. The study comprised three principal stages. Stage one involved the review of information and confirmation of the issues. Stage two involved the development of options to address the issues and development of a plan for implementation and the compilation of a draft report. Stage three involved consultation on the draft report, funding matters on preferred options and the submission of the final report. West Coast Transportation Network: Background The West Coast region has two main ports, Greymouth and Westport, with a smaller fishing port at Jackson s Bay in south Westland. Both main ports handle fishing vessels as well as bulk shippers of predominantly coal in the case of Greymouth, and cement in the case of Westport. The Port of Greymouth is serviced by road with rail one kilometre away. The Port of Westport has a rail unloading facility as well as the ability to receive by truck. The West Coast roading network consists of 2,894 km of roads, consisting of 873 km of sealed State Highways. Local roads make up about 2,021 km of which about 50% are sealed. The West Coast has approximately 300 km of mainline rail track in its network. The network runs from Ngakawau in Buller, to Hokitika in Westland, and is connected to the national network via the Otira tunnel and the Midland Line to Christchurch. The railway is the main mode utilised presently for the transport of bulk products like coal, timber, dairy and meat products. These bulk products are usually railed from the West Coast to Lyttelton where they are then shipped. Rail is also an important transporter of people, especially tourists, as the Tranz Alpine Express passenger train runs from Christchurch to Greymouth. This is an icon service and one of the world s must travel rail routes. The West Coast Region has two main airports, Westport and Hokitika, with a smaller airport at Greymouth, with scheduled flights operating from Westport and Hokitika to Christchurch and Wellington. From this study it is concluded: The list of transport issues facing the West Coast is extensive. However six issues stand out as significant. The issues are as follows:» Coal o Solid Energy plans to increase volumes from around 2 million tonnes per annum to a forecast 3.0 million in 2010 and possibly up to 3.8 million in 2015; 5

7 They have arrangements in place with Toll to address the issues on the Midland line to achieve those volumes; Coal for domestic markets and Australia is shipped by barge or coastal shipping. There is adequate capacity for current volumes but to move significant volumes the Port at Greymouth and/or Westport may need further development. o Pike River Coal Company (PRCC) plan to produce and ship around 1.1 million tonnes per annum. They are exploring, through a tender process, the options to get this volume to an export port. Currently, as things stand, there is not the capacity on the Midland line for both Solid Energy and PRCC s planned output. Similarly there are constraints in the other transport modes particularly with respect to export ports, heavy transport routes and receiving ports that create uncertainty. Their tender process is underway at present and is aimed at addressing this but there is no outcome yet. o Other producers volumes are small by comparison at present. A number of other parties have plans to develop new mines but none rival the scale of Solid Energy or Pike River.» Cement o Holcim currently ship from Westport between 380 and 480 thousand tonnes of cement. They wish to expand capacity to between 700 and 800 thousand tonnes. o Their existing ships do not have this capacity with the average water depths at Westport. The concern is that Holcim may leave the West Coast, moving its operations somewhere else in New Zealand that offers better access for product to markets.» Tourism o Tourist numbers are forecast to grow rapidly. In many parts of NZ, tourist traffic co exists with heavy freight road traffic, for example around the Rotorua area. However the West Coast offers a remote wilderness experience to visitors and so for the West Coast, tourist road traffic is less compatible with heavy freight road traffic. While the volume of vehicles on the road is not significant and it is well within the capacity of the road network, tourists find it uncomfortable (as do the locals) and it lessens the West Coast Experience to share road space with heavy traffic. For foreign tourists the roads will be narrow, windy and many will be driving on the wrong side of the road.» Rail Infrastructure o The West Coast is heavily dependant on the rail link for its commercial survival. It is a key link for coal, dairy and forestry. Any failure would have severe consequences for the West Coast. While a programme of work is underway by On Track, there are the questions as to whether it is enough; whether the work has sufficient priority and whether there is all the money required to undertake what is needed.» Economic Development o When the ability to transport is not available, development struggle to get off the ground. This impact is illustrated by Pike River s current efforts to arrange freight transport. Financing a major project requires a high degree of certainty in major risk areas and freight is usually the second largest cost a mine faces. Uncertainty about capital costs, plans and designs, consents, and community acceptability have the effect of undermining a venture at the financing stage. 6

8 » Preservation of strategic port assets o The ports of Westport and Greymouth are key strategic assets for the whole country. The ports role is as a prime source of transport for some goods and as back up to the heavy dependence on rail. As fuel costs increase, carbon charges take effect and volume demands increase there is likely to be a further move towards coastal shipping. This trend is already evident in New Zealand and other countries. o Once a port has been allowed to fall into disrepair, the harbour silts up, and heavy transport corridors become lined with cafes and shops, the ability to reinstate the port for commercial purposes is probably gone for all time. Recommendations: Due to the nature of the situation surrounding transport providers and customers on the West Coast at this time it is neither appropriate nor possible to suggest a single optimum option that would mitigate all issues and cover all scenarios. The outstanding questions at time of writing this report are significant: 1. Will Holcim remain based in Westport, or construct a new cement plant outside the West Coast region? 2. Can Solid Energy s Spring Creek mine produce the forecast volumes? 3. Will Pike River coal ship via Westport, Greymouth or the Midland Line via Lyttelton (if capacity is available)? This presumes that project does get underway and as of today it still faces consent, transport and funding hurdles. Given the fundamental uncertainties above, which individually and in combination exert significant influences on the movement of bulk volume products within the West Coast region, it is recommended that the emphasis on transport infrastructure should be:» Improving certain pieces of infrastructure;» Reserving assets required for implementation of options;» Removing planning and consent hurdles; and» Fostering a competitive environment for bulk freight. If classes of infrastructure are addressed in these terms the following activities should be undertaken: Road» The acute issue of replacement of the Arahura River bridge must be pursued through existing planning and approval processes to ensure its replacement or alternative methods found;» Seek State Highway designation (or alternative heavy traffic route status) for routes onto the wharves at Greymouth and Westport to gain full funding and enhance long term heavy traffic status; and» Ensure key road links are progressively enhanced to improve security, capacity and safety for all users. This includes critical routes on which the Coast is dependent even though they are outside the region specifically: o Klondyke corner to Arthurs Pass; and 7

9 o Waimakariri Bluffs. Rail» Work with OnTrack, Toll and Solid Energy to ensure the rail system is capable, accessible and able to meet the needs of all users. This includes: o o o o o Sea» Both Ports o o o o Reserving the ability to install rail onto Greymouth wharf; Ensuring the continued availability of general goods capacity; Preservation of the flagship Tranz Alpine service; Maximising the coal carrying capacity of the system to at least 8 coal trains per day; and Lobbying for additional funding if required to address above issues. Through District Plan changes and/or RMA consents gain the rights to develop port facilities; Designate road and rail corridors; Acquire land not yet held in the port area; and Complete preliminary design of preferred options to allow firm costing and rapid implementation.» Greymouth o o o Decide on the preferred option for transport by road and rail bearing in mind reasonable (base case) forecasts of possible demand. In our view road via Mawhera Quay, and Rail via Victoria Park when a volume threshold is passed, are the pragmatic preferred options; Reconstruct key elements of the wharves to give a long life at lower maintenance costs; and Ensure adequate facilities to service the fishing industry (without loss of activities to other ports) are available.» Westport o o Enhance the dredging capability of the port; and Facilitate agreements between all asset owners/lessees to ensure ongoing access to all users. Other» Remove uncertainty through o o o Land availability; Designations/consents/zoning; and Preliminary design/engineering and cost estimating.» Help West Coast based entities get transport business by being ready and available to provide service The A3 table overleaf sets out a summary of current issues, our recommendations and a vision of the transport infrastructure that will exist in a few years time as a consequence. 8

10 1. Introduction 1.1 Study Objectives The overall goal of the West Coast is to assess whether there is sufficient and appropriate transport infrastructure capacity for the West Coast region, and if not, where is the need and is the need acute. The Plan also aims to identify what additional transport infrastructure should be upgraded or if new infrastructure should be provided. 1.2 Scope of the Study The Scope of the study included the following work activities:» Collection of data.» Consultation with key stakeholders.» Identification of the existing and future bulk volume products that are being transported or are intended to be transported from, to, and within the West Coast Region.» Review of the existing transport infrastructure capacity and current proposals of infrastructure providers to increase capacity.» Identification of the options and recommending optimum infrastructure options and costs for the integrated transport of bulk volume products from, to, and within the West Coast Region and illustration of how of the options meet wider economic, social, cultural and environmental needs.» Assessment of whether existing individual infrastructure development proposals by transport network providers including coastal ports and shippers to increase capacity are consistent with the recommended optimum infrastructure options and if not where would it be more appropriate to direct infrastructure development resources.» Identification of actual or potential conflicts and constraints with other transport users.» Identification of actual or potential district and regional planning requirements and making sure the optimum infrastructure options meet these requirements.» Identification of agencies and stakeholders from which funding for the implementation of optimum infrastructure options can be secured.» Economic assessments of options in accordance with key transport funding agency criteria.» Provision of a priority action plan and indicative timeframe for implementation of recommended optimum transport infrastructure options. 1.3 Data Collection and Stakeholder Consultation In order to prepare this report, information was gathered in two ways. Existing information and reports were sourced from Councils and other agencies and reviewed for relevant information, and consultation was undertaken with identified stakeholders. Information from both these sources was used in the development of this report. 9

11 1.3.1 Existing Information Information was sourced from a number of agencies and a full list of references is included within Appendix A of this report. Given the length of the study period it is possible new information has become available or existing information has been updated. Where possible and time permitting the latest and most accurate information is included in this report Stages to the Study The study comprised three principal stages. Stage one involved the review of information and confirmation of the issues. Stage two involved the development of options to address the issues and development of a plan for implementation and the compilation of a draft report. Stage three involved consultation on the draft report, funding matters on preferred options and the submission of the final report. Stakeholder changes to the regional integrated transportation network have the potential to create a number of traffic and environmental effects within the region, both actual and perceived. For this reason alone it was considered essential to engage key stakeholders effectively in the consultation process from the outset and to channel their current base information, constraints, ideas, suggestions and other inputs into the study process and the strategy outcome. A consultation strategy was developed for the project. Organisations that were consulted as part of this project fit within the following categories:» Transport Agency;» Transport Provider;» Transport Interest Group;» Key Transport Users; and» Other Key Stakeholders. The objective of consultation as part of stage one of the study was to identify existing and future demands and stakeholder issues. In order to do this, the following was undertaken: 1 Media release announcing the study and providing an opportunity for people to register their interest; 2 Letter of Introduction and request for updated information sent to stakeholders; 3 Meetings with District Councils and other key stakeholders; 4 Gathering of information and review; 5 Analyse input; and 6 Submitting an Issues Report to the West Coast Regional Transport Advisory Group. Although no formal consultation was expected to occur during stage 2, it eventuated that a number of discussions occurred with a number of organisations with an interest in the study. This consultation occurred mainly at a one on one meeting opportunity, as well as an opportunity for all stakeholders to view the draft final report and make comments. 10

12 1.4 Report Structure This report is structured into sixteen sections, including this introduction. Sections two to eight inclusive describe the current situation with trends within the region. Section two sets the scene and based upon feedback from the consultation undertaken, outlines the current transport situation and describes the region and its economic standing. Section three outlines key stakeholder strategies and plans with reference to the West Coast. Sections four through eight describe in more detail the road, rail, port, airport and light transport sectors on the West Coast, looking at the current situation and issues as well as options and preferred options for dealing with the issues. Section nine focuses on the tourism industry on the West Coast and associated issues in relation to the transportation network. Section ten highlights the issues in order of priority for the West Coast integrated transport network. Section eleven looks at the options to mitigate the issues in section nine and refers to an A3 table in the appendices. Section twelve evaluates the preferred options in more detail with section thirteen looking at the economics of these preferred options. Section fourteen looks at funding of the preferred options for transport infrastructure upgrades. Section fifteen addresses implementation of options and outlines a priority action plan and indicative timeframe for implementation of the recommended optimum transport infrastructure options. 11

13 2. Setting the Scene 2.1 Requirements for an efficient transport system An effective freight system able to meet future needs depends on several factors: 1 Availability of fixed infrastructure to meet marginal demand. 2 Ability to invest in new infrastructure without long lead time hurdles such as RMA consents or land acquisition. 3 Access to conveyances in a reasonable timeframe eg locomotives, coastal ships etc. 4 Competing operators OR competing modes. The very real impact of these factors not being well established is illustrated to some extent by Pike River s current efforts to arrange freight transport. Financing a major project requires a high degree of certainty in major risk areas and freight is usually the second largest cost a mine faces. Uncertainty about capital costs, plans and designs, consents, and community acceptability have the effect of undermining a venture at the financing stage. The ports of Westport and Greymouth are key strategic assets for the whole country. As fuel costs increase, carbon charges take effect and demand volumes increase there is likely to be a further move towards coastal shipping. This trend is already evident in New Zealand and other countries. Once a port has been allowed to fall into disrepair, the harbour silts up, and heavy transport corridors become lined with cafes and shops, the ability to reinstate the port for commercial purposes is probably gone for all time. The requirement for competing modes or operators requires elaboration. It is tempting for a consultant to analyse the costs of possible transport options and conclude that one option based on its underlying economics is the lowest cost and should be implemented. However New Zealand is a market economy where prices are set by negotiation between users and suppliers. There is no price regulation or mechanism for price setting. Competition between operators (eg for road transport) or between modes (eg rail vs. road) is necessary for fair price setting. With road transport excluded for long distance movement of millions of tonnes of coal, and a long term monopoly rail operator, the ability to move bulk cargo by rail or sea is essential. This study therefore cannot pick a single winner as that potentially creates a monopoly with no ability to ensure service at a fair price can be delivered. Instead the study outcome may be a forecast of the likely modes and routes but with a recommendation of the creation of a feasible competitive environment. 2.1 Existing transportation infrastructure on the West Coast Roads The public roading network is owned by:» Transit NZ all State Highways; 12

14 » Local Authorities of Buller, Grey and Westland District Councils; and» Department of Conservation the Fox and Franz Josef glacier roads. The West Coast roading network consists of 2,894 km of roads, consisting of 873 km of sealed State Highways. Local roads make up about 2,021 km of which about 50% are sealed Rail The West Coast has approximately 300 km of mainline rail track in its network. The network runs from Ngakawau in Buller, to Hokitika in Westland, and is connected to the national network via the Otira tunnel and the Midland Line to Christchurch. The railway is the main mode utilised presently for the transport of bulk products like coal, timber, dairy and meat products. These bulk products are usually railed from the West Coast to Lyttelton where they are then shipped. Rail is also an important transporter of people, especially tourists, as the Tranz Alpine Express passenger train runs from Christchurch to Greymouth. This is an icon service and one of the world s must travel rail routes Ports The West Coast region has two main ports, Greymouth and Westport, with a smaller fishing port at Jackson s Bay in south Westland. Both main ports handle fishing vessels as well as bulk shippers of predominantly coal in the case of Greymouth, and cement in the case of Westport. The Port of Greymouth is serviced by road with rail one kilometre away. The Port of Westport has a rail unloading facility as well as the ability to receive by truck Airports The West Coast Region has two main airports, Westport and Hokitika, with a smaller airport at Greymouth. Air Nelson operates scheduled daily flights from Hokitika to Christchurch, and from Westport to Wellington. With three flights a day to Hokitika, passenger and freight volumes doubled within two years of the airline being integrated into Air New Zealand in Passengers and freight can travel to and from distant parts of the country making the Coast s isolation a thing of the past. Greymouth Airport is the base for Air West Coast and provides a regular service to Wellington via Westport, and tourist flights to glaciers and Christchurch. Freight transportation by air is negligible; there is a very small freight movement through airports in comparison to other freight transport modes Cycling, Walking and Passenger Transport Passenger services include the iconic Tranz Alpine rail service between Christchurch and Greymouth and a wide variety of scheduled bus services. Low utilisation of the West Coast roading network is regarded as an important aspect of the West Coast scenic/adventure/eco/wilderness experience. 13

15 A good proportion of the local residents on the West Coast use cycles either for commuting/schooling or for leisure and recreational purposes. Many visitors to the region utilise cycles for travel and sightseeing. Walking also plays an important role in meeting peoples transport needs. 2.2 Demands on the West Coast Region s Transport Network The map in Appendix B gives an overview of the current bulk volume transport situation on the West Coast. Volumes of bulk volume freight are shown on the map in green for 2004 as well as predicted volumes to Major ports, airports, State Highways, railways, coal load out facilities and mines are also pinpointed Bulk Freight transport Bulk volume freight for the West Coast was investigated by Option One in March Their findings, reproduced below, remain relevant more than a year later. Appendix A shows the bulk volume transport volumes by rail, road (average annual daily traffic volumes) on State Highways, and the location of ports, airports, mines and load out facilities. The West Coast is a region disadvantaged by its location, which is further from ports and population centres than any other region in New Zealand. It is the only major region further than 150 km from a major port or population centre. The availability of transport capacity is constraining some West Coast industries at present, impeding new developments in other areas and will become more of an issue in the mid term. Similarly, the cost of transport is a constraint in some circumstances. Cost competitive transport service depends on two things:» The availability of infrastructure and equipment and;» Competing operators, or competing modes where there is only one operator in a mode. The absence of either will compromise availability, frequency or cost of freight or a combination of these service factors. This study has found that:» For freight that can only be carried by road (e.g. livestock), there are competing operators and adequate facilities;» For freight that can be carried by road or rail (e.g. containers) there are competing modes and operators although rail capacity faces limits in the mid term;» For freight that can only be carried by rail there is no practical existing alternative and therefore no competition, and there are infrastructural limitations. This impacts availability and cost; and» For freight that can be carried by rail or sea there are infrastructure limitations. This impacts availability and cost. For the bulk of the freight in the West Coast, producers have a restricted choice of mode. Additionally, the freight costs are a major cost for the producers of these goods and availability and cost of transportation are an important factor in the decision of these businesses to go ahead with new developments. The sectors most impacted are coal, rock and aggregates and to a lesser extent, forestry. 1 West Coast Freight Transport Current Situation Report 5th March 2004, Option One 14

16 As an advocate of economic development in the West Coast, Venture West Coast needs to ensure that there is adequate infrastructure in place for commercial enterprises to engage in new developments without being disadvantaged by unavailability of capacity, unavailability of choice or abnormally high costs of freight transport in the region. To achieve a competitive and cost effective freight transport environment Ports need to be able to offer facilities allowing a coastal shipping alternative to producers and to create competition for providing additional capacity. The roading network needs to be enhanced to improve cost effectiveness (including improved safety) and OnTrack should invest adequate funds into the rail network to ensure it is fit for purpose to allow Tranz Rail to continue providing services and extra capacity to its West Coast customers without any interruptions Tourism The tourism industry is growing fast in the West Coast region. Tourism is dealt with further in Section 9 below. 2.3 Population, Demographics and Iwi Population The following is the latest information from the New Zealand Regional Economic Scoreboard March 2005 quarter: The population of the West Coast Region as at Jun 2004 was 31,000 with an annual growth of 0.3%. The West Coast is projected to experience slow population growth (an outflow at the rate of 0.8% p.a.) however the local councils are undeterred, the housing market is strong: prices up over 25% in each local authority; and dwelling consents up strongly across the whole region Demographics 22.5 percent of people in the West Coast Region are under the age of 15 years, compared with 22.7 percent for all of New Zealand percent of people in the West Coast Region are aged 65 years and over compared with 12.1 percent for all of New Zealand percent of people in the West Coast Region said they belong to the European ethnic group, compared with 80.1 percent for all of New Zealand. The median income of people in West Coast Region is $14,600, compared with $18,500 for all of New Zealand. The unemployment rate in the West Coast Region was 6.7 percent, compared with 7.5 percent for all of New Zealand. The most popular occupational group in the West Coast Region was Service and Sales Workers (16.2 percent). The most popular occupational group for New Zealand as a whole was Service and Sales Workers (14.8 percent) Iwi Ngai Tahu is the iwi for the West Coast region. The iwi is represented by two Papatipu Runanga on the Coast: Ngati Waewae in the north, and Makaawhio in the south. Te Runanga o Ngai Tahu is the tribal representative body based in Christchurch. 15

17 2.4 Existing Economic Environment The West Coast economy has performed well relative to the rest of New Zealand in recent years. Record high commodity prices coupled with ever increasing tourist numbers have contributed to the West Coast s impressive economic growth since the year The information provided by the National Bank in Table 1 shows that in the 18 year period from 1987 to 2004, the West Coast has recorded an annual average economic activity growth rate of 2.5%, compared to 2.9% for New Zealand as a whole. However, since 2000, the West Coast economy has generally performed better than the national economy (see Table 1). Table 1 National Bank Composite Index of Economic Activity (Percent average annual growth) West Coast New Zealand Average for Period Source: Based on data provided by the National Bank. This trend is further demonstrated in Table 2 below and shows the quarterly economic activity growth rates for the West Coast and New Zealand in the period September 2003 to September

18 Table 2 National Bank Composite Index of Regional Economic Activity (Quarterly percentage change) West Coast New Zealand September December March June September Source: The National Bank. Economic activity in the West Coast region for the quarter to September 2004 grew at 1.5%, the third highest of the nation s 14 regions behind Wellington s 1.8% and Manawatu Wanganui s 1.7%. The national quarterly growth rate for the corresponding period was 0.8%. 2.5 Economic Employment Sectors Table 3 below provides a sector by sector comparison of employment levels for the West Coast region and New Zealand in 1997 and It also shows in percentage terms the change in employment levels in each industry sector during that period. Table 3 Employment by Sector in New Zealand and the West Coast Region (FTE s) New Zealand % Change West Coast % Change Agriculture, Forestry and Fishing 28,080 36, % % Mining 4,320 4, % % Manufacturing 244, , % 1,540 1, % Electricity, Gas and Water Supply 10,800 6, % % Construction 95, , % % Wholesale Trade 98, , % % Retail Trade 171, , % 1,430 1, % 17

19 New Zealand West Coast Accommodation, Cafes and Restaurants 60,190 76, % 1,010 1, % Transport and Storage 61,590 67, % % Communication Services 26,090 27, % % Finance and Insurance 47,280 46, % % Property and Business Services Government Administration and Defence 152, , % % 56,000 56, % % Education 98, , % % Health and Community Services Cultural and Recreational Services Personal and Other Services 104, , % 970 1, % 30,090 39, % % 45,270 53, % % Total % , % Source: Statistics New Zealand. Note: Agriculture includes agricultural services only. It excludes on farm employment. Table 3 highlights the increased importance of tourism to the West Coast region. Employment in cultural and recreational services rose by some 113% (170 FTE positions) while employment in the accommodation, cafe and restaurant sector recorded an approximately 34% increase. In percentage terms both of these increases exceeded those recorded for the corresponding sectors on a national level, which were 30% and 27% respectively. Falls in employment levels in the agriculture, forestry and fishing, and mining sectors, primarily driven by lower employment in the Buller District, offset many of the increases mentioned above and led to an overall increase in employment for the West Coast of 4.73%, approximately 10% less than the 14.38% recorded for New Zealand as a whole. 2.6 Economic Opportunities Future economic opportunities on the West Coast can be expected, in the main, to be provided by the dairy, mining and tourism industries. Identified as key drivers to economic development in the West Coast Economic Development Strategic Plan of October 2002 and in a report to the West Coast Development Planning Committee by Business and Economic Research Ltd (BERL) in October 2001, 18

20 these three industries have been in large part responsible for the strong economic performance of the West Coast in recent years and seem set to provide continued momentum going forward. Current and planned expansion in the dairy and mining industries coupled with ever increasing tourist numbers appear the most likely sources of economic activity and opportunity generation. These projects include:» The $38 million expansion of the Hokitika dairy factory;» Oceana Gold s redevelopment of the Globe Progress open pit and the former Blackwater mine shaft, with first gold expected early next year;» Construction of the Pike River coal mine;» Ongoing events such as the Wild Food Festival, Kumara races and the Buller half marathon;» The continued attraction of eco tourism destinations such as the Fox and Franz Joseph glaciers and the Punakaiki Rocks to domestic and international visitors; and» The West Coast Development Trust s scope to provide financial resources in the form of grants, loans or equity to assist tourism events and marketing Dairy Industry Westland Milk Products is an independent, co operative dairy company, owned by its 370 farmer shareholders. It has a history of over 60 years of dairy production. Each year the company processes more than 350 million litres of milk, with daily milk intake reaching 2 million litres at the peak of the season. The following is an extract from the Westland Milk Products 2003/4 Annual Report. Milk production increased by 17% above the 2002/3 season with 412 million litres whole milk collected. This was a considerable increase over the budget forecast of 10% and was due primarily to good weather over the peak of the season. 2003/4 production totalled 64,646 tonnes. Milk growth for the next 12 months is forecast at 12%. The Board of Directors has approved expenditure of $9.9 million in early 2004 for the construction of an anhydrous milk fat facility, which will provide sufficient cream processing capacity for the next 10 years. The Board also recently approved an investment in a protein production facility. This project will be carried out in two stages covering a period of 2 years with a total investment of $63.5 million. It represents the start of a protein strategy with the relocation of the casein plant from Karamea and it s upgrading to incorporate modern technology in some sections of the plant Tourism Tourism spending in New Zealand is forecast to reach $20,719 million (in 2003 dollars) in 2010, a 25.34% increase from Spending by foreign visitors is expected to rise by approximately 50% and will surpass that of domestic tourists by some 14% in

21 Table 4 Projected Real Growth in Tourism Projected Real Growth in Tourism Tourism Spending $M (2003$) Real Change 2003 to % Domestic 9,088 9, International 7,442 11, Total 16,530 20, Source: Tourism Workforce and Skill Projections October 2004, BERL. The West Coast is forecast to experience a growth in visitor numbers of 22.7% in the period 2003 to This ranks it fourth of New Zealand s 28 Regional Tourism Organisations behind Fiordland (34.9%), Lake Wanaka (25.9%) and Queenstown (25%). Total visitor nights per annum spent on the West Coast are projected to grow to 3.4 million by 2010 with visitors spending $517 million. With no major ports and limited airport facilities, visitor flows are predominately by coach or rental/private vehicle. Tourism is dealt with further in section 9 below The Greymouth Coalfield s National Significance Figure one shows the location of New Zealand s coal resources. (Note: production numbers are from 2002.)» All North Island coal is sub bituminous in rank;» Only West Coast coal is bituminous;» Virtually all of the Southland/Otago coal is lignite; and» The Canterbury deposits are not significant. Figure 1 New Zealand s coal resources Mining costs for bituminous and sub bituminous coals are similar and usually lignite costs are lower as they are nearer the surface. Transport costs do not vary with coal type; they are similar on a per tonne/km basis. Lignite has the highest water content, typically 45%. 2 Tourism Research Council New Zealand; New Zealand Regional Tourism Forecasts , September

22 When energy content and transport costs are taken into account then lignite and sub bituminous coals face a significant disadvantage as shown in Table 5 below: Table 5 Coal costs Lignite Sub bituminous Bituminous Moisture % Energy GJ/T Mining cost $/T Transport cost $/T Total cost per tonne $/T Total cost per MJ $/GJ Shown graphically in Figure 2 below, the difference is obvious 3. The higher tonnages of lignite per unit of energy means greater investment in infrastructure are required. The locational disadvantage of Southland lignite compared to North Island demand is also obvious. Figure 2 Delivered cost of Coal It follows that West Coast coals can more readily stand the cost of transport 4 to make them available to users in locations away from the point of mining. This situation is borne out by the following existing trades: Delivered Cost» Only West Coast coal is exported overseas; Dollars per GJ Lignite Subbituminous Bituminous» West Coast coal is shipped to users in the North Island at present;» Lignite is only used in Southland; and» No sub bituminous coal is transported outside the island in which it is mined. Table 6 below shows New Zealand s recoverable coal reserves. They are split by coal type. Table 6 Recoverable Reserves Area MTonnes Lignite Sub Bituminous Bituminous Northland 0 Waikato Fixed transport costs are assumed 4 Costs are indicative and do not relate to any particular mine 21

23 Area MTonnes Lignite Sub Bituminous Bituminous Taranaki Nelson 0 West Coast Canterbury 2 2 Otago Southland Totals Source: Crown Minerals Website Based on the transport costs principles above, the North Island sub bituminous and West Coast reserves are the most significant. The North Island reserves are already being mined to their economic limits. As energy values increase some other deposits not currently worked should become economic. The West Coast reserves can be further broken down as follows: Table 7 West Coast Coal Reserves Location Tonnes Metallurgical Thermal Low Value Buller Inangahua Reefton Garvey Creek Charleston Pike river Greymouth Aratika Minor Coalfields West Coast Region Metallurgical grade coal is currently exported and has a value much higher than thermal grade coal (which may also be exported). It is unlikely that metallurgical coal would be used for thermal uses in NZ. At present such coal is worth more than $US100 per tonne in export markets. It can now be readily seen that virtually all the economically transportable thermal coal within NZ lies in the Greymouth coalfields. The low value coal is typically high in sulphur or low in energy or both. This 130 million tonnes of coal has an energy content of 3900 Petajoules (PJ). This can be compared to NZ gas reserves (Crown Minerals data) as follows: 22

24 Table 8 Gas Reserves Producing Gas Reserves as at 1 Jan 04 Field Operator Total Reserves (Bcf) Remaining Reserves (Bcf) Maui STOS Kapuni STOS McKee Todd Taranaki Ltd Tariki/Ahuroa Swift Mangahewa Todd Taranaki Ltd Waihapa/Ngaere Swift Rimu/Kauri Swift Kaimiro/Ngatoro Greymouth Petroleum Total Includes LPG. All figures have been quoted at P50 recoverable reserves. 5 Bcf= billion standard cubic feet. Note that Pohakura and Kupe add a further 1100PJ. The conclusion can be therefore drawn that the Grey coalfield is of national strategic significance in terms of supplying fuel for electricity generation, should it be required to further ensure New Zealand s security of electricity supply. Spring Creek Mine is the most significant effort to date to mine this thermal coal reserve and notwithstanding the difficulties this mine faces, the energy reserve at Greymouth remains of great significance Projections of Coal Volumes Figure 3 below shows various scenarios of West Coast coal output volumes over a twenty year timeframe. The following points should be noted:» All scenarios show coal production peaking in years 4 10 and then falling away over time.» Increases in output rely on the successful development of Spring Creek mine and Pike River mine» Mines have a long lead times, new developments can end up replacing existing production capacity and depleted reserves, rather than adding to capacity» New developments are more or less successful. Any individual project may produce more or less than indicated in the base case. The overall regional output may end up similar to that shown in the base case even if the actual output of individual mines differs from that shown.» The above point means that even if some of the developments foreshadowed in the high case occur, their timing may be such that they replace other mines leading to a base case level of output 5 Reserves can be quoted as 95% likely (P95), 50% likely (P50) or 5% likely (P5). 23

25 » The probability that either the low or high case actually arises is regarded as low; they could be subjectively regarded as 5% and 95% confidence limits.» Planning should be based around the base case while understanding the implications of either the high or low scenario occurring, especially the low case.» The recently announced Cypress Mine has been included in Stockton tonnage forecasts, as coal from Cypress will enter the transport system at the same point. Figure 3 West Coast coal outputs 24

26 Output Scenario Base case Roa Spring Creek Pike River Stockton Inc Cypress etc Year Calendar Year Output Scenario Low case Spring Creek Series5 Roa Pike River 1000 Stockton Inc Cypress etc Year Calendar Year Output Scenario High Case Other (Buller) Other (Grey) Roa Spring Creek 3000 Pike River Stockton Inc Cypress etc Year Calendar Year 25

27 3. Stakeholder Strategies and Plans This section outlines some of the key stakeholder s strategies and plans as they relate to transport infrastructure and these must be taken into account in the implementation of future transport infrastructure upgrade options. The relevant parts of the District Plans and Long Term Council Community Plans for the three West Coast District Councils are found in Appendix C. 3.1 Land Transport Management Act 2003 The Land Transport Management Act 2003 (LTMA) aims to provide an integrated approach to land transport funding and improve the planning, management and investment of land transport in New Zealand. Transfund is the government funding agency that allocates funding to land transport programmes. Section 20 of the LTMA requires Transfund to make an assessment of a particular proposal before granting funding and each proposal must therefore demonstrate how it achieves the following outcomes:» Assist economic development;» Assist safety and personal security;» Improve access and mobility;» Protect and promote public health; and» Ensure environmental sustainability. Transfund must also consider whether a land transport programme is consistent with current national land transport strategies, relevant regional transport strategies and National Energy and Conservation Strategies. In order for road controlling authorities to receive funding, they must satisfy Transfund of the above requirements. 3.2 New Zealand Transport Strategy The New Zealand Transport Strategy (NZTS) sets out the government's vision for transport and must be used to guide future policy decisions about transport. The NZTS is based on four key principles that include:» Sustainability Principles of sustainability, integration and transport policy must enhance economic, social and environmental well being, and promote resilience and flexibility. Consideration of the needs of future generations and medium and long term costs and benefits is also important.» Integration Transport policy will help create an efficient and integrated mix of transport modes by achieving cooperation and collaboration between stakeholders and efficient use of existing and new public investment.» Safety Achieve safety, health and personal security for all transport users and providers. 26

28 » Responsiveness The diverse needs of urban and rural communities need to be recognised. All government agencies must be responsive to different transport needs. The main objectives of the NZTS are to:» Assist economic development;» Assist safety and personal security;» Improve access and mobility.» Protect and promote public health;» Ensure environmental sustainability; and 3.3 National Energy and Conservation Strategy New Zealand s National Energy Efficiency and Conservation Strategy promotes energy efficiency, energy conservation and renewable energy within the context of achieving a sustainable energy future. This strategy is closely linked with New Zealand s climate change response and the NZTS and the NZ Sustainable Development Strategy. The National Energy and Conservation Strategy aims to achieve the following goals:» Reduce carbon dioxide emissions;» Improve economic productivity;» Improve economic resilience; and» Reduce local environmental impacts;» Promote industry development;» Improve health and welfare. Within each goal there are a number of projected outcomes proposed for 2012 that aim to improve urban air quality, increase the economic development of sustainable industries, increase the reliance on renewable energy and improve the health of citizens. 3.4 Road Safety 2010 The Road Safety 2010 Strategy provides a direction for road safety in New Zealand that is focussed on engineering, education and enforcement. The road safety strategy is an important part in achieving the New Zealand Transport Strategy goal of an affordable, integrated, safe, responsive and sustainable transport system. The government s transport vision is that by 2010, New Zealand will have an affordable, integrated, safe, responsive and sustainable transport system. A main theme of the Road Safety 2010 strategy is to: Provide a more systemic approach to transport management should build safety in, not add safety on. Safety should be considered in all transport decisions and designed into our infrastructure. The Strategy aims to provide a road network and land use planning environment that reduces road deaths and injury and accommodates the safety needs of all users pedestrians, cyclists, public transport users and motorists. 27

29 3.5 National Rail Strategy to 2014 The National Rail Strategy to 2015 was released in May It aims to realise the full potential of rail as a properly integrated part of the nation's transport infrastructure. The strategy outlines national rail objectives for each of the 5 key National Transport Strategy objectives as follows:» Assisting economic development To enhance rail s contribution to sustainable economic development» Assisting safety and personal security To improve rail safety and personal security» Improving access and mobility To maintain and develop access to rail passenger services» Protecting and promoting public health To promote rail s contribution to positive health outcomes» Ensuring environmental sustainability To achieve a sustainable transport system that uses land, energy and other resources effectively. As far as assisting economic development is concerned, the National Rail Strategy outlines several priorities to achieve its objective of enhancing rail s contribution to sustainable economic development:» Upgrade the national rail network;» Improve the contribution of rail to regional development transport is a critical factor affecting regional growth and development. Growth opportunities have been identified in the coal and dairy sector and in container traffic;» Encourage more freight to be carried by rail; and» Optimise the use of the rail network as part of the wider transport network: increased integration of transport modes includes development of innovative and flexible approaches, for example inland ports or transport hubs. Key initiatives of the government include:» Government investment of $200 million to restore and upgrade network;» Investigations into development of the network; and» Promote integration between rail and other networks. As far as improving access and mobility is concerned the objective of the government is to maintain and develop access to rail passenger services including long distance passenger rail. In terms of ensuring environmental sustainability the negative environmental impacts associated with rail transport are small when compared to road. Rail freight uses 4% of freight transport energy. Road freight accounts for 91% and coastal shipping 5%. A key initiative is to encourage sustainable modal shift from road to rail where appropriate. 28

30 3.6 West Coast Regional Land Transport Strategy The West Coast Regional Land Transport Strategy (RLTS), which is currently under review, has a number of goals that need to be met. The key priorities for the region in the next five years will be:» Improving Accessibility enable and enhance movements of residents and visitors;» Regional Development A major impediment to growth and development has been transportation costs. Transportation is fundamental for sustained growth in the region s economy;» Improved Safety; and» Environmental impact consider the environmental impact of transport developments in the region. The RLTS identifies the following issues and a number of policies and methods to deal with them have been established in the Strategy:» The movement of freight traffic, its conflict with other road users and its impact on the environment;» Death and Injury to people and damage to vehicles and other property resulting from road crashes;» The reduced personal mobility by various groups within the West Coast in terms of their access to social, cultural and economic services and opportunities;» Traffic safety and access concerns for those visiting the West Coast region;» The safety of cycling and its conflicts with other road users;» Safety and access requirements by those walking; and» The environmental effects of land transport. 3.7 Transit New Zealand Strategies West Coast The following has been identified in Transit New Zealand s Draft 2005/6 2014/15 10 Year State Highway Plan. Key regional issues:» Route security/efficiency to the east via SH73 Arthurs Pass and SH7 Lewis Pass, to the north via SH6 Hope Saddle, and to the south via SH6 Haast Pass;» Road safety a key concern is the potential conflict of heavy and light traffic, particularly at single lane bridges on SH6; and» Tourist traffic. Alternatives:» Road, rail and/or shipping for coal coal is currently mostly transported by rail. Interchange facilities and freight consolidation may provide further opportunities for rail. Packages/strategies:» Strategy for route security/efficiency: secure the road north at its weakest points SH73 Arthurs Pass, SH6 Haast Pass and to the north (replacement of the Gates of Haast Bridge); and» Strategy for road safety: strategy to replace one lane bridges with two lane bridge where cost effective to do so, remove roadside hazards, widen seal width on SH6 Haast to Murchison, and provide network of stock truck effluent disposal sites. 29

31 Proposed large activity priorities in the plan for West Coast region:» Gates of Haast Realignment high local problem (high risk of road closure). High regional priority (strategic route);» Fox Glacier footpath; and» Arahura and Taramakau Bridges Cyclist Improvements. Draft 2005/6 Walking and Cycling Plan:» Bullock Creek Bridge and Pororai Bridge Cyclist Facilities; and» Fox Glacier Footpath. 30

32 4. Ports Summary There are two main ports on the West Coast: Greymouth and Westport. GHD and Option One note the strategic location of Westport and Greymouth distant from other larger ports, combined with a local economy dependent on industries with sea access and sea transport requirements. The economic wellbeing of a region is a national issue and these assets should not be allowed to decline or disappear. There are issues with road links that service the ports, as they are not designed for the weight or volume of truck traffic that is projected. There is a lack of transport options into the Port of Greymouth as there are no rail services into the port. Without addressing issues associated with berth improvements, turning circles and coal handling equipment, the Port of Greymouth will be unable to handle the projected coal throughput. Upgrades and improvements are demand driven and at present is dependant on contracts from freight generators. The Port of Westport is currently under pressure with Holcim considering whether or not it retains its Westport operations due in part to rail and shipping issues. Options include redeveloping the ports themselves and providing improved access for bulk volume transporters. 4.1 Ports Overview New Zealand has a relatively large number of ports. Table 9 below shows how they can be categorised as either major commercial ports able to handle large ocean going ships (handy size or larger), small commercial ports handling coastal and Trans Tasman trades, or smaller ports servicing fishing, small coastal or recreational/tourist needs. The large ports have generally been that way since New Zealand was first settled by Europeans. Many of the third category were formerly in the middle (Coastal/Tran Tasman) group but have declined in significance since then, often in the 1960 s and 1970 s as coastal shipping was overtaken by deregulated road transport and rail. In some areas such as Wanganui, local groups are trying to resurrect their ports. Just Greymouth and Westport, along with Onehunga fall into the middle category. A key question is: Will these ports remain as viable coastal / trans Tasman ports or will they too decline into relative shipping obscurity? 31

33 Table 9 New Zealand Ports Port International Ocean Going Large coastal/ Tran Tasman Fishing/Small Coastal/Tourist/ Recreational Tarakohe X Port Motueka X Nelson Port Marlborough X X Port Underwood Kaikoura X X Lyttelton X Akaroa X Timaru X Oamaru X Port Chalmers Dunedin Bluff X X X Riverton Milford Sound Jacksons Bay X X X Greymouth Westport X X Wellington X Wanganui X Port Taranaki X Raglan Kawhia X X Onehunga X Waiuku Kaipara Hokianga X X X 32

34 Port International Ocean Going Large coastal/ Tran Tasman Fishing/Small Coastal/Tourist/ Recreational Opua X Tutukaka X Marsden Point X Whangarei X Waitemata X Thames X Coromandel X Whitianga X Whangamata X Tauranga X Te Kaha X Hicks Bay X Tolaga Bay X Gisborne X Napier X A plot of the geographic distribution of the large ports is also interesting for the West Coast. The illustration below shows the major ports with 150 km radii drawn around them. 33

35 It is very evident that the West Coast is disadvantaged in terms of its proximity to major ports. The following points should also be kept in mind:» Ports are facilities with lifetimes measured in hundreds of years and contain classes of assets with lifetimes of scores of years. Shorter term fluctuations in perceived demand for their services should not allow their long term futures to be compromised;» New industries can emerge to replace traditional cargos at a port eg logs replacing meat, dairy products replacing wool;» Two of the West Coast s cornerstone economic activities utilise ports. Fishing for access, shelter and transport to processing and market, and mining for transport of ores and products;» All industries based on minerals tend to have transport as a critical cost element. This is true for cement manufacture (product to market), gold mining (ore for processing) and coal (product for processing and to market); and» Improvements in ship design and port management can drastically alter shipping economics for example: 34

36 o Current coal ship designs can carry around 4 times the payload per voyage of past West Coast colliers; o A new design cement carrier may carry double the load of existing purpose built vessels; and o Bar sounding technology and communications have increased sailing draughts (at a given water depth) and allow more precise dredging. GHD and Option One note the strategic location of Westport and Greymouth distant from other larger ports, combined with a local economy dependent on industries with sea access and sea transport requirements. The economic wellbeing of a region is a national issue and these assets should not be allowed to decline or disappear. 4.2 Current Situation The cost and operating capacity constraints related to transporting coal from the West Coast over the Southern Alps to the export terminal at the Port of Lyttelton have long been a restriction on export production from the West Coast. Plans for a $160M (almost certainly well over $200M today) coal export jetty on the West Coast have been effectively quashed by a combination of cost, reduced life, and improvements in the cost and availability of other modes such as rail. Of the two major ports on the West Coast, the Port of Greymouth is facing major redevelopment issues arising from the potential for significant increases in trade driven almost exclusively by coal. The Port of Westport is, at the time of preparing this report, under pressure with Holcim (New Zealand) considering whether or not it retains its Westport operations due to rail and shipping capacity issues. Both Greymouth and Westport are bar harbours on rivers. Unlike sheltered deep water harbours they are subject to constraints on shipping arising from the following:» High river flows prevent access;» Swell (wave) conditions or currents make the harbour entrance unpassable; and» Accumulation of sediment on the bar can reduce either the sailing draught or in extreme cases close the bar. While dredging can mitigate the effects of siltation of a bar, in some circumstances of low river flows and rough seas the rate of accumulation can be such that the bar cannot be kept open until the next flood in the river scours it clear. Both ports are subject to these effects. In general Westport has better availability of the Port from the point of view of weather induced delays (waves and currents) than Greymouth. Available data suggests that Greymouth has slightly more reliable water depths although there have been occasions (some decades ago) when shoaling of the bar restricted access and draughts similar to the recent problems at Westport. The two ports are affected by different weather patterns. When the Port of Westport was closed (bar closure) for over a month due to low flows in the Buller River recently, Greymouth continued to operate. Similarly there are periods when southwesterly weather patterns prevent access to Greymouth but Westport s more northerly aspect allows it to remain open to shipping. Port availability is also a ship specific issue with manoeuvrability, draught and ship size all influencing judgments about whether any particular vessel can enter or leave a port on any particular day. 35

37 These patterns can be analysed and the effects on shipping modelled. On average the availability of both ports is reasonable, but the occasional extended periods of downtime can cause very real problems for shippers. Better understanding of the long term weather patterns that give rise to problems, along with greater dredging capacity and well targeted dredging can probably improve past performance. The ability to move cargo from one port to the other for shipping (as happened with coal recently) is also a feasible (if expensive) option to maintain shipping volumes at times of more severe adverse weather/bar/river conditions. Optimised vessels will also assist in maximising port availability. Notwithstanding the difficulties inherent in bar harbours, the proximity of these ports to the source of the goods to be shipped, and the cost effectiveness of moving bulk goods by sea rather than rail or road means that these ports are attractive top shippers and are likely to be more so as transport costs increase. While Solid Energy has secured long term high volume rail capacity (3.3 to 3.8M tonnes per annum (tpa)) to Lyttelton it is also pursuing alternative transport options involving shipping. It wants to increase base coal volumes from 2M tonnes to beyond 2.7M tonnes. Solid Energy is looking at constructing specially designed coal ships capable of entering the two river ports of Greymouth and Westport and leaving with up to 12,000 tonnes of coal. These vessels would service North Island and Australian demand more effectively than railing to Lyttelton and shipping from there. Except for relatively small quantities direct to Australia, all export coal is now being shipped out of Lyttelton in up to post Panamax sized ships (60,000 75,000 tonnes). The opening of a new deepwater port at Shakespeare Bay in the Marlborough Sounds for coal exports appears to have been discounted by Solid Energy and Pike River. 4.3 Greymouth Port The Port of Greymouth provides a means of freight transport in up to 10,000 DWT 6 ships to/from the North Island, Australia, and a deep water port in New Zealand or Australia (eg Shakespeare Bay, Lyttelton, New Plymouth, Marsden Point, Port Kembla and Newcastle) for transhipment to larger ships en route to other continents. This will be a particular advantage for coal and might also offer opportunities for timber, logs and wood chips. The port is served by road transport with rail one kilometre away. The long term future of the port looks promising with an increase in the amount of coal being transported through the port and the potential for more. The Grey District Council has recognised this and has committed to spending $1M on a First Phase development securing the ability to handle 500,000 tonnes of coal exports per year. The Council s objectives are to, subject to the securement of appropriate agreements and the implementation of suitable transport solutions, upgrade and increase the Port handling capacity for coal to 2.3M tonnes per year. Gravel, fish and general cargo are also areas of promise. 4.4 Greymouth Port Issues All the major coal producers, Solid Energy, Roa Mining and Pike River have flagged Greymouth as their contracted (Roa), preferred (Pike River) or likely for domestic trade (Solid Energy) point of loading. 6 DWT = Dead weight tonnage (The cargo carrying capacity of a vessel, including fuel oil, stores and provisions.) 36

38 It is our view that the Port of Greymouth will witness growth in the future due to its locational advantage relative to coalmines. It is expected that coal will be the catalyst for development due to projected growth in the export volumes. Other possible uses are fish landings and aggregates (both bulk and landscaping). Some specific issues and impediments raised by Port of Greymouth are:» Lack of clarity of means of land transport to port for coal tonnages in excess of 1M tpa. Should land transport of coal to the port be by road or rail? Rail infrastructure is currently one kilometre from the port;» Lack of emphasis given to potential new road or rail links to port in District Plans;» Impacts on adjacent areas (coal dust problems);» Need for funding;» The turning basin in Greymouth is only 109m while the required length is at least 130m; and» Current use of the Port as a stockpile area. Of the points above, the restriction in turning lengths is a constraint on shippers being able to use timechartered existing vessels or purpose built optimised vessels. But for this, they could use Greymouth with its existing coal handling facilities today. The ability to turn 130m vessels would make Greymouth consistent with Westport and Onehunga. The physical characteristics of the Port play a large role in operational considerations. Issues related to this are:» The Port of Greymouth is a river port and water depths limit ship draughts over the entrance bar;» Flooding and coastal exposure severely limit the effectiveness of bar dredging;» The coastline is exposed to heavy swells;» Vessels moored at Richmond Quay can be subjected to high river flows during flooding;» Larger vessels cannot moor out of the stream in the inner basin as at Westport; and» The turning of vessels at Richmond Quay is constrained by the river width. This limits vessel length to a maximum of 109m at present. An increase in output of the Pike River Coal mine could see the need for alternative transport routes specifically built for Port development. Upgrading the existing road network is not the only option. Other options could include:» A new bridge across the Grey River to link Atarau Road directly with SH7;» New rail facilities to the port or new road corridors; and» Transporting the coal via Taylorville to a new coal loading facility on the Cobden side of the Grey River, bypassing the Central Business District (CBD) completely. Conflicts between heavy vehicle traffic and the use of Mawhera Quay for tourist attractions, accommodation, cafes and increasing pedestrian traffic need to be considered as Mawhera Quay must have a maximum capacity for safe vehicle use. If Mawhera Quay is to be retained in its present form, maximum tonnages using the route should be no more that 1 1.5M tpa. It is likely that public pressure and congestion issues will mean that Council will be requested to consider alternative routes before theoretical limits are reached. 37

39 At present, the Grey District Council owns the stockyard and harbour assets, the shiploader is owned by Sea Tow, and potential road and rail corridors are in a variety of ownerships. A consistent set of agreements or actual ownership is required to ensure long term availability of facilities to all parties. At present the Greymouth Port operates as a Harbour Authority, rather than a private company, which means that all information, including some commercially sensitive information, is made public, which can create issues. 4.5 Westport Port The Port of Westport is located at the mouth of the Buller River, and offers a sheltered haven to fishing vessels and cargo handling facilities for vessels up to DWT. Existing cargoes are 460,000 tpa of cement, and 50,000 tpa coal to Australia. A cruise liner makes annual calls. Vessels up to 135m in length and 5.5m average drafts can be accommodated. The port has a tug/pilot vessel and a dredge. There is one electric travelling crane with a 12.2 tonne lift and a 17 metre radius, and mobile cranes are available. A merchandise shed has a storage area of approximately 3500 cubic metres and there is a flat storage area of 20,000 square metres. The port is served by road and rail transport with rail unloading facilities, conveyors and shiploaders owned by Solid Energy. Coal exports are forecast to increase to 150,000 tpa by 2010 and higher tonnages could be accommodated with improvements to coal stock piling facilities. The operation also includes an engineering workshop. Holcim has a cement plant at Cape Foulwind. Holcim ships cement to eight locations around the country from Westport Port. The current cement shipping volume is 380, ,000 tpa and the feasibility and cost of increasing this to 700, ,000 tpa is being investigated. 4.6 Westport Port Issues In the report 7 prepared for Holcim Cement a number of issues were raised, including the bar depth, and operational and plant constraints of the Westport Port. One more ship, bringing the number to a practical maximum of three, or replacement by larger capacity vessel(s), would meet Holcim s requirements for throughput from the port. Increasing existing storage capacity at the wharf and the plant, and an increase in the rate of transfer of cement to the wharf would be required to meet increased shipping volumes. Holcim is considering whether its Westport plant continues as a manufacturing and distribution centre for its South Island cement operation as it currently faces limitations in available rail capacity and shipping issues. At the time of writing the port has remained closed for the past month (bar closure). This has impacted Holcim s operations and its supply of cement throughout the country. The Buller District Council Long Term Council Community Plan cites a refurbishment of the coal terminal wharf and refurbishment of fishing jetties as among the significant issues at Westport Harbour. Unlike Greymouth, Westport is not the favoured point of loading for large quantities of coal. Solid Energy foresees incremental growth to around 150,000 tpa. Modelling by GHD/Option One suggests that Westport is a higher cost option for Pike River than Greymouth. (See section 13.2: Combination Options: Economic Assessment) However this will only be actually determined by the commercial offers that Pike River receives and the decisions they choose to make. Use for other coal shipments is speculative. 7 GHD Cape Foulwind Capacity Increase Report Options for increased shipping through Westport, prepared for Holcim Cement New Zealand, October

40 Westport has a rail unloading facility as well as the ability to receive by truck. Westport s biggest constraint is the limited stockpile space on the wharf. This prevents the gradual accumulation of coal by rail in advance of a shipment. Therefore trucking is preferred as it results in less disruption to rail services to Lyttelton. At present, the Buller District Council owns the stockyard, Solid Energy owns the conveyors and loader, the land on which they sit is owned by NZRC and the Westport Harbour Authority owns the harbour assets. A consistent set of agreements or actual ownership is required to provide long term availability of facilities to all parties. Key Issues: Ports on the West Coast cite restricted transport links (sea, road and rail) as a key current or potential constraint on activity. Examples of this are:» There are issues with road links that service the ports, as they are not designed for the weight or volume of truck traffic that is projected. The increase in volume of traffic could create potential conflicts between heavy traffic and other road users, including cyclists and pedestrians, as well as congestion and noise nuisance for locals;» There is a lack of transport options into the Port of Greymouth as there are no rail services into the port;» Without addressing issues associated with berth improvements, turning circles and coal handling equipment, the Port of Greymouth will be unable to handle the projected coal throughput. Upgrades and improvements are demand driven and at present are dependant on contracts from freight generators; and» The Port of Westport is currently under pressure with Holcim considering whether or not it retains its Westport operations due in part to rail and shipping issues. 4.7 Options The following is a list of options identified as potential solutions to the above key issues relating to the ports on the West Coast. Options are to increase sea freight capacity at Greymouth and Westport or build a new facility on the West Coast. The options can also be found in summary version in the options table 8 ; the numbers next to the options make reference to that table. Each option has been considered, checked for fatal flaws and evaluated against the performance criteria 9. Section 11 sets out the preferred options Greymouth development: Three locations for berth development have been considered in the Port of Greymouth Development Options Study Stage 1A 10 : 8 See Appendix F 9 For a full list of performance criteria see Appendix G. The performance criteria evaluation table is included in Appendix H 10 Port of Greymouth Development Options Study: Stage 1A, prepared by OPUS for the Grey District Council and Port of Greymouth Management Ltd, Feb

41 » Three berths on Richmond Quay wharf;» One berth on Martins Quay Wharf and two berths on Richmond Quay wharf; and» New port facility at Cobden Island. The Cobden Island location has the advantages of removing coal handling/dust problems from the central Greymouth area, and of taking the coal transport route away from the town centre. However, there is an additional cost of $24.8M involved with construction of the new port and providing road and rail access. There would also be a rising of flood levels upstream and a need to dredge the basin. The Cobden option has not been considered further because of cost and likely consent issues. Option (b) above gives the greatest flexibility for berthage and coal handling, and is the recommended 11 development option. Twenty eight road, rail and conveyor transport options and combinations of these have been considered in the study completed by OPUS. These cover both access to the existing port site and to a new port on Cobden Island. Of the 28 options, the following 4 transport options (plus the status quo as the base case) are have been identified by the Port of Greymouth and the Grey District Council at an informal workshop held on the 24 March. 1. Base case: Mawhera Quay by road. Advantages: shortest route for transport, low cost option. Disadvantages: conflicts with other road users, especially considering the increasing tourist attraction value of Mawhera Quay. Risk: Medium conflicts with shops and all other users of this area. 2. Victoria Park Nursery by Rail (option ) (OPUS option 20) Advantages: More moderate rail curves. Disadvantages: 6 urban crossings. Limited disruption to Victoria Park, disruption to Greymouth Nurseries. Risk: Medium consent delay, land acquisition. 3. Cobden Island Short Bridge by Road (option ) (OPUS Option 16) Advantages: No trucks through CBD. Bridge more flexible use than conveyor only. Good alignment onto truck discharge facility. Disadvantages: Susceptibility to flooding. Possible visual and navigation issues. Possible impact on flood levels. Risk: Medium consent delay. The land has reserve status, which may be harbour endowment reserve. Land will need a change of status to become legal road and be surveyed off for this purpose. 4. Mawhera Quay Floodwall by Rail (option ) (OPUS Option 23) Advantages: Shortest route. No road crossing (except Gresson St in port area). Opportunity to upgrade floodwall at same time. 11 Recommended development option in the OPUS report. 40

42 Disadvantages: Alterations to floodwall required. Possible noise and dust issues. Disruption to coal park. Gresson St closed during discharging. Break in stopbank (stoplog system) required. Risk: High technical/cost, consent delay. 5. Grogan Leonard return by Road (option ) (OPUS Option 8) Advantages: Direct, few turns. Disadvantages: Conflict with other road users and local businesses. Risk: Medium consent delay, land acquisition Westport development: Buller Port Services has advised that they are only considering one option for Westport Port to upgrade the existing facilities, with a base case option for redevelopment costing $8M. 1. Expand existing facilities at Westport Presently there are two existing options for the movement of coal into the port of Westport:» Road to existing coal wharf; and» Rail to existing coal wharf. At the time of writing Buller Port Services, who manage the Port of Westport, are investigating port redevelopment options in relation to the movement and loading of bulk volume products New port/jetty facilities on the West Coast (options & 3.3.2): There have been investigations into construction of new port facilities at Granity and Rapahoe/Point Elizabeth 12, however these options have been considered and deemed not viable. Solid Energy proposed a new port facility at Granity and devoted considerable time and effort during the mid and late 1990 s to this project. Resource consents are still held and are valid for exercising until Solid Energy and the Buller District Council did a joint review of the project in 2003 and decided to take no further action due to the major advances in rail capacity to Lyttelton (now at least 3.3M tpa) and the cost and risks involved in the development. 12 The Grey District Council District Plan makes reference to investigations being made into alternative port facilities at Rapahoe/Point Elizabeth and Cobden. See Appendix C. 41

43 5. Rail Summary The West Coast has approximately 300 km of mainline rail track in its network. The network runs from as far north as Ngakawau in Buller to Hokitika in Westland and is connected to the national network via the Midland Line. The railway is the main mode utilised presently for the transport of bulk products like coal, timber, dairy and meat products. These bulk products are usually railed from the West Coast to Lyttelton where they are then shipped. Coal output is forecast to increase and the current rail network would be unable to cope with demand from coal producers. The Midland Line is close to reaching maximum capacity; at present it is limited to 7 coal trains per day plus 2 general goods and one passenger. Should the overflow not be able to be carried by the ports, major upgrades to the rail network will be necessary to handle the projected increase in volume. Options must be developed to accommodate the needs of other freight users besides coal, as the projected increase in coal freight volumes by rail will create a lack in availability of space for general goods. Oceana Gold will effectively use most existing spare capacity leaving questions about growth in capacity for other goods. Coal is forecast to take up much of the capacity on rail, therefore the possible cement rail demand of up to 200,000 tpa is difficult to envisage. This will create issues for Holcim who would like to increase production. Options for improvement include more freight trains, fewer other trains, more trains per day, and larger trains. 5.1 Current Situation The West Coast has approximately 300 km of mainline rail track in its network. The network runs from as far north as Ngakawau in Buller to Hokitika in Westland and is connected to the national network via the Midland Line between Stillwater and Rolleston. Table 10 West Coast Rail Network Line Rail Route Line length Primary Traffic Type Hokitika Line Hokitika Greymouth km Dairy Rapahoe Branch Rocky Creek Greymouth 9.0 km Coal Stillwater Westport and Ngakawau Lines Ngakawau Stillwater Westport Ngakawau 136 km plus 30 km Coal 42

44 Line Rail Route Line length Primary Traffic Type Midland Line Rolleston Greymouth 211 km Coal, Dairy, Forestry General Freight, Tourism The railway is the main mode utilised presently for the transport of bulk products like coal, timber, dairy and meat products. These bulk products are usually railed from the West Coast to Lyttelton where they are then shipped. Rail is also an important transporter of people, especially tourists, the Tranz Alpine express passenger train runs from Christchurch to Greymouth. In 2004 the New Zealand government repurchased the rail infrastructure and placed ownership with the Railways Corporation recently rebranded OnTrack. OnTrack is responsible for infrastructure ownership, maintenance, renewals and management of operations. Toll NZ Ltd, the primary rail operator in the West Coast, has exclusive rights until 2070 for its freight and existing long distance passenger operations. Toll owns and operates its own fleet of locomotives and rolling stock. The Midland Line is the sole rail corridor from the West Coast and rail traffic from the other West Coast lines converges on this route. Coal volumes on the Midland Line have increased from 0.2M tonnes in 1976 to 2.1M tonnes in Solid Energy s 15 year plan is for these volumes to grow to 3.8M tpa by The strategy is to mine to the capacity of the transport infrastructure. Currently Toll is running 6 or 7 coal trains of 24 or 30 wagons per day (7 days per week) on the Midland Line: 5 trains from the Stillwater Westport line and 1 2 trains from Rapahoe (Spring Creek / Rocky Creek or Reefton). In addition, two general freight services (operating 5 days per week) and one passenger service (operating seven days per week) use the Midland Line. Infrastructure utilisation/performance has steadily improved from 75% asset utilisation/performance achieved in 2000 to 85% in The target for the future is 90%. It is possible that rail asset utilisation can be improved to 95% by dealing with infrastructure reliability, temporary speed restrictions etc. before being constrained by the effects of weather and maintenance windows. Overall coal system (including loading and discharge delays) availability is targeting 90%. Current projects aimed at improving operating efficiencies include:» Increasing the length of trains to 30 coal wagons. This project involves the building of additional coal wagons, increasing the length of passing loops, locomotive power upgrade, the fitting of Brightstar kits to locomotives to improve traction efficiency and adding an additional fan in Otira tunnel. This project is well underway and due for completion in October 2005;» Deferred maintenance is being addressed to eliminate speed restrictions and facilitate further operating efficiencies;» A new load out facility is being constructed at Rocky Creek (Rapahoe Line). Unlike the old Spring Creek facility it will be permitted to operate 24 hours per day if required. This is scheduled for completion 2005; and» An agreement has been reached between OnTrack and Solid Energy to construct a new Cobden rail bridge, on the Rapahoe Line, across the Grey River near Greymouth. Construction of the new 285m long concrete bridge is expected to be completed by early 2006 at a forecast cost of $15M. This will 43

45 remove the 16 tonne axle load restriction on the line and allow wagons to run from Rocky Creek fully loaded (18 tonne axles). Table 11 Coal Route Capacities COAL TRAINS (Per Day) TRAIN LENGTH OPERATING EFFICIENCY Tonnes pa (000 s) 6 Coal Trains 24 90% Coal Trains 24 90% Coal Trains 24 90% Coal Trains 30 90% Coal Trains 30 90% 3780 Solid Energy and Toll have signed an agreement that will see greater quantities of coal transported from the West Coast to Lyttelton. The increase will eventually see 7 trains a day increased to 8. The two companies are committed to working with rail track owner OnTrack to provide the investment to address increased capacity and reliability on the line. In addition, the agreement also established a framework for the possible transportation of Solid Energy coal on other parts of the rail network, including carrying it to ports in Westport and Greymouth. An estimated $100M is expected to be spent on track upgrades over the next 10 years in addition to maintenance expenditure. OnTrack is confident that a 7 coal train per day (2.646M tpa) scenario on the Midland Line is achievable today and increasing the length of trains to 30 wagons will see this capacity increase to 3.307M tpa. The planned increase in output from Pike River Coal mine could see the need for alternative or new transport routes specifically built for development. Upgrading of the existing road network is not the only option, other options could include: a new bridge across the Grey River to link Atarau road directly with SH7, new rail facilities to the port or new road corridors, transporting the coal via Taylorville to a new coal loading facility on the Cobden side of the Grey River, bypassing the CBD area completely. PRCC has two transport options for its coal: by road along the district and State Highway networks or by rail following the construction of a new branch line (this option would require 300,000 tonnes of coal to be transported by road for the first two years of operation). At the time of writing, Solid Energy s Spring Creek mine projected output is uncertain. Should the forecast volumes of 0.9 million tonnes not eventuate this would free up capacity on rail for other users, such as Pike River. This would enable the existing rail system to carry most of the West Coast coal, without the need for substantial infrastructure upgrades. This is however dependent on the relevant parties reaching commercial agreements and that mode being preferred by Pike River. The planned capacity increase on the Midland Line is primarily focused on Solid Energy s coal business. The issue of potential increases in rail transport demand, for products such as gold ore from Reefton (Oceana Gold) (95,000 tpa) and increased Dairy products from Hokitika (64,000 tpa) still need to be resolved. Toll has indicated that the Oceana tonnage can be met by a combination of more Reefton trains, more wagons and higher wagon payloads. The dairy tonnage is progressive and incremental and 44

46 it is reasonable to presume that incremental changes will be made to accommodate this in the rail system. OnTrack have indicated that additional traffic windows could be accommodated on the Westport to Stillwater Line. This provides an opportunity for intra region rail traffic between the north and south of the West Coast most likely for raw milk. The Hokitika Line carries only one train a day (5 days per week seasonal). This is a shunt service from the Westland Dairy Factory at Hokitika to Greymouth where it connects with the general goods rail service from Greymouth to Christchurch. In future, line by line access pricing will provide a transparent cost structure and a mechanism for OnTrack and Toll to review the economic viability of the line. 5.2 Issues Transport of coal by rail through the Southern Alps to the port of Lyttelton on the east coast has been a major cost issue for Solid Energy. But an agreement made last year, between Solid Energy and Toll Rail, for a 13 year contract for railing coal has provided more certainty to long term coal delivery costs. Current initiatives are generally based on achieving a seven coal train per day scenario and improving the resilience of the timetable. Issues with the South Island coal route:» Deferred maintenance is estimated at $50M. The work, mainly to structures and track, is required to support existing volumes. The funding for some of this work has been provided by government and is part of the $200M funding allocated over the next five years to address deferred maintenance issues nationally; a total of $100M in upgrades (extra to maintenance) has been provided for as part of the Toll Solid Energy New Zealand long term agreement.» There are serious concerns regarding timber bridges being loaded at or above rated capacity. A significant upgrade programme of under strength bridges is underway involving either strengthening of critical members or total bridge replacement. This programme will proceed over the next few years;» The Otira tunnel is a significant bottleneck for the Midland Line. Electrification back to Jackson s could potentially double the capacity of the Otira Tunnel. This would eliminate the Otira tunnel bottleneck however the costs of this enhancement may be prohibitive» There are concerns regarding the increased risk of track buckling caused by heavier and longer trains, particularly under braking conditions; and» The track geometry is characterised by many tight radius curves, many steep grades, 26 tunnels and over 240 bridges. This imposes significant constraints on train speeds and motive power requirements. However, the above issues are generally being addressed by OnTrack funding already announced and by further investment underwritten by users and Toll, which has been identified as necessary to ensure contractual performance of the coal transport contracts. Issues for Rail Freight service and infrastructure providers are:» The ability of general goods trains to handle increased demand for the railing of products other than coal;» Improved utilisation of the existing locomotives and rolling stock; 45

47 » Increasing the number of coal trains to 8 or 9 per day in a 24 hour window. The spacing of passing loops is one of the key drivers of route capacity. The current loop spacing of about 30 km indicates a train every hour, or a route constraint of 12 return trips per day. In reality the number will be somewhat less;» The frequency and length of crossing loops, drawbar capacity and locomotive horsepower are constraints on increasing the length and number of trains on the Midland Line;» Maximum allowable axle loads on the national rail network are set at 18 tonnes;» Otira Tunnel and problems with diesel fuel emissions mean that a purge time of minutes is required before another train can enter the tunnel and the overall running time between trains is about 1 hour. This means a theoretical maximum of 24 train movements (per day) are achievable through the tunnel although in reality the number will be somewhat less;» Height restrictions on traffic through a number of the tunnels means 9 6 containers on standard UK flat top wagons cannot run between the West Coast and Christchurch;» The availability of locomotives and wagons;» Draw gear constraints limit the size of general goods trains. Trains are currently limited to 1000 tonnes (gross weight / train);» There are concerns regarding the length of time it takes to load out from Ngakawau (2 hours) and Rocky Creek (currently 3 hours). This has a significant impact on wagon and locomotive utilisation. Best practice in NZ is minutes to load a 30 wagon coal train;» Hokitika Line: In future, line by line access pricing will provide a transparent cost structure and a mechanism for OnTrack and Toll to review the economic viability of the line. The implications of this are not known at this time; and» The planned capacity increase on the Midland Line is primarily focused on Solid Energy s coal business. The issue of potential increases in rail transport demand for products such as gold ore from Reefton (95,000 tpa) and increase in dairy products from Hokitika (30,000 tpa) still need to be resolved. Key Issues:» Coal output is forecast to increase and the current rail network would be unable to cope with demand from coal producers. The Midland Line is close to reaching maximum capacity; at present it is limited to 7 coal trains per day plus 2 general goods and one passenger. Should the overflow not be able to be carried by the ports, major upgrades to the rail network will be necessary to handle the projected increase in volume;» Options must be developed to accommodate the needs of other freight users besides coal, as the projected increase in coal freight volumes by rail will create a lack in availability of space for general goods. Oceana Gold will effectively use most existing spare capacity leaving questions about growth in capacity for other goods; 46

48 » As stated above, coal is forecast to take up much of the capacity on rail, therefore the possible cement rail demand of up to 200,000 tpa is difficult to envisage. This will create issues for Holcim who would like to increase production; and» There are increased costs and handling issues for exporters because of varying container sizes being transported. Due to height restrictions in tunnels on the Midland Line, 9 6 containers currently cannot run on the West Coast rail lines. 5.3 Options The following is a list of options identified as potential solutions to the above key issues relating to rail on the West Coast and attempts to provide more rail capacity for coal and general goods such as cement. The options can also be found in summary version in the options table 13 ; the numbers next to the options make reference to that table. Each option has been considered, checked for fatal flaws and evaluated against the performance criteria. 14 Section 11 sets out the preferred options for more rail capacity More coal freight trains, fewer other trains 1. Substitute one or both general goods trains with coal train (option 2.1.1): This would put more trucks on the road:» Dairy onto road (2004: 60,000 tpa; 2010: 90,000 tpa);» Log traffic onto road (185,000m³ pa);» Oceana Gold onto road (2006: 90,000 tpa); and» Holcim Cement onto ship or road (2005: 50,000 tpa; 2020: 200,000t). For each substitute train, 500,000 tpa coal can be carried. Capacity to carry additional general goods is effectively removed. Toll advise this is not a preferred option and that other rail alternatives are available to handle increased coal freight demands. With arrangements in place to rail Oceana Gold s ore, only one general goods train remains that could be substituted, that originating in Hokitika, and the removal of this capacity is not regarded as a desirable or acceptable option. 2. Substitute the Tranz Alpine passenger train with a coal train (option 2.1.2): Consequences:» Impact on tourism and New Zealand s tourism image;» More cars and buses on road;» Redundant rail passenger asset; and» Potential loss of jobs. 13 See Appendix F 14 For a full list of performance criteria see Appendix G. The performance criteria evaluation table is included in Appendix H 47

49 Toll advise this is not a preferred option and other rail alternatives are available to handle increased coal freight demands More trains per day 1. Increase number of coal trains on the coal route (Midland Line) from 7 to 8/9 (option 2.2.1). Consequences:» Increased track congestion;» Increase number of crossing loops and/or double track various track sections. Requires capital expenditure (capital expenditure (capex));» More locomotives and wagons required (capex);» Practical engineering issues at Otira Tunnel; and» The 7 train operation is currently underway. A timetable has been prepared for an 8 train scenario capital expenditure is required for wagons and locomotives and minimal further expenditure is envisaged for track infrastructure. The Otira Tunnel capacity is limited to 1 movement per hour this constrains capacity to a maximum of 9 coal trains, 2 General Goods and 1 Passenger service. 2. Increase maximum speed of trains on the coal route (option 2.2.2) Consequences:» Train safety implications;» Need to rebuild the track for higher speed traffic; and» Need to speed up the load out facilities. OnTrack s strategy is to increase average train speeds by eliminating speed restrictions, rather than increasing maximum running speeds. This work forms part of the OnTrack funded project to cover deferred maintenance on the coal route. A fatal flaw of this option is that the system is not designed for higher speeds. 3. New train service carrying Pike River coal to Westport. (Option 2.2.3) Consequences:» Increased track congestion; and» One additional train set required (locomotives and wagons) (capex). Additional port capacity would be required at Westport to handle 1 2 M tpa coal. Empty coal trains could be used to carry coal from Pike River Coal Company to Westport, however an additional train would be required to compensate for the timetable drift. 4. New train service carrying Pike River coal to Greymouth. (Option 2.2.4) Consequences:» Increased track congestion;» One additional crossing loop near Dobsons (capex); and 48

50 » One additional train set required (locomotives and wagons) (capex). Additional port capacity would be required at Greymouth to handle 1 2M tpa coal. See option in the Options Table 15 for more on options to increase port capacity at Greymouth. A dedicated unit coal train would run between Pike River Coal Company and Greymouth Larger trains 1. Longer coal trains (up to 30 wagons) (Implementation for coal trains 2005) (option (a)) This project is already in progress. Consequences:» Increases existing coal train capacity by 25%;» Requires longer crossing loops, this is currently underway;» Upgrade of locomotive controls Brightstar underway; and» More coal wagons (underway). The 7 coal train scenario provides Toll with a realistic capability of carrying approximately 3.2M tpa. between the West Coast and Lyttelton Port. 2. Longer general goods trains (up to 30 wagons) (option (b)) Consequences:» Increases existing general goods capacity;» Requires dedicated rolling stock fleet with improved draw gear;» Upgrade of locomotive controls Brightstar (capex); and» Requires longer crossing loops, this is underway for coal traffic. Currently 2 general goods trains operate between the West Coast and Christchurch. Upgrading the existing freight service would provide an additional capacity of 500,000 tpa. This will satisfy forecast increases in general goods out to Trains longer than 30 wagons (option 2.3.2) Consequences:» Increase capacity;» Extend critical crossing loops further (capex);» Load out facilities will require redesign (capex);» More locomotives or bigger locomotives required (capex);» More wagons required (capex); and» Slower average running speeds may eventuate. 15 See Appendix F 49

51 1 or 2 trains of 60 wagons could operate on the mainline only. Some critical crossing loops could be extended, however most are constrained for room by bridges or tunnels. This option is limited to 1 or possibly 2 train sets. 4. Heavier axle capacity wagons: (option 2.3.3) Consequences:» Track is designed for 18 tonne axles so speed restrictions would apply or the track would require reconstruction;» Most bridges would require uprating;» Few wagons can hold more coal, 170+ wagons would need to be replaced to take advantage; and» Track and wagon capex probably prohibitive. A fatal flaw of this option is that most wagons and track structure is not designed for axles greater than 18 tonnes. 50

52 6. Road Summary The West Coast roading network consists of 2,894 km of roads, consisting of 873 km of sealed State Highways. Local roads make up about 2,021 km of which about 50% are sealed. Traffic volumes on the West Coast are low, seldom exceeding 1000 vehicles per day (vpd) in rural areas with a maximum of 12,410 vpd within Greymouth. A common factor in the West Coast roading network is route security. The network is subject to a higher than normal number of natural hazards. This is a result of the harsh terrain and high rainfall on the West Coast. While a number of stretches of road and localities do not meet standard seal widths and pavement strengths, these areas are attended to in the normal planning and funding processes. The perceived effect of quality of roading on tourism suggests a higher standard than minimum is desirable. However the low ability of rates based funding to contribute on the West Coast, along with relatively low traffic densities, suggests that alternative funding criteria and methods may be appropriate as a special case. The Arahura road/rail bridge remains a key issue in terms of route security. A large increase in road traffic to the Port of Greymouth will create safety and conflict issues and needs to be mitigated. Without making proper allowance for the projected increase in tourism numbers using the roading network, especially in the form of campervans, cyclists, buses and other tourist traffic, the West Coast tourism industry could suffer. The potential conflict between heavy transport and tourist traffic is an issue. The options for dealing with the above key issues surrounding the West Coast roading network are all currently being managed within Transit New Zealand, Regional Land Transport Committee (RLTC) and/or normal District Council processes. 6.1 Network Characteristics Owners The public roading network is owned by:» Transit NZ all State Highways.» Local Authorities Buller, Grey and Westland District Councils.» Department of Conservation (DoC) the Fox and Franz Josef glacier roads Physical Features The West Coast roading network consists of 2,894 km of roads, consisting of 873 km of sealed State Highways. Local roads make up about 2,021 km of which about 50% are sealed. 51

53 Table 12 West Coast Road Network Owner Road Length Total Sealed Unsealed Number of Bridges Transit NZ 873 km 873 km 0 km SH6 180 Westland D.C 685 km 350 km 335 km 269 Buller D.C 580 km km km 138 Grey D.C 616 km km km 220 The State Highways provide a key strategic function providing a vital link to communities, businesses and emergency services. The local roads provide community functions, access to individual properties and recreational areas. The DoC glacier roads serve recreational and tourist needs. The physical characteristics of the region affect the roading alignment, construction and maintenance of the network. The environment is rugged, dominated by mountains, rivers and rainfall. The majority of the network is characterised by a narrow corridor through which the road traverses. 6.2 Traffic Patterns The table in Appendix D is an excerpt taken from the Transit New Zealand State Highway Traffic Volumes Report and looks at the relevant West Coast State Highways: SH6, SH7, SH63, and SH73. The data is taken from count stations on the State Highways. Traffic volumes are measured in terms of annual average daily traffic (AADT), which is the total annual traffic volume divided by the number of days in the year. Traffic volumes on the West Coast are low, seldom exceeding 1000 vehicles per day (vpd) in rural areas with a maximum of 12,410 vpd within Greymouth. SH7 and SH73 have similar traffic volumes of around 1300 vpd Heavy Transport The table in Appendix E shows the heavy vehicle volumes at various points along the West Coast State Highways. Volumes are measured in terms of AADT. The major commodity categories are livestock, milk products, forestry and mining activities. The density of heavy vehicles on the West Coast roads is similar to that experienced on other routes around New Zealand. Pike River Coal Company s increase in output could see the need for alternative or new transport routes. Upgrading of the existing road network is not the only option, other options could include: a new bridge across the Grey River to link Atarau road directly with SH7, new rail facilities to the port or new road corridors, transporting the coal via Taylorville to a new coal loading facility on the Cobden side of the Grey River or passing the CBD area completely. Solid Energy is looking at trucking coal from Ngakawau to Reefton via Westport. Solid Energy currently barges coal from Westport to the Australian ports of Whyalla in South Australia and Port Kembla in New South Wales and has plans to barge coal from Westport to Lyttelton. To load an 8,000 tonne barge, coal is trucked at a rate of around 1,500 tonnes a day (50 return truck movements) for up to five days from 52

54 Ngakawau to Westport. Coal is also delivered to the port by rail. Coal is occasionally trucked between Greymouth and Westport. Currently between 700 and 1,000 tonnes of coal (up to 33 return truck movements) a day is delivered to the Port of Greymouth, but this is set to increase as Spring Creek Underground Mine moves towards full production. 6.3 Issues Route Security A common factor in the West Coast roading network is route security. The network is subject to a higher than normal number of natural hazards. This is a result of the harsh terrain and high rainfall on the West Coast. These natural hazards include river erosion and flooding, rock fall, slips, coastal erosion, snow and ice. State Highways The State Highway network is vital for the tourism industry and has an important strategic function in providing a link for the transport of goods, local residents and emergency services. Transit New Zealand s West Coast Strategy Studies concluded that the highways have many seal width sections below Transit s minimum standard and there are many single lane bridges and single lane sections of highway of safety concern. While a number of stretches of road and localities do not meet standard seal widths and pavement strengths, these areas are attended to in the normal planning and funding processes. They attract relatively low priorities due to the low traffic volumes. The perceived effect of quality of roading on tourism suggests a higher standard than minimum is desirable. However the low ability of rates based funding to contribute on the West Coast, along with relatively low traffic densities, suggests that alternative funding criteria and methods may be appropriate as a special case. There is significant room for State Highway improvements within the region. The Transit West Coast Strategy Studies highlight the following issues:» Poor condition of Arahura bridge;» General lack of alternative routes;» The absence of passing bays and lanes; and» The uncertainty of predicted heavy vehicle movement volumes and consequent effects on highways, particularly pavements and access points to highways. Local Roads Like the State Highways, many seal widths are below standard, and pavement strengthening is required to cater for increased heavy vehicles from dairying and other industry. Department of Conservation (DoC) Roads Increased tourist numbers to the West Coast have resulted in strong traffic growth on the DoC owned roads that provide access to the Glaciers. Visitor numbers to the West Coast region are forecast to increase from 850,000 visitors in 2001 to 1.12 million visitors in 2008 (32% growth). Tourists expect sealed roads of a much higher standard than the currently unsealed and dusty routes provided by DoC. 53

55 Roading issues highlighted in District Council Plans can be found in Appendix C. Key Issues:» The Arahura road/rail bridge remains a key issue in terms of route security.» The maintenance of road safety in general is vital.» A large increase in road traffic to the Port of Greymouth will create safety and conflict issues should the following factors not be addressed: Preferred routes with heavy traffic bypasses; State Highway classification for roads into ports; Land acquisition; Truck wash effectiveness; Separation of heavy traffic from preferred tourism routes; and Cycle and pedestrian safety.» Without increased priority for improvement of the key interregional routes, in particular the Waimakariri Bluffs, and Klondyke corner to Arthur s Pass, there will be no viable alternative to rail transport for general goods freighters who cannot obtain space on rail services. There are a number of one lane bridges and sections of narrow seal width on the West Coast that pose a hazard to all road users. With the increasing amount of heavy transport and tourist traffic, replacement of these should be a priority in order to maintain road safety standards on the West Coast. 6.4 Options The options for dealing with the above key issues surrounding the West Coast roading network are all currently being managed within Transit New Zealand, Regional Land Transport Committee (RLTC) and/or normal District Council processes: Option: Improve safety, capacity and efficiency of roads» Improve safety of bridges for heavy and light traffic (including cyclists and pedestrians);» Improvement of key routes for tourism and bulk volume traffic;» Separation of heavy traffic and tourist traffic;» Develop a regional cycle plan; and» Improve facilities for pedestrians. Roading issues and options associated with port access and rail capacity options are dealt with under the port and rail sections above. Where road infrastructure upgrades or changes are seen as the optimum option, the designation of the road corridor and recommended changes in status will be reviewed. It is also important to note that there is potential for conflict between bulk transport operators and other road users, such as tourists, pedestrians and cyclists. Tourism is recognised as a major industry on the West Coast and the transport network associated with this is discussed further in Section 54

56 9 below. Therefore optimum infrastructure options for bulk freight transport will avoid, remedy or mitigate such conflicts and constraints. 55

57 7. Cycling and Walking 7.1 Current Situation A good proportion of the local residents on the West Coast use cycles either for commuting/schooling or for leisure and recreational purposes. Many visitors to the region also utilise cycles for travel and sightseeing. Walking also plays an important role in meeting people s transport needs. The West Coast Regional Land Transport Strategy includes sections on enhancing walking and cycling as a means of transport. The issue of cycle/pedestrian safety on narrow bridges and at the Glaciers has also been highlighted in Transit NZ State Highway strategy and there are plans in place for safety improvements. Tourism is recognised as a major industry on the West Coast and the transport network associated with this is discussed further in Section 9 below. 7.2 Issues Key Issues:» Projected increases in trucking in and around Greymouth could create hazards for all road users, including cyclists and pedestrians. 7.3 Options The issues and options for cycling, pedestrians and the West Coast roading network in section 6 above are related. As in the roading section, the options for dealing with the issues surrounding cycling, pedestrians and roads are all currently being managed within Transit New Zealand, RLTC and/or normal District Council processes: Option: Improve safety, capacity and efficiency of roads» Improve safety of bridges for heavy and light traffic (including cyclists and pedestrians);» Improvement of key routes for tourism and bulk volume traffic;» Separation of heavy traffic and tourist traffic;» Develop a regional cycle plan; and» Improve facilities for pedestrians. It is important to note that as there is potential for conflict with bulk transport operators and other road users, such as tourists, pedestrians and cyclists. Therefore optimum infrastructure options for bulk freight transport will avoid, remedy or mitigate such conflicts and constraints. 56

58 8. Airports 8.1 Current Situation The main West Coast airports are Hokitika and Westport airports. These airfields have m runways suitable to accommodate turboprop aircraft. In recent years aircraft size has progressively increased from unpressurized Bandeirante, to Metroliner, then BeechLiner 1900 and Saab 340 to ATR 72 (66 seats) and the newly ordered Dash 8 (50 seat) aircraft. These latter aircraft contrast with the much smaller aircraft used in the past and highlight the ability to move more passengers without increasing frequencies. Air Nelson, a subsidiary of Air New Zealand, operates scheduled daily flights from Hokitika to Christchurch. Westport Airport is serviced seven days a week by an Air New Zealand Link flight direct from Wellington. Greymouth, with a total of 1091m of sealed runway and approach issues, is likely to continue as a general aviation field only. Greymouth Airport is the base for Air West Coast that provides regular service to Wellington via Westport and tourist flights to glaciers. It also has a vital role in providing transport support for Grey Base Hospital and is a base for Air Search and Rescue Helicopters. 8.2 Issues Key Issues:» Jet aircraft operations particularly Trans Tasman flights cannot be accommodated. This demand would only be driven by inbound tourism and there is no information available to suggest there is a strong unsatisfied demand for this;» Restrictions on noise or other limitations placed on airports could impede future growth in usage. Local Authorities at Westport, Greymouth and Hokitika must ensure that airfield operational capabilities are maintained; and» Airports on the West Coast do not have instrument systems for all weather operations. There is a possibility to upgrade. 8.3 Options The overall goal of the West Coast Integrated Regional Transport Plan is to assess whether there is sufficient and appropriate transport infrastructure capacity within the West Coast region, and if there is not, to consider where is the need and is that need acute. This report has found that there is sufficient and appropriate air transport capacity on the West Coast and no current demand for additional services. Therefore there has not been any further investigation into options for any changes to the current airport facilities. 57