Australia. Economic strength and resilience.

Supporting

the Australian Rail Sector‟s

International Success ARA Rail Suppliers Forum

Melbourne,

3 July2013

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Discussion points

1. What and where are the international opportunities?

– Trends and drivers, markets, some specific examples

2. Why are they potential opportunities for Australia?

– Why should you be interested

– Are they opportunities for your company?

3. How to pursue opportunities

– What are you going to do about them?

– Support from Austrade

– Next steps

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Austrade

• Federal Government agency tasked with promoting and

assisting Australian business to be successful in

overseas markets, facilitating productive foreign direct

investment in Australia, and promoting Australian

education and training internationally

• Commercially focused, highly diverse team with local

contacts, cultural, business, industry and language

understanding in approximately 60 countries worldwide

• Able to support all types and sizes of Australian business

in a variety of ways

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Austrade has a global network of offices

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Global Opportunities and drivers for rail –

macro level

• Urbanisation

• Industrialisation

• Resources and energy needs

• Environmental sustainability

• Safety and reliability

• Speed, efficiencies and costs - productivity

• Strategic and political

• Interconnectivity

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Global Opportunities and drivers for rail

– high level

• GCC Rail – metro, freight, heavy haul

• India – metro, freight, heavy haul

• China – high speed rail, metro

• SE Asia – metro, heavy haul, freight, light rail, intermodal

• South America – heavy haul, freight, metro

• Europe – light rail, metro, intermo

• Africa – heavy haul, freight, passenger

• North America

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The Middle East Rail Opportunity • Opportunity:

• Greenfield projects

• GCC rail network spanning 2,117km linking Oman, UAE, Saudi Arabia, Qatar, Kuwait, Bahrain by 2017

• Over 6,000 km of track may be laid by end of decade in all GCC Countries

• Estimated investment of US$130 billion - government funded

• Over US$44.8bn-worth of rail projects planned or under way in Saudi Arabia and US$36.8bn in Qatar. US$25bn in UAE and between US$5bn and US$17bn in Kuwait, Oman and Bahrain

• Population growth, diversifying economies behind plans

• Would boost trade, reduce dependence on Strait of Hormuz

• Australian capability across value chain: • Solutions for remote and harsh environment, high temperatures, high levels of automation

• Consulting and engineering services

• Track construction, operation, asset management and specialised equipment

• All forms of rolling stock and their components

• Signaling, communications, and electrification solutions

• Railway equipment, component repair, and workshop services.

• Railway management & training/education

Australian capability in rail, particularly in heavy haul, is highly regarded, and several Australians and other western expats present in the local industry

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GCC rail projects • UAE- 1,500km freight lines by Etihad Rail in Abu Dhabi in 3 stages. First stage is a

264km spur line to link Abu Dhabi gas fields to transport seven million tons of granulated sulphur per year (22,000 tonnes per day on two trains). The next two stages will extend the line to strategic port and production areas, eventually running through the whole country connecting the UAE to the GCC link by 2017. Three million containers and 30 million tons of bulk quarried material, aluminium, cement, iron ore and steel will be transported on the network by 2015. Metro and light rail in Abu Dhabi is currently at the pre-qualification stage and Dubai metro is under operation.

• Saudi Arabia – 2,750km and more lines in freight, metro and passenger. Riyadh metro, Jeddah LRT, Mecca Mass Rail Transport, Ras al-Khair-Jubail line

• Oman –Approximately 2000km freight and passenger lines. Currently the Program Management Consultant and Preliminary Engineering contracts are at the tendering stage

• Qatar- Doha metro (Red and Green line contracts has been awarded out of four rail lines in June 2013 that will link stadiums for the 2022 World Cup soccer tournament). Lusail light-rail transit (LRT), high-speed passenger line, freight line.

• Kuwait –Metro and the connection with GCC

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Turkey Rail Opportunities

• Turkey‟s railway development creating supply chain and maintenance opportunities.

• Railway reform and modernisation - separating infrastructure, passenger and freight

• Partnerships for technology transfers, purchasing and renovating track components,

locomotives, wagons and passenger cars and their components, which all lie as

opportunities for Australian Companies

• Turkey‟s rail development will increase the importance of the Silk Road, and lead to the

interconnection of Europe, Asia, especially the Middle East, and the Central and Far East

Asia by rail

• Turkey is developing rapidly and has become a manufacturing force in Europe driving

demand for rail freight between Asia and Europe

• There is an interest in growing railway freight in the market for domestic and international

routes. Turkey is keen to capitalize on its strategic geographical location (The potential is

around 75 million USD)

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Brazil Railways

Objectives

• New modeling for the investments and exploration of railways

• Breaking of the monopoly of carriers on the tracks

• Expansion, modernization and integration of the railway network

Railway concession details

• Duration: 30 years

• Total investment of A$ 44 billion by 2018

• Construction, maintenance and traffic control

• Purchase of the full transportation capacity of the railways by the State

• Patronage risk – to be assumed by Government

• Government transport agency to sell the railway capacity

• Business opportunities for independent railway carriers

• Right of way in all lines

• Leveraged IRR from 13% to 6% p.a.

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Brazil Railways

Total of 10,000 km of new tracks

Brazil Rail Opportunities

Major investment in railway infrastructure planned for the next 30 years (2013 –

2043) – with 60% of the expenditures planned for the next 5 years: 2013 - 2018

Cargo /heavy haul railways

1. Current cargo/heavy haul rail network: 28,100 km

2. Investment plan: expansion of a total 10,000 km, in a PPP model.

3. Estimated total investments: R$ 91 billion (A$ 44.6 billion) being R$ 56 billion

(A$ 27.44) in the next 5 years

4. Timing:

The 1st phase of the bidding process will comprise 2,600 km (divided in 4 sections)

Timing: tender details were disclosed in March 2013

Calls for bidding: April 2013

Signature of contracts: July 2013

The 2nd phase of the bidding process will comprise 7,400 km (divided in 6 sections)

Timing: tender details to be disclosed in May 2013

Calls for bidding: June 2013

Signature of contracts: September 2013

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High Speed passenger train

Project: high speed passenger train linking the cities of Campinas – São Paulo – São Jose dos Campos and Rio de Janeiro

Extension: 511 km

1 – Operator – rolling stock

The 1st tender will select the train operator and the proposed technology (rolling stock)

Timings:

September/November 2012: Public hearings

December – August 2013 – Preparation of the bidding documents

September 2013 – Call for biddings

November 2013 – Confirmation of the winner

February 2014 – Signature of the contract

Financing for the operational investment : 70% financing by the Government – at subsidised interest rate and 30% equity.

Concession to the winner granted for 40 years

2 – Infrastructure project

Project design of the railway infrastructure: The selection of the project company scheduled for February 2014. Completion of the project

by February 2015.

3 – Investors – contractors for the civil works

The tender process to select the investor /contractors for the civil works and the permanent ways is scheduled to take place in 2015

However , the government has already indicated that if no private investors show interest in the civil works in a PPP model than the

Government will go ahead solo with the civil works .

Given the high population density between the cities of Campinas-Sao Paulo and Rio de Janeiro (approximately 35 million) and the

already congested highways and airports linking those cities, the Government sees that there is no better option for more efficient

transportation option considering the environmental and sustainability issues.

Estimated date for the beginning of the operations of the high speed train: July 2020

Brazil - Passenger trains

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Brazil - Other Regional Passenger trains and

main metro projects

• The following 3 new passenger trains are in the design phase for the

infrastructure. Private companies are interested in investing in the construction of

these routes to explore them:

1. São Paulo – Jundiaí – 58 km

2. São Paulo – Sorocaba - 101 km

3. São Paulo – Santos – 80 km

• Metro railway network in the cities of Sao Paulo and Rio de Janeiro are unders

expansion

• Monorail in Sao Paulo and in Manaus are under construction

• Other monorail lines are under analysis.

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Brazil - Local manufacturing capability and imports

• Brazil is home to many global players in rail transportation systems, some of the companies that

have a local presence are ABB, Alstom, Bombardier, Caf, GE, Hitachi, Siemens

• Local 100% Brazilian organizations include manufacturers of many items such as traction

engines, invertors, wagons, car pullers, ticketing systems, weighting systems, cargo handling, fuel

automation, pre-cast items, batteries, turn out systems, electrification and signalling systems,

axles, radiators, braking systems, fastening, seats, sleepers, etc

• In addition to the local manufacturing capability, Brazil is a major importer of products and

services related to railways. In 2010 total imports reached US$ 825 million. With the expansion

of the network there will certainly be an increase of imports.

• There are currently 77 local organizations that represent 98 international suppliers from 18

countries –some of the largest exporters to Brazil are: Austria, Canada, China, Czech Republic,

Germany, Poland, Spain, UK, Italy, South Africa, Poland and the USA. Australia appears as a

supplier of products and services in some cases directly to the railway operators and to

companies that specialize in the refurbishment of locomotives.

.

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Brazil – Possible Market openings for

Australian companies

Australian companies could consider different approaches in projects to win

business, such as :

- As investors, joining investment funds that were implemented targeting the

infrastructure industry or modelling new funds

- Liaising with local organizations to participate in the supply chains

- Engagement with the rail operators

- Engagement with Engineering, Procurement & Construction (EPC) companies

- Engagement with Project Engineering companies

- Engagement with contractors

- Engagement of Australian Rail Industry Association with Brazilian Railway

Industry Associations and Rail Education/Training entities in Brazil and in

Australia

- Engagement with Government Transport policymakers to raise awareness of

Australian expertise and identify new opportunities

India Rail Development and Opportunities 1. Network expansion

• 500 km new lines, 750 km doubling, 450 km gauge conversion targeted in 2013-14

2. Modernisation

Amenities for Rail Users

• Progressive extension of bio-toilets on trains

• Upgraded Ticketing Systems, vending machines and e-ticketing

Station and rail infrastructure upgrading

• Funding to be raised through PPP in 2013-14 for station modernisation and land development

Safety and Security

• Train Protection Warning System on Automatic Signalling Systems; fire and smoke detection systems and related equipment

• Use of fire retardant furnishing materials in coaches

Rail Based Industries

• Railways has announced a modern signaling facility at Chandigarh through PPP route

Clean technologies

• Setting up of Railway Energy Management Company (REMC) to harness potential of solar and wind energy

• windmill plants and solar powered level crossings with solar power

Training & Education

• Youth skills training in rail related trades

• Rail electronics technologies training institute

• Centralized financial management training institute

Research & Development

• railway related research to reduce carbon footprint

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Thailand Rail Infrastructure Program – Major

Components Double Track Railways

Today

4,043 km

(3,685 km single track)

39-60 km/h

11M tonnes / year

45M Pax / year

In 2020

5,097 km

100-120 km/h

> 50M tonnes / year

> 75M Pax / year

Urban Transport

Today

12 hrs from Bangkok

to Chiang Mai by

SRT rapid train

In 2020

410 km

10 lines

5.36M Pax / day

High Speed Train

In 2018

1,447km

4 lines

200 trips / day

30M Pax / year

3.5 hrs to Chiang Mai

Today

80 km

4 lines

0.9M Pax / day

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Rail Projects in Malaysia – Moving Forward

2013 - 2020 2011 - 2017 2013 - 2020 2014 - 2020

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Global Opportunities and drivers for rail

Specific

• Abu Dhabi Metro

• GCC Rail – e.g. training, engineering

• Singapore sleeper replacement

• Thailand – double tracking, metro

• India – Dedicated Freight Corridor, rail depot

enviromental management

• Africa – capacity building, training

• China – technology and equipment partnerships

• Indonesia – PPPs, coal infrastructure

• Vietnam – Hanoi metro

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What makes them Opportunities for Australian Rail?

Australia‟s long experience and “Brand” in Resources, Heavy Haul

• Feasibility and design, simulation modelling

• EPCM

• Operation and asset management

• Training

• Environmental sustainability, safety

• Innovation, R&D

• Making things work reliably, efficiently in extreme conditions, high temperatures, remote locations, with longest and heaviest trains

Metro, light rail

• Engineering, operation, asset management, training

• Tunnelling and other infrastructure

• Innovative solutions to complex problems

Intermodal facilities

And lots of successful cases – so we should have some confidence!!

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Branding, perceptions and promotion

• Leveraging the Australian “brand”

• Joint promotions, national pavilions, missions

• MOUs – e.g. ARA/RISSB and Indonesia on safety

• „Australia Unlimited‟ national brand

• Roundtables, briefings, technical seminars

• Capability marketing documents – e.g. Heavy Haul

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Investigating and pursuing opportunities –

options

• International trade shows

• Tailored individual business programs

• Sharing information and engaging with existing local

partners re international opportunities

• Initial business with international player in domestic

market then partner offshore

• Clustering / partnering with non-competing companies

• Engaging consultants/ Austrade for market research and

partner identification

• Austrade delivered opportunities and relationships

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Investigating and pursuing opportunities –

pitfalls

• High costs of international travel and trade show

participation

• Reactive vs proactive

• Transactional rather than relationship based, lack of

management commitment

• Lack of research, due diligence, cross checking

• Lack of understanding of foreign business environment,

protocols, culture

• Little or no assessment of risks, drain on resources

• Not focusing on own areas of true global competitiveness,

not selling effectively

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What Austrade can offer you:

• opportunity identification and qualification assistance

• video/teleconferencing for relationship building with o/s customers

• comprehensive visit/contact programs using our badge of government

• linkages to global supply chains and third country partners and customers

• inwards and outwards missions

• in-depth briefings on markets and target companies

• interpret business culture and local commercial practice, language support

• Business meeting program arrangement and accompaniment

• remain your “eyes and ears” and provide practical on the ground support

• Export Market Development Grants (EMDG) assistance to qualified

exporters.

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Austrade in rail – accessing global opportunities Our global network can help you to gain access to opportunities across:

Sectors:

- Passenger (including metro and light rail),

- heavy haul,

- infrastructure,

- education & training; and

- Services

- R&D

Markets/regions

- Growth and emerging markets (e.g. Middle East, ASEAN, India, Latin America, Eastern Europe)

- Mature markets (e.g. Western Europe, Japan)

- Third country cooperation – e.g. With companies from Japan, Korea, Europe, Turkey, etc in Asia, Middle East, South America

And use our networks and ‘badge of government’ to facilitate introductions to key influencers and

decision makers, including for third market opportunities.

What is EMDG?

•A key Australian Government financial assistance program for aspiring and current exporters.

•Designed to encourage small and medium sized Australian businesses to develop export markets.

•For applicants that have incurred $20,000 eligible export promotion expenses, EMDG reimburses 50% of

those expenses above a $10,000 threshold

•Provides up to seven grants to each eligible applicant

Who can apply?

Australian-based businesses, individuals, partnerships, companies, statutory corporations, co-ops and

trusts that have:

• carried on an export business in Australia during the grant year

• annual income not more than $50m

• exported or promoted for export eligible goods, most services, intellectual property or know how; or

promoted events held in Australia

• spent at least $20,000 on eligible export promotion activities over the last financial year (or the last two

financial years for first grant)

• no disqualifying convictions

• can satisfy the Grants Entry Requirements (First-time applicants only)

Export Market Development Grants Scheme

How to apply for EMDG? Step One

• Learn about EMDG

• Email us your questions at emdg.help@austrade.gov.au

• Visit www.austrade.gov.au/exportgrants

• Call Austrade on 13 28 78 and ask for your local EMDG office

Step Two - Check your eligibility to apply for EMDG and join mailing list:

www.austrade.gov.au/exportgrants/howtoapply

Step Three - Complete an application form and supporting schedules - available

shortly

www.austrade.gov.au/exportgrants

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How you can help us to help you

• Let us know your capabilities, interests and experience

• Help us to understand your competitive strengths and

reference projects

• Let us know when you are visiting overseas markets and meet

with our offshore colleagues

• Feel free to seek our views re offshore queries and companies

• Keep in touch

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Next steps and events • Let us know if you‟re interested in international business

• Get on board ARA, ICN and Rail Supplier Advocate organised events

• 3-5 October 2013 10th International Rail Equipment Exhibition, Delhi, India

www.ireeindia.com

• October 2013 - MENA Rail Projects, Abu Dhabi, UAE http://www.meedconferences.com/rail

• 5-7 November 2013 – Business on Rails - http://ntexpo.com.br/the-exhibition - Sao Paolo,

Brazil

• 20-22 November 2013 Intermodal India http://intermodalindia.com , Mumbai, India

• 25/26 – 28 November 2013 - AusRail Plus and World Congress on Rail Research – likely

overseas delegations to visit

• February 2014 - Middle East Rail, Dubai, UAE http://www.terrapinn.com/exhibition/middle-

east-rail/index.stm

• CORE 2013 Adelaide – possible overseas delegations

Australia. A Wealth of Opportunities .

Want to discuss further?

For more information, please email or call:

Peter Ironmonger, Trade Adviser, Resources & Infrastructure

Contact: 02 9392 2784

Mobile: 0434 650 404

Email: peter.ironmonger@austrade.gov.au