TasRail missing out on revenue due to bauxite mine's slow start

Tasmania's state-owned rail operator is missing out on revenue as the operator of a new bauxite mine near Campbell Town fails to find buyers.

During government business scrutiny hearings, TasRail management revealed Australian Bauxite had fallen far short of supplying its contracted volumes for transport.

The mining company, chaired by former premier Paul Lennon, opened the mine earlier this year with plans to produce about 400,000 tonnes of ore a year.

TasRail chairman Bob Annells said TasRail has carted just 35,000 tonnes, which remained sitting at Bell Bay.

Despite breaches of the contract Mr Annells said TasRail had told Australian Bauxite it was prepared to "cut you some slack up front" because it supported the project.

"It has not started as we would've wanted or they would've wanted, they have not secured their first shipment," Mr Annells said.

He did not specify how much revenue TasRail had missed out on because of Australian Bauxite's slow start.

Last month, Australian Bauxite announced a deal with Mumbai-based company Rawmin Alliance to purchase 4.7 million tonnes over the next five years, but it was unclear when the first shipment would take place.

Earlier in the hearings TasRail conceded a 40-year deal with Tasmania's largest freight mover, Toll Group.

Mr Annells told the committee they had no choice but to sign a long-term haulage deal with Toll in order to secure the operation as a tenant at the Brighton transport hub.

He said he would have preferred a shorter contract, but Toll was in a stronger bargaining position.

"The arrangement that was put in place after much difficult negotiations with a very difficult partner is a back-to-back haulage agreement that mirrors the lease agreement," he said.

He was tight-lipped about the terms of the deal.

State Opposition Leader Bryan Green was concerned the length of the deal would make it more difficult for TasRail to become profitable.