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AURIZON Holdings Limited (ASX:AZJ) and Qube Holdings have secured Federal Government approval for the $1.5 billion Moorebank Intermodal Terminal in Sydney.
Sydney Intermodal Terminal Alliance is a consortium between the rail freight operator and logistics company to develop and operate the project.
Aurizon has a 33 per cent stake and its capital contribution is expected to be up to $235 million in FY16.
Aurizon managing director and CEO Lance Hockridge (pictured) says Moorebank is set to become the largest integrated warehouse rail terminal precinct in Australia.
"It will help drive competitive advantage for Aurizon and Qube because of its strategic location, unprecedented scale and the seamless integration of port, rail and road," Hockridge says.
"Coupled with the efficiencies available to greenfield operations, it will reduce logistics costs and provides greater opportunity for a sustained modal shift from road to rail.
"Moorebank provides Aurizon the opportunity to diversify our general freight portfolio into the rapidly growing IMEX (import-export) market, connected by rail to one of Australia's busiest ports."
The first stage of the project is an IMEX facility connected by rail to Port Botany, with an initial capacity of 250,000 containers per year expected to commence in 2017.
The second stage is an interstate freight terminal with initial capacity of 250,000 containers each year, and is expected to be operational in 2019. The project will include associated warehousing.
"It provides clear commercial opportunities for private sector participants, has the potential to transfer a greater share of Australia's freight from road to rail, as well as delivering a range of economic, environmental and social benefits," Hockridge says.
"These are the win-win outcomes this nation needs with long-run and productive freight transport infrastructure."
Aurizon took a strategic stake in 2007, after identifying it as one of Australia's "best-positioned greenfield" sites for a freight precinct.
The consortium must meet planning and environmental conditions on the site before commencing construction, which is expected to be finalised in the first half of FY16.
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