In a groundbreaking agreement, P&O Trans Australia (POTA) will operate its own engines and rolling stock on the Queensland Rail-owned line between Mount Isa and Townsville.

Until now only QR has used the rail line.

The memorandum of understanding, signed yesterday, will help steer negotiations worth about $40million in the first year of operation and up to $3billion during the 20 year life of the agreement.

Legend president and CEO Joseph Gutnick cited the transport company’s commitment to flexibility as a key factor in the appointment.

“This is a staged project, commencing late 2009/early 2010 with an annual volume of between 0.5 and 1 million tonnes per annum,” Mr Gutnick said.

“With the construction of several key components of infrastructure this will rapidly increase to up to 5 million tonnes per annum.”

The agreement covers road cartage of phosphate from D-Tree and Paradise North tenements to the rail head in Mount Isa, rail haulage from Mount Isa to the port of Townsville and various storage and material handling tasks.

It was too early in the project to determine where storage and loading facilities would be built and what roads, if any, would been to be changed, Mr Gutnick said.

“This is still under investigation but will be made public when finalised,” he said.

Mr Gutnick hopes to start operations late this year or early next but a number of variables including the wet season meant exact dates cannot be set.

However, Legend will upgrade the mine access road making it suitable for type-2 road trains and is negotiating with the Department of Main Roads about the Barkly Highway.

Mr Gutnick said that Legend had been in extensive negotiations with the QR Network, the below rail (track) manager on the Mount Isa to Townsville network and he was confident that capacity would be made available.