You could do worse than extend standard gauge into northern Queensland. Mount isa could maybe benefit from SG and maybe from both east and west.
Unless large scale phosphate or base metal mining begins between Tennant Creek and Mt Isa it is very unlikely there will be a railway between the two Northern Australia mainlines. Darwin is nearly twice the distance from Mt Isa than Townsville and an extra 365mm between the rails is never going to beat the cost of the extra length of the railhaul to Darwin.
Ah, but there is a thing that would be introduced, competition meaning competitive pricing from Darwin Port and also Townsville Port.
Why in Australia do we not have port owners also in the rail business making it a seamless experience for shippers?
RMFE. The mantra of competition trumps basic economics.
The cost of haul is proportional to haul length. First estimate is that cost of haul to Darwin would be about 140% of that to Townsville (~900 km vs ~1300 km). The maximum they could charge for this longer haul is the existing cost to Townsville. Do you think that the profit on the current haul to Townsville would be sufficient to cover the extra costs hauling to Darwin *and* make sufficient profit on the capital invested?
In fact, the economics would be even worse than that. A significant part of the cost of haul is the cost of the infrastructure, including the land. On the route to Townsville, the only capital cost counted is that of the above grade infrastructure; the cost of the land and the earthworks would have long been written off. But that would not be true of the route from Mt Isa to Darwin.
No one would invest money to build a railway from Mt Isa to Darwin on those economics.
If anyone was mad enough to make that investment, all that would happen is that there'd be a short rate war. The operators of the Darwin route would rapidly lose all their money, and the operator of the Townsville route would lose money until the Darwin operators went broke. If they were really unlucky, the Townsville operator would go broke as well.
You might argue that I haven't considered the cost of shipping from the port (Townsville or Darwin) to the customer. Darwin is closer - for example the distance from Darwin to Shanghai is about 3000 nm, vs 4100 from Townsville. True, but costs of sea haulage are so much lower than rail that they wouldn't count. This is why containers still travel by ship from Asia to Sydney/Melbourne rather than to Darwin and then by rail.