TRAIN operator El Zorro Transport has ceased trading.
The rail company voluntarily shut down its operations yesterday, blaming the loss of a contract with mining company Iluka Resources and unpaid payments from Cargill for its financial problems.
El Zorro Transport director Ray Evans told The Weekly Times
last week his company had owed Cargill $2 million but had a repayment plan in place.
Mr Evans said Cargill had stopped making payments for work carried out during the previous four weeks, a claim disputed by the grain trader.
A Cargill spokesman said the grain trader was well in advance of its payments to El Zorro Transport.
Mr Evans told The Weekly Times
last week one of the problems with El Zorro Transport was that the trading and accreditation functions of the rail operator sat within the one company.
He said that if he was to run a rail transport company again – and he was confident of doing so – he would separate the trading and accreditation functions.The Weekly Times
understands any rail company wanting to operate in Victoria has to be accredited by the Department of Transport and have public liability insurance of $250 million dollars as two major requirements.
Insurance policy premiums to cover public liability of $250 million costs about $1 million.
Yesterday, Mr Evans also shut down Regional Port Enterprizes Pty Ltd, of which he was sole director and owner.
It had about 60 employees.
Neither RDE or El Zorro have been placed in liquidation.
According to the Australian Securities and Investment Commission documents, both companies are still registered entities.
A rail industry source said El Zorro still had DoT accreditation as a rail operator.
ASIC documents show that on April 30, Regional Port Enterprizes (Aust) Pty Ltd was established, along with Railway Employment Co Pty Ltd.
The sole director and owner of both new companies is Mr Evans’ sister, Pamela Lopez.
The rail industry source said neither of the new companies had DoT accreditation.
Rumours have been circulating about El Zorro’s financial problems for many months but the company has consistently denied it was struggling.
Iluka Resources and Cargill were the company’s two biggest clients.
Cargill leased to El Zorro about 170 rail wagons it had built in China and shipped to Australia in 2009 and 2010.
“We are firmly focused on ensuring that we have operators to move our grain,” a Cargill spokesman said.
“We have contracts with Pacific National and GrainCorp. We are looking at securing longer term rail logistics.”
Another company leasing rolling stock to El Zorro was Consolidated Rail Leasing.
CRL took action in the Supreme Court of NSW two weeks ago to wind up El Zorro.
Other groups are also owed money by El Zorro.
The Castlemaine and Maldon Railway Preservation Society said in a newsletter it had not been paid by El Zorro for the lease of one of its locomotives for nine months, straining its cash flow.