QR National Ltd. (QRN.AU) will continue to work with BHP Billiton Ltd. (BHP) despite plans by the mining giant to build a competing rail line in coal-rich Queensland state, the rail operator's chief executive said Monday.

Lance Hockridge said the plans of its largest coal customer make "absolute sense" but are at an early stage and it would be some time before a new rail operation could be launched.

"We don't expect to do everything in this infrastructure space in Queensland...We believe in competition," Hockridge told analysts during a briefing following the release of the Brisbane-based company's full-year results.

BHP, which like rivals including Rio Tinto PLC (RIO) built dedicated rail systems in iron ore-rich Western Australia, has submitted an initial application to build a rail network from its Queensland coal mines to the coast.

"There are synergies by more closely coupling rail, mine and port," Marius Kloppers, chief executive of the Melbourne-based mining company, said last week. "That is not a reflection on the operators or the owners of the existing parts of that chain, but I think we would very much say that our capability to engineer better outcomes and more proactive decisions is easier in Western Australia where there is one party that needs to take the decision around port, rail and mine."

QR National, privatized by the Queensland government last year and listed on the Australian exchange in November, is Australia's largest rail freight business by tons hauled. It operates and manages some 2,300 kilometers of rail infrastructure in Queensland under a 99-year lease with the state.

Hockridge said QR National has the advantage over prospective rivals of assets in place and the ability to continue expanding its capacity.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

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