The state government has reinstated a 10 per cent subsidy on the Mount Isa rail line – but one North Queensland leader says it is a Band-Aid on a worsening situation.

The four-year subsidy will allow companies in the North West Minerals Province companies to carry ore to the Port of Townsville at a cheaper rate.

A phosphate customer moving 0.5 million tonnes per annum of minerals concentrates in a bulk operation between Cloncurry and Townsville would save $2.80 per tonne, or about $1.4m per year and $5.6m over four years.

But Traeger MP Robbie Katter believes the government is “missing the point” when it comes to carting ore on the Mount Isa line.

Mr Katter said the “root cause” of the issue was the “highly constrictive” operating environment imposed on Queensland Rail.

He said the restrictions on the line created “artificial market conditions” which lead to increased prices. Mr Katter said one of the restrictions was that backloading – booking empty space on an already scheduled train – had to be done at a full rate, which made haulage through trucks more competitive.

He said this was leading companies to use the Flinders Highway to move ore to the coast, putting more trucks on the road.

However, North West Phosphate Director of External Affairs Madeline Simmonds said this was a “game changer” for the region. “Lower freight costs and improved certainty around rail access will help attract new investment, support local jobs and strengthen regional supply chains,” she said.

Townsville Enterprise CEO Claudia Brumme-Smith affordable, reliable energy was fundamental to reinsuring mines and processing facilities thrive.

“Lowering the freight costs through today’s rail subsidy announcement will encourage mines and proponents to take trucks off our Flinders highway, not just creating a safer road for visitors and locals but improving efficiencies for those mines and proponents too,” she said.

Transport Minister Brent Mickelberg said lowering transport costs would make rail a more competitive option for the industry, and would improve the freight corridor.

“We know transport costs can be a real pressure on industry in the north and this subsidy will encourage a shift from road to rail, improving safety on our roads and strengthening long-term freight resilience,” he said.

Natural Resources and Mines Minister Dale Last said the Mount Isa line was the “backbone” of the North West.

“We’re backing the Queenslanders who rely on a strong resources sector, with this targeted support coming on top of our capital investment into Glencore’s copper processing facilities in Mount Isa and Townsville, and fast-tracking approvals for Graphinex’s Esmeralda Graphite Project near Croydon,” he said.