Lance Hockridge.

Lance Hockridge. Photo: Dean Osland

QR NATIONAL chief executive Lance Hockridge has warned against Australian investors taking a ''Chicken Little'' approach to the outlook for demand from China for resources such as coal.

His warning against Australia becoming too pessimistic came as the Queensland government yesterday began selling more than half its stake in Australia's largest rail operator.

The government will sell a total of $1.5 billion of shares in QR National and use the proceeds to pay down debt.

It will reduce the government's stake from almost 34 per cent to 16 per cent.

The deal includes a sale of $1 billion of shares via a selective buyback to QR National at $3.47 a piece, as well as a $500 million placement yesterday to a small number of cornerstone investors.

The sell-down removes a significant portion of the share overhang from the government's cornerstone stake, which has weighed on the stock since QR National was floated in late 2010. Shares in the coal-haulage company surged more than 5 per cent yesterday to a five-month high of $3.65.

While the resources industry was experiencing an ''undoubted slowdown'', Mr Hockridge said Australia needed to be careful not to ''get entirely into Chicken Little territory''.

''Whilst there is a slowdown, the fundamentals are sound,'' he said.

''As much as it would be unwise to predicate the future on an unreasonably optimistic view of the world, equally, it would be unwise to predicate the future on an unreasonable pessimistic view of the world.''

QR National indicated in August that its ''best guess'' for the amount of coal it would haul in 2012-13 would be between 195 million and 205 million tonnes, compared with 186 million tonnes last financial year.

While the government will still be the largest shareholder, Mr Hockridge said the sell-down would help remove investor concerns over the past two years about the intention to eventually sell.

''Removing more than half of the government's shareholding is a big, big swing factor with respect to questions about the so-called overhang,'' he said.

A Macquarie Equities analyst, Ian Myles, said investors had reacted positively to the sell-down because it was earnings-accretive for QR National and removed a degree of the share overhang.

''There is still plenty of balance sheet capacity in that company. If the resources sector does slow down, this company does have the capability to remove more shares when it says it is appropriate.''

Queensland Treasurer Tim Nicholls said the government would continue to review its investment in QR National but had ''no current intention'' to sell any of its remaining shares in the near term.

The buyback will need the approval of QR National shareholders. The company has postponed its annual meeting on November 7 to November 21 in order to give shareholders time to consider the deal.

QR National has spent about $50 million acquiring 14.5 million shares since announcing a buyback in August. That buyback will be suspended, and eventually replaced by the selective buyback announced yesterday, provided it wins the approval of shareholders.