ACCC approves Newcastle overhaul

NEWCASTLE port operators can start asking coal producers to nominate export estimates now that the Australian Competition and Consumer Commission has approved the new long-term export plan for the port.

Blair Price

To help overcome problems with managing coal exports out of Newcastle, key Hunter Valley coal industry players submitted a joint application – called the Hunter Coal Plan – to the ACCC in June.

ACCC has now granted interim authorisation to Port Waratah Coal Services, the Newcastle Coal Infrastructure Group and the Newcastle Port Corporation to start the phased implementation of arrangements in the plan.

The authorisation is necessary to make sure the port operators and other parties are immune to potential legal risks arising from competition provisions of the Trade Practices Act.

ACCC said that PWCS could now ask coal producers to nominate their capacity requirements for export coal.

The government agency said this allowed for the modelling of coal chain system capacity and the introduction of long-term contracts to underpin future investment along with the efficient operation of the coal chain.

"The ACCC considers that the proposed arrangements are materially different to capacity-balancing schemes previously authorised, with new features starting to introduce efficient commercial incentives across the entire coal chain,” ACCC chairman Graeme Samuel said.

"The ACCC also notes that the industry, assisted by the New South Wales government, has made significant progress in developing long-term capacity framework arrangements.

“Therefore, the ACCC considers that granting interim authorisation is unlikely to further delay the achievement of a long-term solution in the Hunter Valley and, in fact, will assist it."

ACCC said the applicants of the plan had committed to finalise and execute a suite of documents that would set out the detailed framework for the long-term solution by August 31.

"While recognising the complexity of these arrangements and the substantial efforts of the parties to date, the ACCC maintains its concern that any unnecessary delay in reaching a long-term solution imposes significant detriments through forgone coal exports,” Samuel said.

"Accordingly, the ACCC will revoke interim authorisation if the applicants fail to meet their August 31 deadline."

PWCS said the long-term plan would allow it to secure 10-year contracts with its coal-producing customers, giving the industry urgently needed clarity over how much coal can be exported over the long term.

“This moves the coal chain away from the current practice of ad hoc and unreliable investment planning and provides a foundation upon which coal chain stakeholders can make informed infrastructure investment decisions,” PWCS said.

“This, in turn, would ensure that adequate infrastructure is built at the right times to maximise exports and eliminate long vessel queues.”

The port operator said there was now an onus on the NSW government and the Hunter Valley coal industry to sign off on the intricate details of the plan by August 31.

“It is extremely encouraging that the Hunter coal industry has taken another big step towards achieving far-reaching reform,” PWCS general manager Graham Davidson said.

“The NSW government and the industry have put enormous work into getting this far.”

NSW Ports Minister Joe Tripodi welcomed the ACCC’s decision.

“The NSW government and Hunter coal industry have worked long and hard to plan suitable export access arrangements at the Port of Newcastle,” Tripodi said.

“This approval will allow orderly management of coal exports and any awaiting vessels while the ACCC considers its final decision.

“It will also assist in making a smooth transition from the current system to the long-term solution for coal exports.”

Under the Hunter Coal Plan, PWCS will be able to lease additional land from the state government and build a fourth coal terminal on Kooragang Island.

The producers that are part of the Hunter Coal Plan are BHP Billiton’s Hunter Valley Energy Coal, Coal & Allied, Xstrata Coal, Anglo Coal Australia, Integra Coal (Vale Australia), Peabody Pacific, Centennial Coal, Austar (Yancoal Australia), Felix Resources, Gloucester Coal, Whitehaven Coal, Donaldson Coal, Bloomfield and Idemitsu.

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