Asset sale affects Centennial's NCIG port capacity

A NEW South Wales Supreme Court decision on Monday will force Centennial Coal to make part of its Newcastle Coal Infrastructure Group port capacity available for Xstrata Coal’s greenfield Mangoola project.

Blair Price

Back in 2007 Centennial sold the Anvil Hill project to Xstrata, which renamed it Mangoola. Xstrata plan to start exporting coal from Mangoola in 2012.

Under the sales agreement, Centennial gave certain undertakings over its interests in the NCIG consortium, which is currently building a new coal terminal at Newcastle’s port.

The independent coal producer said Xstrata undertook to assist it in obtaining additional port capacity through Port Waratah Coal Services’ existing terminal at the port.

“Despite more than a year of negotiations, the parties have been unable to resolve how this would be achieved,” Centennial said.

To try and resolve the matter and also enter into the recent Hunter Coal plan between Hunter Valley coal producers, Newcastle port operators and the state government, Centennial sought a declaration from the state’s Supreme Court that it has fully discharged its residual undertakings under the sales agreement for Anvil Hill.

Centennial said, to date, the matter had been subject to confidentiality restrictions contained in the Anvil Hill sales agreement.

The Supreme Court held that both Centennial’s and Xstrata’s agreed residual undertakings remain on foot for the time being.

“The court’s decision means that Centennial is required, to the extent possible given restrictions in the NCIG agreements, to make port capacity in NCIG available in the future for Xstrata’s Mangoola project (formerly Anvil Hill),” Centennial said.

“Centennial is reviewing the court’s decision and considering its position.”

Centennial supplies most of its coal to domestic power stations, with most of its exports going through Port Kembla.

The producer expects to have sufficient port capacity for the immediate future and said there was no dispute regarding its ability to use its allocation at NCIG, due to be available in 2010, until Mangoola is producing coal, expected no earlier than 2012.

“In the longer term, with the finalisation and implementation of a new NSW government/coal industry port access regime for Newcastle and the potential doubling of the port’s capacity to over 200 million tonnes per annum over the next few years, Centennial remains confident that sufficient port capacity will be available for its growing exports.”