Newcastle Port quota extended

WITH the Hunter Valley coal producers unable to agree on a long-term solution to a constrained coal chain, the Australian Competition and Consumer Commission has stepped in and extended the current capacity balancing system at Newcastle Port into 2008 as a short-term solution.
Newcastle Port quota extended Newcastle Port quota extended Newcastle Port quota extended Newcastle Port quota extended Newcastle Port quota extended

Port Waratah Coal Services.

Angie Tomlinson

The ACCC yesterday granted interim authorisation to applications from Newcastle Port Corporation and Donaldson Coal for the CBS - designed to allocate port capacity to coal producers in proportion to their expected production levels.

Without a system the industry is concerned the queue of ships waiting to be loaded will increase, giving rise to increased demurrage and escalating costs.

While it has granted interim authorisation, the ACCC has previously raised concerns that the operation of the system on a long-term basis may hinder the development of an agreed solution to the problem of constrained capacity within the Hunter Valley coal chain.

The ACCC yesterday reiterated it was "imperative" that industry worked together to find a long-term solution.

It also said that while it did approve the current scheme, this did not mean it would necessarily approve the scheme for an extended period.

The ACCC expects to issue a draft determination in relation to applications from Newcastle Port Corporation and Donaldson Coal early in 2008 and will consider whether interim authorisation should continue.

The ACCC's decision follows its rejection last week of a request by the port operator and rail providers for interim authorisation for a new scheme which would have allocated capacity on the basis of rail and port contracts.

The ACCC rejected the interim request noting that it was a significant change to the current scheme and had the potential to permanently and significantly affect individual producers.

Port Waratah Coal Services, which yesterday agreed to continuation of the CBS despite being one of the applicants behind the proposal rejected by the ACCC last week, said it hoped a solution could be agreed upon by mid next year to serve the coal chain until mid-2010.

"The rollover of the CBS into 2008 is by no means a permanent solution," said PWCS general manager Graham Davidson.

"However, it is a step towards reaching consensus on a coal allocation protocol that is perceived to be fair by the industry.

"There is still a lot of work to be done in terms of solving infrastructure constraints in the Hunter Valley coal chain."

Davidson said recent discussions between PWCS and the New South Wales Government had canvassed appointing an independent figure or panel to arbitrate on how coal export allocations are decided.

"PWCS believes that more independence is required to add rigour and transparency to the process of deciding coal export nominations and allocations, in a manner considered fair to all players," Davidson said.

"PWCS is hopeful that the Hunter coal industry and the NSW Government can give strong consideration to appointing a prominent figure or panel to achieve this.

"This would enable PWCS to focus on its core objective of loading coal and continuing its expansion agenda."