Newcastle Port shake-up

A FOURTH terminal, provisions for newcomers and long-term contracts have been touted as the answer to Newcastle Port’s supply chain troubles under a new plan which could potentially see coal exports doubled.

Angie Tomlinson

On Friday, the New South Wales government released its terminal access framework, a plan put together from recommendations by former NSW premier Nick Greiner, the state government and the coal industry.

Friday’s plan is consistent with a joint application made to the Australian Competition and Consumer Commission last month by Port Waratah Coal Services and the Newcastle Coal Infrastructure Group.

The plan was lauded by Newcastle port operator PWCS which said the framework would stimulate Hunter Valley coal handling infrastructure expansion.

“This is a highly significant and historic plan that looks set to finally iron out a multitude of inefficiencies that have hampered the Hunter Valley coal chain for so many years,” PWCS chair Eileen Doyle said.

“Whilst some details need to be sorted, the plan appears to strike a balance between giving existing miners the certainty they need to invest in infrastructure and increase output, and giving new entrants the certainty they need to access the port.”

Under the plan PWCS will be given the opportunity to lease additional government land and build a fourth coal loading terminal on Kooragang Island.

To give producers export certainty and a solid foundation for future infrastructure investment along the entire coal chain, producers will be given the ability to commit to long-term terminal contracts.

For the industry’s newcomers, a trigger is proposed whereby new producers and existing producers wanting to expand give between two and four years notice, enabling new infrastructure to be built to cater for them.

A pro-rata levy is proposed on all coal exports to cover the cost of any terminal expansion shortfalls, where contracts do not align exactly with construction needs.

Larger producers will be able to have their contracts compressed up to 5% per year if PWCS expansions are delayed or fall short of targeted capacity, but smaller producers exporting less than 5Mtpa would not be subjected to compression.

Doyle said there was an urgent onus on the state government and the coal industry to demonstrate to the ACCC that the plan can work, with a view to having the ACCC authorise approval for interim access arrangements for the early part of next year.

PWCS general manager Graham Davidson said the new plan would see PWCS remain an open access terminal.

“It’s in everyone’s interests for both loaders to expand as quickly as possible to cater for incumbent and new producers, and it now looks as if the pieces are finally falling into place to make that possible,” he said.

“This plan would add a massive dose of badly needed commercial reality to the coal chain.”

On Friday, the federal government announced it would commit $A580 million to expand capacity along the rail corridors connecting Hunter Valley coal mines with Newcastle Port, a move praised by the Minerals Council of Australia.

“The MCA has long advocated the need for efficient and effective export corridors to maintain Australia’s international competitiveness and there has been no better exemplar of the problems with some of Australia’s integrated supply chains than the Hunter Valley coal chain,” MCA said.

“In the midst of the current downturn, it is critical that export impediments and supply constraints are removed to ensure business is able to fully capitalise on an expected re-correction in global economic conditions in the mid-term.”