ACCC blesses Hunter export overhaul

THE Australian Competition and Consumer Commission has authorised the capacity framework arrangements of the New South Wales coal industry’s plan to increase exports out of Newcastle’s port and the Hunter coal chain.
ACCC blesses Hunter export overhaul ACCC blesses Hunter export overhaul ACCC blesses Hunter export overhaul ACCC blesses Hunter export overhaul ACCC blesses Hunter export overhaul

Image courtesy of Port Waratah Coal Services

Blair Price

The capacity framework arrangements will replace the capacity balancing system used at the port, criticised as a barrier to further investment in port expansion and for slugging coal producers with hefty demurrage costs from queues of up to 70 unloaded vessels offshore.

Port Waratah Coal Services started executing long-term ship or pay contracts with coal producers this month.

Rival port operator Newcastle Coal Infrastructure Group is in the process of finalising the contracts with its consortium of coal producers for the second stage expanded capacity of its new terminal.

The first stage capacity is expected to be available by March with the new terminal still under construction.

Under the new legal framework for managing coal exports through Newcastle, port operators are allowed to impose an industry levy to their coal company customers in specified circumstances to provide funds for further capacity expansions.

ACCC said there were certain agreed triggers and processes for determining whether and when expansions of PWCS terminals were required.

The new framework also allows PWCS to allocate port capacity under long-term contracts in accordance with the agreement’s nomination and allocation procedures.

For the second stage expansion of NCIG, ACCC said up to 12 million tonnes per annum of port capacity could be allocated to companies outside the NCIG consortium under long-term contracts.

The ACCC’s authorisation for the capacity framework arrangements starts from new year’s day until the last day of 2024.

The commission said there was still work to be completed by the coal industry before the start of 2010.

“For instance, the Capacity Transfer System Working Group continues to finalise the design of a centralised capacity transfer system proposed to operate under the arrangements,” it said.

“Further, the ACCC understands that discussions between the terminal operators and the Australian Rail Track Corporation continue in relation to the operational implementation of contractual alignment across the coal chain.”

By granting authorisation, the ACCC provides immunity from court action for conduct that might breach provisions of the Trades Practices Act, and the competition regulator can review the authorisation at any time.

Years in the making

"For the first time, coal producers have signed long-term contracts with Port Waratah Coal Services to secure capacity at the Port of Newcastle," ACCC chairman Graeme Samuel said.

"This will allow producers and terminal operators to make more accurate and timely investment decisions to expand capacity and provides greater certainty to new entrants.

"The capacity framework arrangements are the result of two years of negotiations between the NSW government and representatives from the Hunter Valley coal industry."

NSW Ports and Waterways Minister Paul McLeay said the landmark authorisation of the Hunter Coal Export Agreement would secure jobs and investment in the region for the next 25 years.

He said the decision gave industry the official go-ahead and the confidence to invest in new infrastructure and mine development.

“Such investment is expected to double export capacity over the next six years, supporting 16,000 existing jobs and generating almost 25,000 new jobs,” McLeay said.

The new legal framework provides protection to small producers and access to new entrants.

Under the plan, PWCS will be able to lease additional government land on Kooragang Island to build a fourth coal-loading terminal, T4, to meet further projected increases in demand.

The feasibility for T4 is underway.

PWCS, NCIG and the Newcastle Ports Corporation signed the agreement earlier in the year on behalf of the Hunter Valley coal producers.

These companies 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.

NCIG is owned by BHP, Centennial, Donaldson, Peabody, Felix and Whitehaven.

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