ACCC backs cut coal queue at Newcastle

ACCC backs cut coal queue at Newcastle

A NSW coal moving company has been granted an authorisation that will cut the long queue of ships off Newcastle and save the coal industry around $175 million, the consumer watchdog says.

The Australian Competition and Consumer Commission (ACCC) has given the final tick of approval for Port Waratah Coal Services (PWCS) to reinstate the so-called counter balancing system (CBS) for getting coal onto ships.

Producers are charged fees – known as demurrage – when vessels endure an unduly long wait for cargo. The queue off Newcastle is currently as much as 70 vessels per day.

ACCC chairman Graeme Samuel said PWCS estimated it would take until July to cut the queue to a more workable level using the reinstated, amended CBS.

“Reinstating the system is expected to result in significant demurrage savings for the industry for the remainder of 2007,” he said.

“PWCS estimates the size of these savings could be upwards of $175 million.”

Mr Samuel rejected criticism that the CBS, which Hunter Valley coal producers last year voted to switch off, had reduced coal production and relieved the pressure on the industry to invest in infrastructure to expand capacity.

“Any limits on production levels at individual mines are a factor of the limited capacity of the coal chain, and not the reinstatement of the capacity balancing system itself,” Mr Samuel said.

“If there was no system in place, the coal chain would not be able to export more coal and producers would need to reduce production as vessels wait even longer in the queue to load coal and to avoid excess stockpiling at mines.

“The ACCC is also satisfied that reinstating the amended system will not constrain export growth.”

Under the CBS, Hunter Valley producers have had their allocations cut and now get a proportionate share of the available capacity of the coal chain – transportation by road or rail from mines to the port and loading onto ships.

The cuts have angered some producers and have been blamed for job losses in the industry.

The Rio Tinto-owned producer Coal and Allied said the cut in allocations were behind its axing of 250 contractor positions from its Hunter Valley mining operations earlier this month.

But unions say Rio Tinto, which also part-owns Port Waratah, orchestrated the cuts and took advantage of the CBS to restructure Coal and Allied.

Mr Samuel said an imbalance remained between the amount of coal producers wanted to export and the infrastructure capacity for moving coal from mines onto ships, despite a lift in the port’s capacity to 102 million tonnes a year.

The NSW government has approved plans by a consortium of mining companies to build a new $922 million terminal at the port to increase capacity and boost exports by $1 billion, but it is not expected to be operational until the second half of 2009.

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