ACCC approves phase-in of long term solution to Hunter Valley coal chain constraints

The Australian Competition and Consumer Commission will grant conditional interim authorisation to Port Waratah Coal Services, the Newcastle Coal Infrastructure Group and the Newcastle Port Corporation to begin the phased implementation of arrangements to provide a long term solution to continuing capacity constraints in the Hunter Valley coal chain.

Port Waratah Coal Services can now ask coal producers to nominate their capacity requirements for export coal.  As a result, coal chain system capacity can be modelled and long term contracts entered into that will underpin future investment and the efficient operation of the coal chain.

"The ACCC considers that the proposed arrangements are materially different to capacity balancing schemes previously authorised, with new features starting to introduce efficient commercial incentives across the entire coal chain,” ACCC chairman, Graeme Samuel, said today.”

"The ACCC also notes that the industry, assisted by the NSW Government, has made significant progress in developing long term Capacity Framework Arrangements.  Therefore, the ACCC considers that granting interim authorisation is unlikely to further delay the achievement of a long term solution in the Hunter Valley and in fact will assist it."

The applicants have committed to finalise and execute a suite of documents that will set out the detailed framework for the long term solution by 31 August 2009.

"While recognising the complexity of these arrangements and the substantial efforts of the parties to date, the ACCC maintains its concern that any unnecessary delay in reaching a long term solution imposes significant detriments through forgone coal exports.

"Accordingly, the ACCC will revoke interim authorisation if the Applicants fail to meet their 31 August deadline," Mr Samuel said.

Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.  Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application.

More information regarding the application and granting of interim authorisation, including the reasons for the ACCC's decision, will be available by following the Public registers link on the ACCC's website: www.accc.gov.au.