ACCC reinstates interim approval following Hunter Valley coal industry agreement

The Australian Competition and Consumer Commission today reinstated interim authorisation to Port Waratah Coal Services, the Newcastle Coal Infrastructure Group and the Newcastle Port Corporation, including for the port's coal queue capacity management system. This system will allow better management of the queue of ships waiting to load Hunter Valley coal.

After a three week delay, the parties have now all executed their respective legal documents that set out the detailed framework for the long term solution.
Interim authorisation allows the parties to undertake the phased implementation of arrangements to provide a long term solution to continuing capacity constraints in the Hunter Valley coal chain.

"The execution of these documents represents a significant milestone for the Hunter Valley coal industry," ACCC acting chairman, Peter Kell, said today.

"The terminal operators will now be able to ask producers to provide binding nominations for their long term terminal capacity requirements.  As a result, coal chain system capacity can be modelled and long term ship or pay contracts can be entered into for the first time, which will underpin future investment and the efficient operation of the coal chain.

"There is still a program of work to be completed by the industry to allow the long term solution to be fully implemented across the coal chain by January 1 2010.  In particular, the ACCC considers the resolution of remaining contractual alignment issues needs to be a priority for the industry."

The ACCC originally granted interim authorisation to Port Waratah Coal Services, Newcastle Coal Infrastructure Group and the Newcastle Port Corporation in July 2009 subject to a condition that the applicants execute their respective Capacity Framework Documents by August 31 – a deadline they had set.

The parties advised that one party failed to execute its documents by the deadline.  Accordingly, the ACCC revoked the previous interim authorisation.

The ACCC encouraged the industry to resolve outstanding issues, noting that it was open for them to seek interim authorisation again once all of the Capacity Framework Documents were executed.

Since then, the applicants amended the proposed long term arrangements to reflect mechanical and practical changes arising out of negotiations between the parties.

On September 17 the parties confirmed that all documents had been signed and asked for interim authorisation to be granted to the amended Capacity Framework Arrangements.

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 amended application and the ACCC's latest interim authorisation decision will be available from the ACCC's website: www.accc.gov.au/AuthorisationsRegister.