The Australian Competition and Consumer Commission has decided to grant interim authorisation* to Port Waratah Coal Services Limited to immediately reinstate an amended Capacity Balancing System.
"Reinstating the system is expected to result in significant demurrage savings for the industry," ACCC Chairman, Mr Graeme Samuel, said today.
"Despite recent and ongoing expansion activities at the port, there is still an imbalance between demand and capacity of the Hunter Valley coal chain which has led to a record queue of vessels of around 70 ships returning to Newcastle," he said. "The ACCC is advised that even with the immediate re-introduction of the system, it could take until July to reduce the vessel queue to a more workable length. If the amended system is not reinstated, Australian coal producers could face substantial demurrage** costs as high as A$460 million for 2007."
The ACCC originally granted conditional authorisation to the Capacity Balancing System in 2005, with that approval not due to expire until 31 December 2007. In September last year, however, Hunter Valley coal producers voted to switch off the system for 2007. In order to reduce and manage the large queue that has subsequently reformed, and therefore reduce the resultant high demurrage costs, PWCS now seeks authorisation to reinstate a modified system for the balance of 2007.
"The ACCC's decision comes just two weeks after receiving PWCS' request for approval to urgently reinstate the modified system. The granting of interim authorisation in no way binds the ACCC in its consideration of the substantive application for authorisation. Should authorisation not be granted, producers have the ability to re-schedule vessels and production timetables based on annual demand nominations for the remainder of 2007,"
Mr Samuel said.
The ACCC will continue to consult interested parties about the modified system to inform its consideration of the substantive authorisation application.
More information regarding the application and granting of interim authorisation, including the terms, is available by following the Authorising anti-competitive conduct and Authorisations links on the ACCC's website.