The Australian Competition and Consumer Commission has issued a determination, granting authorisation* to applications from Newcastle Port Corporation and Donaldson Coal Pty Limited to operate a capacity balancing system at the Port of Newcastle until 31 December 2008.
The industry is concerned that without a system for the allocation of capacity during 2008, the queue of ships waiting to be loaded will increase giving rise to significant costs.
"While the ACCC has granted authorisation, the ACCC remains concerned that the continued operation of the CBS has the potential to impact upon investment in the coal chain and reduce incentives for industry to develop a long-term solution," ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC considers that this may ultimately result in several billion dollars of lost export revenue. For these reasons the ACCC has significant doubts about whether the Proposed System is likely to result in a net public benefit beyond December 2008."
In issuing its draft determination in February this year, the ACCC identified a number of underlying issues that were affecting the operation of the Hunter Valley Coal Chain. These underlying issues include the common user provisions of PWCS's Kooragang Lease, which appear to be restricting its ability to enter into long term, binding contracts to underpin investment, and service providers contracting based on assessments of individual capacity without reference to the coal chain as a whole. The ACCC also remains concerned that industry and governments have been slow in addressing these underlying issues.
"However, the ACCC is of the view that the proposed capacity balancing system is likely to result in a net public benefit till 31 December 2008. In particular, the proposed system is likely to have the effect of minimising the vessel queue at the Port of Newcastle, which has the potential to save industry a significant amount in deadweight demurrage costs."
More information regarding the applications for authorisation and a copy of the determination is available at the ACCC website by following the links to Public registers and Authorisations and notifications registers and Authorisations register.