Coal producers allowed to collectively bargain with Port of Newcastle Operations

27 August 2020

The NSW Minerals Council and ten coal producers will be allowed to collectively negotiate the terms and conditions, including price, of access to the Port of Newcastle for the export of coal and other minerals, under an ACCC authorisation granted today

The ACCC has authorised these arrangements until 30 September 2030.

Port of Newcastle Operations (PNO) offers coal producers a 10-year deed for access to the port. The mining companies sought approval to collectively negotiate the terms and conditions of this deed with PNO, and discuss and negotiate industry-wide issues, such as proposed capital expenditure at the port and the allocation of costs.

“The ACCC believes that collective bargaining is likely to generate public benefits, including enabling coal producers to have greater input into the terms and conditions of access, and increasing transparency around capital expenditure plans and cost allocation at the port,” ACCC Commissioner Stephen Ridgeway said.

“This would ultimately provide greater certainty for the delivered price of Hunter Valley coal, more timely resolution of industry-wide issues, and facilitate more efficient investment decisions across the industry.”

Any collective bargaining will be voluntary for all parties, including PNO.

The mining companies did not seek, and the ACCC’s authorisation does not grant, approval for the mining companies to boycott the port, nor to share sensitive commercial information about customers, marketing strategies, coal volumes or future projections.

“Despite the broader history of access and regulatory disputes at Port of Newcastle, these collective bargaining arrangements are similar to many other arrangements that the ACCC has authorised in this and other industries,” Mr Ridgeway said.

“Collective negotiation can be mutually beneficial for all parties. ACCC authorisation gives coal producers and PNO an opportunity to resolve long running disputes about the terms and conditions of access to the port.”

“Coal producers and PNO can opt in or out of collective negotiations at any time. The ACCC is confident that producers will chose to do so if it is in their commercial interests,” Mr Ridgeway said.

Further information about the ACCC’s decision is available here: New South Wales Minerals Council.

Background

ACCC authorisation provides statutory protection from court action for conduct that might otherwise be in breach of the competition provisions of the Competition and Consumer Act (CCA). Broadly, the ACCC may grant final authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.

The 10 coal producers who export coal through the Port of Newcastle and are applicants to the application are Glencore Coal, Yancoal Australia, Peabody Energy Australia, Bloomfield Collieries, Centennial Coal, Malabar Coal, Whitehaven Coal, Hunter Valley Energy Coal, Idemitsu Australia, and MACH Energy Australia.

The coal producers are likely to be considered competitors for access to the Port of Newcastle. Accordingly, they seek authorisation to collectively negotiate and discuss the terms of access to the Port of Newcastle, including price, with PNO.

At the end of 2019, PNO invited coal producers, vessel agents, vessel operators and FOB coal consignees to enter into bilateral long term discounted pricing arrangements (the Deed), which includes discounted navigation service charges and wharfage prices set by PNO. The term offered by PNO under the Deed is ten years.

Following the privatisation of the Port of Newcastle by the NSW Government in 2014, PNO operates the port under a long term lease arrangement from the NSW Government. PNO is the trustee for the Port Of Newcastle Unit Trust, which is jointly owned by investors The Infrastructure Fund, and China Merchants Port Holdings Company.

NSW Minerals Council recently lodged an application with the National Competition Council for declaration of the channel services at the Port of Newcastle under Part IIIA of the CCA. The National Competition Council is currently seeking submissions on this separate declaration application. The Applicants intend to collectively negotiate with PNO subsequent to any declaration of the Port’s channel services during the period of ACCC authorisation.

Release number: 
180/20
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