Port of Newcastle to reduce charge for Glencore

8 October 2018

The ACCC has finalised its arbitration of a dispute between Glencore Coal Assets Australia Pty Ltd (Glencore) and Port of Newcastle Operations Pty Ltd (PNO) about terms and conditions for accessing the ‘declared’ shipping channel service at the Port of Newcastle.

The ACCC has determined that PNO should reduce its current charge for ships entering the port to carry Glencore’s coal by around 20 per cent to $0.61 per gross tonne (GT).

The port provides the only commercially viable means of exporting coal from the Hunter Valley region in New South Wales.

In January 2015, PNO increased the charge for coal ships entering the port by around 40 per cent to $0.69 per GT.

In November 2016, Glencore notified the ACCC of a dispute with PNO about the price increase and requested the ACCC to arbitrate. Since then, PNO has increased the charge to its current 2018 price of $0.76 per GT. 

In the course of the arbitration, PNO submitted to the ACCC that a charge of $1.3643 per GT for Glencore's use of the Service would be consistent with a proper application of the section 44X factors. In contrast, Glencore submitted that the charge should be reduced to $0.41 per GT.

The main task for the ACCC was establishing the value of assets used to provide the ‘declared’ shipping channel service. Charges for ships entering the port were then derived from this valuation.

A key part of the dispute was whether PNO should be able to charge for dredging of the shipping channel that had been undertaken or funded by users of the port. The ACCC excluded these user funded amounts from the costs that PNO could recover and determined Glencore should pay a lower price, backdated to 2016.

“PNO proposed large increases to the current price, but the ACCC found that a reduction in the price for using the shipping channel was appropriate,” ACCC Commissioner Cristina Cifuentes said.

“The ACCC also determined appropriate mechanisms for future price changes, and decided on certain non-price terms and conditions of access where the parties had been unable to reach an agreement.”

The ACCC’s arbitrated terms and conditions of access are operative until the ‘declaration’ of the shipping channel service at the port expires on 7 July 2031.

The ACCC’s Arbitration Report, Final Determination and Statement of Reasons, are available at Determination of the access dispute between Port of Newcastle Operations and Glencore Coal Assets Australia

Background

The ACCC has a role in arbitrating access disputes for services which have been ‘declared’ under Part IIIA of the Competition and Consumer Act 2010 (Cth).

The shipping channel service at the port, defined as ‘the provision of the right to access and use the shipping channels (including berths next to wharves as part of the channels) at the Port, by virtue of which vessels may enter a Port precinct and load and unload at relevant terminals located within the Port precinct and then depart the Port precinct’, was declared under Part IIIA by the Australian Competition Tribunal on 16 June 2016.

Additional information: National access regime under Part IIIA

This media release was amended on 11 October 2018.

Release number: 
202/18
ACCC Infocentre: 

Use this form to make a general enquiry.

Media enquiries: 
Media team - 1300 138 917