AusRAIL, Market Sectors

ACCC to allow auction of Newcastle coal terminal capacity

<p>The Australian Competition and Consumer Commission is to allow Port Waratah Coal Services to go ahead with a new medium-term scheme to ease congestion at the port of Newcastle.</p> <p>The new plan will allow Hunter Valley coal producers to swap allocations of capacity at the terminal through an auction to be run by PWCS. </p> <p>The competition watchdog allowed a short-term scheme based on pro-rata allocation of limited rail and terminal space to go ahead in July to clear vessel queues off the port. </p> <p>The authorisation for the earlier scheme expires at the end of the year, and the new medium-term plan will come into force in January.</p> <p>The commission said the auction, which PWCS wants to hold very soon, "will lead to more efficient allocation of scarce capacity. </p> <p>"Granting interim authorisation provides the coal producers with greater commercial certainty regarding allocations for 2005," it said. </p> <p>But the commission has warned that the interim authorisation of the auction could still fail to become permanent, which would mean the unwinding of any transfers of capacity which have taken place. </p> <p>Newcastle is limited by the transport capacity of the Hunter Valley rail network, which is for 80m tonnes against port capacity of 89m tonnes.</p> <p>In the present minerals boom, this means that coal companies have been able to sell far more than they can ship. </p> <p>The result was a month-long queue of over 50 ships off Newcastle earlier this year, with an estimated $300m in added demurrage costs for the coal industry.</p> <p>The commission agreed to the capacity allocations to allow the queue to be reduced, with the auction scheme a further move to cement capacity sharing in place until the present upgrade of the rail network is finished. </p> <br />