Hunter’s biggest miner slugged $50m more in demurrage

<p>The congested Hunter coal chain cost its largest producer $50m more in demurrage alone last year, with the Rio Tinto-owned company recording a 70.7% fall in pre-tax profit.</p> <p>Coal &#38 Allied said the congestion had also caused a substantial net drawdown of its coal inventory, meaning that the blow to its profit was $60m more than in 2006.</p> <p>Figures released yesterday (Tuesday, January 29) said the pre-tax profit of $79.3m was also adversely-affected by the stronger Australian dollar and higher interest costs on debt levels.</p> <p>The coal chain was so congested that C&#38A had to buy coal at spot prices to meet its 2007 contract commitments.</p> <p>The company’s profit after tax was $109.8m, due to a one-off payment of $46m.</p> <p>Substantial cutbacks to port allocations have caused a fall in the number of queuing bulk carriers anchored off the port of Newcastle, with numbers now down to levels not seen since 2006.</p> <p>But the cutbacks, which have restricted vessel arrivals in an attempt to cut demurrage, have slashed the total volumes being exported, further eating into the bottom line.</p> <p>Coal &#38 Allied alone has seen production drop by 4.9m tonnes to 23.9m tonnes, at a time of rapid ramping up of global coal production.</p> <p>The fall in volume is mostly due to port allocation cutbacks and also a fall in domestic sales.</p> <p>C&#38A said it welcomed the appointment of former New South Wales premier Nick Greiner as independent facilitator of the Hunter coal chain.</p> <p>Mr Greiner’s appointment is designed to find a medium to long-term solution to the congested coal chain, described by those on the ground as &#8220a mess&#8221.</p> <p>Meanwhile, as supply concerns in China and South Africa worsened, thermal coal prices at Newcastle jumped to a record high of US$102 a tonne this week.</p> <p>The benchmark price for Asian coal has risen nearly US$9 from a week earlier, data from electronic trading platform globalCOAL showed on its week-to-date index.</p> <p>China has banned coal exports to help address its worsening northern winter power crisis, but Chinese ports were still loading coal in definance of the ban, <em>Lloyd’s List</em> reported in London today.</p> <br />