Australia’s Newcastle Port Plan to Help Triple Coal Exports

By Angela Macdonald-Smith

Dec. 12 (Bloomberg) -- Australia’s Newcastle port, the world’s biggest coal-export harbor, will be able to triple shipments from existing levels under a proposal by the state government to end a deadlock on access to port capacity.

The plan will allow the construction of a fourth coal terminal at Newcastle that could provide as much as 90 metric tons a year of additional shipping capacity, bringing in as much as A$23 billion ($15 billion) of export revenue, New South Wales Ports Minister Joe Tripodi said today in an e-mailed statement.

Bottlenecks at Australian ports have helped constrain supplies of the fuel to Asian customers, contributing to record prices earlier this year and increasing costs for mining companies. Prime Minister Kevin Rudd said separately today the rail link to Newcastle, the world’s biggest coal-export harbor, will be expanded to boost export capacity and create jobs.

“Whilst some details need to be sorted, the plan appears to strike a balance between giving existing miners the certainty they need to invest in infrastructure and increase output, and giving new entrants the certainty they need to access the port,” Eileen Doyle, chairwoman of Port Waratah Coal Services Pty, operator of the two existing coal terminals at Newcastle, said in a separate statement.

The plan allowing for the construction of a fourth coal- loading terminal at Newcastle’s Kooragang Island will allow mining companies to commit to long-term contracts for terminal access, Port Waratah said.

Rio, Xstrata

Rio Tinto Group, Xstrata Plc and BHP Billiton Ltd. are among mining companies that ship coal through Newcastle. The proposal is a blend of recommendations by Nick Greiner, an independent coordinator for coal exports through Newcastle, and requirements of the state government and the coal industry.

“We believe this proposal will provide certainty for companies wanting to explore and develop coal resources in New South Wales,” Peter Wilkinson, executive general manager (NSW) of Idemitsu Australia Resources, which mines coal in Australia, said in the statement from Tripodi’s office. BHP, the world’s biggest mining company, said it was “encouraged” by the proposal, while Rio Tinto and Xstrata said it will allow for long-term growth in the industry.

Some A$580 million will be allocated to expanding rail links between the Hunter Valley and Newcastle port to increase capacity for mining companies, Rudd said in Canberra. The work is scheduled to be finished in 2011 and will generate 650 direct jobs.

This forms part of A$4.7 billion Rudd pledged to spend on infrastructure in a bid to prevent the economy from sliding into a recession as the global economy stalls.

The state government and the coal industry now need to make a clear case to Australia’s national competition regulator about the merits of the plan to secure approval, Port Waratah’s Doyle said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net