The Australian Competition and Consumer Commission has granted interim authorisation* to Port Waratah Coal Services (PWCS) to conduct a coal loading services demand reduction auction, ACCC Chairman, Mr Graeme Samuel, said today.
"Running the auction is one of the first steps to implement a medium term scheme designed to address the imbalance between the demand for coal loading services at the Port of Newcastle and the capacity of the Hunter Valley coal chain.
"With high international coal prices, Hunter Valley coal producers want to export more coal than the coal chain can deliver at present. The scheme proposed by PWCS essentially reduces the amount of coal each producer can export through the port on a pro rata basis so that the overall amount handled by the port better matches the amount that can be delivered by the coal chain. This is designed to substantially reduce demurrage costs that arise from an excessive queue.
"The ACCC granted authorisation to a similar (short term) scheme in July this year, to address the significant queue (more than 40 vessels) sitting off the port. This authorisation will expire at year's end.
"The medium term scheme is seen as the next stage in the transition process for a more efficient coal chain in the Hunter Valley in the long term. For the new scheme to take effect from 1 January 2005, PWCS wants to run the auction soon to enable coal producers sufficient time to implement the outcomes.
"Once initial capacity allocations are made, coal producers will have opportunity through the auction to trade capacity with each other. This should lead to a more efficient allocation of scarce capacity.
"Granting interim authorisation to conduct the auction provides coal producers with greater commercial certainty regarding allocations for 2005.
"The granting of interim authorisation in no way binds the ACCC in its consideration of the substantive application for authorisation. PWCS has committed to not implementing any financial consequences of the auction until final authorisation has been granted. Further, should authorisation not be granted, any allocation transfers for 2005 that would have occurred through the auction will be unwound".
The ACCC will continue to consult with interested parties to inform its consideration of the substantive application for authorisation.
More information regarding the application and granting of interim authorisation, including the terms, is available by following the Authorising anti-competitive conduct and Authorisations links on the ACCC's website.
* The ACCC has the function, through the authorisation process, of adjudicating on certain anti-competitive practices that would otherwise breach the Trade Practices Act 1974. Authorisation provides immunity from court action, and is granted where the ACCC is satisfied that the practice delivers a net public benefit. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application. The ACCC's decision in relation to interim authorisation should not be taken to be indicative of whether or not final authorisation will be granted by the ACCC.