The Australian Competition and Consumer Commission has issued a draft decision proposing to approve the Capacity Framework Arrangements which form part of the integrated long term solution to the ongoing capacity constraints in the Hunter Valley coal chain.
"For the first time, coal producers will be able to sign long term contracts to secure export capacity at the Port of Newcastle," ACCC chairman, Graeme Samuel, said today. "This will allow producers and terminal operators – namely, Port Waratah Coal Services and the Newcastle Coal Infrastructure Group – to make more accurate and timely investment decisions to expand capacity.
"The port arrangements also provide a framework that will help producers align their contracts with the track and rail operators in the Hunter Valley, thereby creating an environment more conducive to efficient investment across the entire Hunter Valley coal chain.
"The arrangements also support centralised modelling of contractable coal chain capacity and monitoring of coal chain performance standards, which should prevent large vessel queues forming offshore in the new contracting environment," Mr Samuel said.
The Capacity Framework Arrangements are the result of two years of negotiations between the NSW Government and representatives from the Hunter Valley coal industry. Port Waratah Coal Services, Newcastle Coal Infrastructure Group and the Newcastle Port Corporation requested authorisation of the arrangements.
Prior to these long term arrangements, the ACCC was asked to authorise various transitional measures designed to balance the demand for coal loading services at the Port of Newcastle with the volume of coal the Hunter Valley coal chain could deliver. Over time, the ACCC became increasingly concerned that the industry was not fixing the underlying problems in the Hunter Valley.
Under interim authorisation from the ACCC, the applicants have been phasing in the Capacity Framework Arrangements over the second half of 2009, to be fully operational from 1 January 2010.
Another critical component of the long term solution in the Hunter Valley is ARTC's proposed rail network access undertaking, which is currently being considered under a separate process by the ACCC.
The ACCC is advised there are ongoing operational discussions between the two terminal operators and the Australian Rail Track Corporation about contractual alignment. The ACCC strongly encourages the industry to continue to work together on this issue. The ACCC invites further submissions from the industry on the progress of these discussions to inform its final decision.
The ACCC's draft determination will be available from the ACCC website, www.accc.gov.au/AuthorisationsRegister. The ACCC invites submissions in response to the draft decision from interested parties.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application.