The Australian Competition and Consumer Commission has decided to grant interim authorisation* to applications from Newcastle Port Corporation and Donaldson Coal Pty Limited for a capacity balancing system at the Port of Newcastle.
NPC and Donaldson lodged separate applications for authorisation in early December 2007 for a system 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 in 2008. The industry is concerned that without a system for the allocation of capacity, the queue of ships waiting to be loaded will increase giving rise to significant costs.
Both applicants have indicated that their proposed systems are, in all material respects, consistent with the CBS currently in operation at the Port of Newcastle but due to expire on 31 December 2007. The CBS is designed to allocate port capacity to coal producers in proportion to their expected production levels.
The ACCC's decision to grant interim authorisation will provide protection from the operation of the Trade Practices Act 1974 in the event that industry chooses to implement the proposed CBS.
"Interim authorisation simply facilitates the continuation of the existing CBS as a means of limiting the queue of ships and consequential costs while the ACCC considers the various applications for authorisation currently before it," ACCC Chairman, Mr Graeme Samuel, said today.
"Ultimately, it is for industry to determine whether or not it wishes to implement the proposed CBS from 1 January next year."
While it has granted interim authorisation to the proposed CBS, the ACCC has previously raised concerns that the operation of the CBS on a long term basis may hinder the development of an agreed solution to the problem of constrained capacity within the Hunter Valley coal chain.
"The ACCC reiterates that it is imperative for industry participants to work together to develop a long term solution to the issues underlying ongoing capacity constraints in the Hunter Valley."
Importantly, the ACCC's willingness to allow the continuation of the current scheme for the short term does not mean that the ACCC will necessarily approve the scheme for an extended period. The ACCC expects to issue a draft determination in relation to the applications early in 2008 and would expect to consider at that time whether interim authorisation should continue.
The ACCC's decision follows its rejection last week of a request by the port operator and rail providers for interim authorisation for a new scheme which would have allocated capacity on the basis of rail and port contracts. The ACCC rejected the interim request noting that it was a significant change to the current scheme and had the potential to permanently and significantly affect individual producers. It was not appropriate to grant interim authorisation in those circumstances without further consideration.
More information regarding the applications for authorisation and the decision to grant interim authorisation will be available on the ACCC website.