The Australian Competition and Consumer Commission has issued a draft determination proposing to grant authorisation* to a queue management system designed to address the imbalance between the amount of coal that producers want to export and the capacity of the infrastructure which moves coal from mines in the Goonyella coal chain onto vessels at Dalrymple Bay Coal Terminal, ACCC Chairman, Mr Graeme Samuel, said today.
"This imbalance led to the formation of a large queue of over 50 ships at the terminal earlier this year", he said. "In response to an urgent request from the operator of the terminal, Dalrymple Bay Coal Terminal Pty Ltd, the ACCC granted interim authorisation** to DBCTPL to commence the implementation of the queue management system in April 2005".
DBCTPL subsequently requested the ACCC delay issuing its draft determination, so as to allow the industry to conduct an extended review of the operation of the queue management system between July and September. Over this period DBCTPL made operational refinements to the scheme following consultation with producers. The ACCC agreed to vary the interim authorisation so as to apply to these amendments.
"The system proposed by DBCTPL essentially reduces the amount of coal each producer can export through the terminal on a pro rata basis so that the overall contracted terminal capacity 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.
"This matter provides an example of complex infrastructure-related issues being progressed in a timely matter by the ACCC working with industry.
"Since the scheme's formal introduction in June up until August 2005, DBCTPL estimates producers saved approximately $150 million in demurrage costs. The queue has also reduced from a peak of over 50 ships to a desirable operating level of approximately 15 ships.
"The ACCC is satisfied that under the system the total volume of coal exports from the Goonyella coal chain is unlikely to be reduced. It is also satisfied that incentives exist under the queue management system for all industry participants to maximise coal exports.
"The ACCC is also satisfied that the queue management system will not constrain export growth. It is a transitional measure which aims to limit the demurrage costs associated with large queues until the scheduled expansion projects at the terminal are operational".
The ACCC proposes to grant authorisation until the end of 2008.
There is a built-in trigger mechanism to ensure that the queue management system does not operate unless the expected demand for coal loading services exceeds the capacity of the coal chain.
The ACCC will now seek further submissions and provide interested parties with an opportunity to seek a conference prior to it making a final decision.
More information regarding the application and a copy of the draft determination are available by following the Authorising anti-competitive conduct and Authorisations links on the ACCC's website.