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Australia approves Newcastle coal-port deal

Australia approves Newcastle coal-port deal

Perth: Australia's competition regulator gave coal producers on Wednesday a second chance to hammer out a long-term solution to ease congestion at Newcastle coal port, the world's largest coal export terminal, writes Reuters.

The Australian Competition and Consumer Commission gave rival coal producers permission to bring back a quota arrangement for rationing exports from the port, provided they worked toward a long-term fix to boost port capacity and efficiency.

The quota arrangement would normally raise anti-trust concerns because it is a competitor agreement to ration supplies without addressing core capacity constraints, but the regulator noted that all parties were now committed to a genuine solution.

Last week, the port operator, Port Waratah Coal Services, and the producers agreed a long-term plan to overhaul the contract system for allocating port capacity and to invest in expanding capacity. It is due to be implemented from next January.

"The execution of these documents represents a significant milestone for the Hunter Valley coal industry," the commission's acting chairman, Peter Kell, said in a statement.

The port operator and Newcastle Coal Industry Group (NCIG), which is building a new coal loader at the port, plan to phase in a new export plan next year, whereby miners will sign 10-year rolling port contracts based on forecast export volumes, replacing the current one-year contracts.

The new system will prevent producers from booking excess terminal capacity -- and creating shipping logjams -- by forcing them to pay for any unused slots.

The commission said there was still a lot of work to be completed by the industry to allow the new export plan to be fully implemented by Jan. 1, 2010.

Australia's Newcastle port, which ships mainly thermal coal used for power generation, has long been dogged by production constraints and congestion, with ship queues swelling to a record high of above 70 in 2007. Vessel queues are now hovering at 26, with an average waiting time of around 10 days.  [24/09/09]