Coal producers set up for collective negotiations with Port of Newcastle

Coal operation at the Mt Owen mine in New South Wales. Image: Glencore.

The Australian Competition and Consumer Commission (ACCC) is proposing to authorise the NSW Minerals Council and 10 coal producers to collectively negotiate their access to the Port of Newcastle for exports.

The 10 producers that export coal through the Port of Newcastle and are applicants to the application are Glencore Coal, Yancoal Australia, Peabody Energy Australia, Bloomfield Collieries, Centennial Coal, Malabar Coal, Whitehaven Coal, Hunter Valley Energy Coal, Idemitsu Australia, and MACH Energy Australia.

Since December last year, Port of Newcastle Operations (PNO) has been negotiating with individual coal producers, vessel agents, vessel operators and free-on-board (FOB) coal consignees to enter into bilateral long term discounted pricing arrangements.

This includes discounted navigation service charges and wharfage prices set by PNO. The term offered by PNO under the agreement is 10 years.

The ACCC had earlier allowed coal producers to commence collective negotiations with PNO in an interim authorisation granted in April this year. The ACCC now proposes to authorise these arrangements for 10 years.

“Collective negotiation gives coal producers an opportunity to reduce uncertainty and achieve more timely outcomes,” ACCC commissioner Stephen Ridgeway said.

“The ACCC considers there are several likely public benefits from granting this authorisation, including greater input by coal producers into the final agreement, which would ultimately facilitate more efficient investment decisions for the Hunter Valley coal industry. It will also result in lower negotiating costs for all parties involved.”

The voluntary nature of the collective negotiations for both PNO and coal producers means this is unlikely to affect competition between coal producers.

“Coal producers will remain free to negotiate individually with PNO if it is in their commercial interests to do so,” Ridgeway said.

The ACCC is open to comments on the draft determination to inform its final assessment of the application, which is expected in August or September this year.

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