Newcastle’s Third Coal Terminal underway

CONSTRUCTION of the first stage of a third coal export terminal for the Port of Newcastle will begin immediately following completion of finance arrangements.

CONSTRUCTION of the first stage of a third coal export terminal for the Port of Newcastle will begin immediately following completion today of finance arrangements and the signing of a 35-year lease for the site from the New South Wales Government.

Newcastle Coal Infrastructure Group (NCIG) Chairman Tony Galligan said the total finance package, sufficient to cover the expected project construction cost of $1 billion plus contingencies, has been completed with a range of Australian and overseas financial institutions.

“As a result the Board has given the immediate go-ahead for the construction of the 30 Mtpa facilities, which is expected to take about two years. The terminal is targeted to be ready to load first coal in the first quarter of 2010.”

Speaking to members of the consortium as the lease on the Kooragang site was signed, New South Wales Treasurer and Minister for the Hunter Michael Costa welcomed the arrangement and said a new coal export terminal would create more jobs and investment.

“This is great news for Newcastle port, which is so important to the economic prosperity of New South Wales” Costa said.

“The announcement helps the entire coal industry and reinforces our commitment to long-term infrastructure investment in the region.”

Construction of the new coal terminal on Kooragang Island will significantly increase the export capacity of the Hunter Valley coal chain which is currently around 95 Mtpa in 2008.

The project is expected to increase GDP by $1.5-billion per year, boost exports by $1- billion and generate up to 5,000 jobs across New South Wales.

The majority of coal loaded via the Newcastle port is shipped to customers in the expanding Asian power and steel industries.

Newcastle and Hunter Valley coals have been servicing these industries for over 30 years.

The NCIG shiploading facilities will be built to the west of the existing Kooragang shiploaders, with the new stockyards and rail facilities to the south-west of the Kooragang Coal Terminal.

Two stacker/reclaimers and a shiploader have been ordered from Sandvik, a large international supplier of bulk material handling equipment.

Funding for the terminal was raised through three tiers of capital comprising: senior non-recourse debt; subordinated secured notes (SHINs); and preference shares (SHIPS).

ANZ has acted as Financial Advisor to NCIG and participated extensively in the capital raising.

Blake Dawson were legal advisors.

The capital structure achieves low finance costs for users of the terminal and is supported by long term throughput contracts.

Seven commercial banks and BHP Billiton Finance Limited provided Senior Debt and SHINs.

The external funders are: ANZ Banking Group Limited, Deutsche Zentral-Genossenschaftsbank, Dexia Groupe, KBC Finance Ireland, Overseas-Chinese Banking Corporation Limited, Sumitomo Mitsui Banking Corporation and Suncorp-Metway Limited.

Subscribers for SHIPS comprise NCIG’s Shareholders, and an investment trust managed by ANZ Infrastructure Services (Diversified Infrastructure Trust).

Dredging of the south arm of the Hunter River to allow ships access to the planned berths is already under way by a joint venture between Dredeco and Boskalis Australia.

Two dredges arrived from Port Kembla late in October and began work in November.

NCIG was formed in 2005 to address fundamental capacity issues associated with coal handling for regional coal exporters.

In April last year the New South Wales Government granted NCIG approval to construct the new coal terminal, with an ultimate capacity of up to 66 Mtpa.

Tony Galligan said the State Government recognised the urgent need to increase the long-term capacity of the Hunter Valley coal export supply chain and had responded by making land available under long term lease for the project.

The members of the consortium are all significant coal producers who have large coal reserves and projects to materially increase their aggregate coal production by at least 30 million tonnes to be shipped through the new terminal.

Partners in project include BHP Billiton (through Hunter Valley Energy Coal) Centennial Coal, Donaldson Coal, Peabody Energy (through Excel Coal), Felix Resources and Whitehaven Coal.

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