T4 coal loader in doubt amidst coal downturn

Hunter Valley miners have told Port Waratah Coal Services that the amount of coal they handle will drop, again putting the T4 loader on Kooragang Island in doubt.

Port Waratah Coal Services (PWCS) chief Henry du Plooy said coal producers in the region has advised that the fall in demand for coal handling services was due to falls in production as a result of lower prices and higher export costs.

Du Plooy said today PWCS had agreed to accept reduced tonnages.

“The acceptance of these reductions means there is currently no capacity shortfall to be fulfilled through the proposed T4 project,” the company said.

Du Plooy said the decision is a positive and appropriate outcome for the industry in challenging times.

“Coal producers who do not require all tonnages previously contracted for have been able to reduce their exposure to ship or pay obligations while producers who still require greater capacity for coal handling and were expecting to reply upon T4 now have access to exiting capacity, increasing certainty and timing,” he said.

“At a time when the industry is experiencing significant economic challenges, PWCS has also been able to reduce coal handling costs for producers by avoiding unnecessary project expenditure.”

Early last month, du Plooy told reporters at a vineyards coal conference that due to falling demand, the company was looking to expand its existing loader on the island instead of building the T4.

Du Plooy said that coal companies were shipping 20 per cent less coal now than when the deal was struck to build the T4

Du Plooy told the conference the approvals process had added another year to the project, with T4 unlikely to gain approval before 2014.

This means construction would take another three years, with the original operating date being pushed back 2018.

In 2009, Port Waratah was given the opportunity to build a new coal loading terminal, known as Terminal 4 (or T4), as part of a wider long term agreement to service the Hunter's growing coal industry.

However late last year, the company cut the capacity of the T4 coal loader by nearly two-thirds to just 25 million tonnes a year.

Today PWCS said it would continue to seek the development approval for T4.

NSW Minerals Council CEO Stephen Galilee said delays and uncertainty in mine project approvals have contributed to the decision to accept reductions in tonnages.

“This is proof that the State planning system is hurting the Hunter coal industry and the NSW economy at a time when it is already struggling to remain globally competitive in the face of low prices, a strong Australian dollar and high costs,” Galilee said.

Rio Tinto, part of the consortium that backs PWCS was shocked last month when approval for the expansion of its Warkworth mine was overturned.

Galilee says the decision had led to decreased production estimates.

“Coal is our State’s most valuable export commodity and provides around 85 per cent of our electricity. Global challenges are already hurting the industry. A poor planning system will diminish confidence to invest in NSW, damage competitiveness and jeopardise jobs.”

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