Australia allows Newcastle port to raise shipping fees

Australian Newcastle coal

Australia will allow the major coal export hub of Newcastle to raise its shipping charges on Tuesday after Treasurer Josh Frydenberg let stand a recommendation by a competition regulator that will let the port set higher fees.

Newcastle, in the state of New South Wales, is an export hub for thermal coal from the Hunter Valley, where Glencore ships out the vast majority of the nearly 60 million tonnes it produces in the region. Yancoal Australia and Whitehaven Coal also both use the port.

Last year, the Australia Competition and Consumer Commission (ACCC), which is the arbiter in trade disputes, ruled that the Port of Newcastle must reduce its charges for ships entering the port, in a big win for Glencore.

The Port appealed to Australia’s National Competition Council (NCC), which regulates infrastructure services, and it recommended revoking the ACCC decision in July.

Australian Treasurer Josh Frydenberg, who has the authority to intervene for 60 days after the NCC’s recommendation, declined to do so meaning that the NCC’s revocation stands, Frydenberg’s office said in a media release on Tuesday.

Glencore said in a statement on Tuesday that it was disappointed Frydenberg did not make a decision.

“Following a A$1.75 billion privatisation in 2014, the Port of Newcastle increased shipping fees by up to 60% without any change in services to customers,” Glencore said.

Glencore also noted that the ACCC indicated “that monopoly export infrastructure should be subject to appropriate regulatory constraints.”

Both Whitehaven and Yancoal declined to immediately comment on the decision.

The Port of Newcastle is owned by China Merchants Port Holdings Co Ltd, which took a stake in February, and Australia’s Infrastructure Fund. The port said in a statement that it welcomed the decision.

“The NCC stuck to its guns in the face of some considerable pressure from other parties….This is a victory for a common-sense approach to regulation,” it said.

After being privatised in 2014, the port increased the charge for coal ships by around 40% to $0.69 per tonne in January 2015, and later raised the charge to $0.76 per tonne.

Source: Reuters

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