Under pressure from all sides – coal producers, shippers and wrangling governments – to get on with expanding capacity, Dalrymple Bay terminal owner/operator Prime Infrastructure laid the blame for the empty vessels on over-eager traders trying to take advantage of frantic Asian demand without actually having any coal to ship.
Prime operations manager Greg Smith told Australia’s Mining Monthly there were more ships waiting offshore than there is contractual capacity. “We can over ship on their contracts up to terminal capacity, but to be able to over ship compared to the number of ships physically arriving at the port is impossible,” he said.
Prime has previously spent $115 million expanding the port’s annual capacity to 56 million tonnes per annum, and then another $30 million to increase capacity again by 4Mtpa.
Now, the company is conducting studies into further expanding the annual capacity of the port to 91Mtpa, a move expected to cost about $600 million and take two years to complete. The increased capacity would open up the prospect of an extra $2.6 billion per annum in export income for the Queensland coal industry.
However, before the work goes ahead, Prime needs confirmation that the extra capacity will continue to be utilised and the current requirements are not just a temporary spike in demand. “We don’t have an issue with undertaking an expansion, our problem is how long is that demand going to be for,” Smith said.
“When we expand the port that expansion has to be valid for the next 30-years.”
From the producer’s side, Rio Tinto Coal Australia insists Prime Infrastructure has an obligation to increase capacity – having been issued with a “bona fide request” over 12 months ago. According to reports, RTCA boss Grant Thorne has argued that if Prime did not want to play the game any more it should be invited leave the field.
Rio Tinto said it was forced to stop work at Blair Athol mine, its largest Queensland export coal operation, for several days last month to clear the backlog of material and resumed operations at reduced capacity.
Smith repeated the argument that, if Rio Tinto wanted extra capacity at the port, Prime needed backing by way of a long-term contract.
“I guess the biggest thing at the moment is that we are being presented with coal at the front of the terminal, amounting to about 51Mt per year, which means we still have spare capacity within the terminal,” Smith said. “The mines at total, not individually, are supplying less than their contracts with us.”
“We are still investigating the reason for this ourselves, but we think it has something to do with the underground mines being able to meet their production targets. At this stage there only seems to be three companies saying they have more coal than they are able to export.”
Strengthening the case for expansion at Dalrymple is Rio Tinto’s $220 million commitment to the expansion of its Hail Creek mine in Queensland, which would boost capacity from 6Mtpa to 8Mtpa.
Federal transport minister John Anderson has tried to push the blame for the ghost fleet on to the Beattie Labor Government, saying the provision of adequate port facilities was the responsibility of the state.
Queensland is already spending $167 million over three years to expand the capacity of the RG Tanna Coal Terminal at Gladstone to defend the state’s record. "This project will increase the port's capacity from 40Mt to 54Mt a year," Beattie said during an inspection of the expansion works in November.
"And in recent times the Central Queensland Port Authority has indicated that the throughput will climb to at least 63Mt by 2007.”
Export tonnages through Gladstone rose in the July quarter this year by 14.4% to 11,484,833t – giving the government-owned port its first billion-dollar quarter.
The State Government has also trumpeted its spending on additional coal train infrastructure and last month announced the formation of the Coal Infrastructure Coordination Group to address the infrastructure requirements.
State development minister Tony McGrady said the expected 7% annual growth in coal production over the next six years would lift the coal tonnage hauled by rail from 143Mt in 2003-04 to 202Mt in 2009-10.
South of the border, Newcastle terminal operator Port Waratah Coal Services claims the infrastructure outside is the main barrier to export growth. General manager John Barbagallo said the company was working with other members of the supply chain on elements such as track infrastructure, mine loading points and the number of trains.
Australia’s Mining Monthly
