The New South Wales Minerals Council has blamed the decision by PWCS on delays and uncertainty in mine project approvals, including a Land and Environment Court decision to halt the expansion of Coal & Allied’s Warkworth project.
Port Waratah Coal Services chief executive Hennie du Plooy said producers had advised PWCS that the reduction in future demand for coal handling services is due to a number of factors affecting the coal industry.
These include lower than previously forecast production growth, resulting from significantly lower prices for export thermal coal and higher production costs and an ongoing shortfall in rail track system capacity relative to producer terminal contracts.
Mine project approvals taking longer and increasing in uncertainty were other contributing factors, he said.
PWCS said it made its decision after a consultation process with affected stakeholders that began in November 2012, with the aim of clarifying demand for coal handling and loading capacity at the two existing PWCS terminals as well as the proposed T4 terminal at Kooragang.
The acceptance of these reductions means there is currently no capacity shortfall to be fulfilled through the proposed T4 Project. That said, a capacity shortfall requiring additional terminal capacity can arise at any time as a result of producer nominations.
NSW Minerals Council chief executive Stephen Galilee said: “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,” he said.
“The NSW Government needs to act quickly to provide more certainty through the planning system to protect the NSW economy, so we can provide more jobs through mining, not less.”
Du Plooy said the decision to accept voluntary reductions was 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 rely upon T4 now have access to existing capacity, increasing certainty of access 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."
In its pursuit of the T4 development approval, PWCS is furthering studies with the state and federal governments on its response to environmental matters, before finalising a Preferred Project Report and continuing to Planning Assessment Commission review.
Du Plooy said the outcome reaffirmed the benefits of the Long Term Commercial Framework. “This is long term planning for meeting the demand for coal exports from the Hunter Valley,” he said.
“Investment is triggered by producer nominations, but the framework is flexible enough to ensure plans can be adjusted according to industry conditions."
PWCS accepted voluntary reductions from coal producers up to an aggregate level that is equal to its contractible capacity (in the order of 142 million tonnes per annum) as modelled by the Hunter Valley Coal Chain Coordinator (HVCCC).
“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,” Galilee said.
“A poor planning system will diminish confidence to invest in NSW, damage competitiveness and jeopardise jobs.”
