Xstrata plc and rival coal producers using Australia's Newcastle port may get allocations for 2008 export capacity based on their rail transportation contracts after failing to agree on a method of sharing capacity.
Avoiding delays: Newcastle, which accounts for a third of the coal-export capacity in Australia, introduced a capacity allocation system in April 2004 to cut costs and reduce the number of ships waiting to load
This plan to allocate the 95 million metric tons of port capacity estimated for next year will probably be challenged in court by smaller mining companies who say they will be disadvantaged, Ross Crump, managing director of Energy Coal Marketing Pty, a Newcastle-based coal trading company, said yesterday.
Newcastle, which accounts for a third of the coal-export capacity in Australia, introduced a capacity allocation system in April 2004 to cut costs and reduce the number of ships waiting to load. Shipping delays helped boost prices for power-station coal at the port to a record for a fourth consecutive week last week.
'There's clearly a major problem in Newcastle with respect to the schools of thought about what's the best way to handle next year,' Mr Crump said at The McCloskey Group's Australian Coal conference in Sydney. 'It will certainly become litigious.'
Conflict between mining companies with existing supplies and those seeking export capacity for new mines resulted in the 'default mechanism' being proposed to the competition regulator, Sydney-based Gloucester Coal Ltd said in a Nov 12 presentation to the Australian Stock Exchange. The existing system for allocating capacity expires on Dec 31.
The line of ships waiting outside Newcastle port to load coal reached a record 79 in June after storms disrupted operations and hasn't been less than 37 this year. Forty ships were waiting as of Monday morning, two fewer than a week ago, Newcastle Port said on its website.
Avoiding delays: Newcastle, which accounts for a third of the coal-export capacity in Australia, introduced a capacity allocation system in April 2004 to cut costs and reduce the number of ships waiting to load
This plan to allocate the 95 million metric tons of port capacity estimated for next year will probably be challenged in court by smaller mining companies who say they will be disadvantaged, Ross Crump, managing director of Energy Coal Marketing Pty, a Newcastle-based coal trading company, said yesterday.
Newcastle, which accounts for a third of the coal-export capacity in Australia, introduced a capacity allocation system in April 2004 to cut costs and reduce the number of ships waiting to load. Shipping delays helped boost prices for power-station coal at the port to a record for a fourth consecutive week last week.
'There's clearly a major problem in Newcastle with respect to the schools of thought about what's the best way to handle next year,' Mr Crump said at The McCloskey Group's Australian Coal conference in Sydney. 'It will certainly become litigious.'
Conflict between mining companies with existing supplies and those seeking export capacity for new mines resulted in the 'default mechanism' being proposed to the competition regulator, Sydney-based Gloucester Coal Ltd said in a Nov 12 presentation to the Australian Stock Exchange. The existing system for allocating capacity expires on Dec 31.
The line of ships waiting outside Newcastle port to load coal reached a record 79 in June after storms disrupted operations and hasn't been less than 37 this year. Forty ships were waiting as of Monday morning, two fewer than a week ago, Newcastle Port said on its website.