The Port of Newcastle has hit back after the High Court rejected its appeal to review previous decisions supporting Glencore Plc's push to have the port regulated, telling S&P Global Market Intelligence that its shipping pricing remains competitive with other Australian ports.
Earlier in March, Australia's High Court refused to grant Port of Newcastle’s application for special leave to appeal the decision of the full Federal Court to confirm the declaration of the service provided by the shipping channel at the port.
The Port of Newcastle said in an emailed statement to S&P Global Market Intelligence that it continues to engage proactively with its customers and the Australian Competition and Consumer Commission, or ACCC, which will regulate the port under the Federal Court's ruling.
"Port of Newcastle has a commercial imperative to maximize trade volumes through the port and to ensure continued access for customers. Its business depends on its customers' success," a port spokesperson said.
"Port of Newcastle pricing remains competitive with other Australian ports."
It was noted that the port's usage charge for coal ships rose by just 1.2% over the past 20 years before being privatized by the New South Wales government, while the Consumer Price Index soared by 70% over that time.
After the government sold a 98-year lease to Hastings Fund Management and China Merchants Group in 2014 for A$1.75 billion, the new private owners unwound historic subsidized port charges and aligned them with that of competitors such as Port Kembla.
Glencore, understood to be the largest beneficiary of those subsidized port charges, then sought to have the ACCC given price-setting powers over the port under Part IIIA of the Commonwealth Competition and Consumer Act 2010.
The miner's complaint was that the port had ramped up shipping fees by up to 60% without any change in the nature or quality of service provided.
The port maintains, however, that based on independent market research from well-respected maritime advisers, its navigation services charge is competitive with other Australian ports and international ports.
It costs more to post a letter from Newcastle to Sydney than for a tonne of coal to pass through the port’s shipping channel — 54 Australian cents — based on a 58,000 gigatonne vessel loading 92,500 tonnes of coal. The average Newcastle thermal price in December 2016 was $128.16 per tonne of coal.
Long-term concerns amid coal optimism
Coal exports are growing as the market continues its recovery, with a record 162.8 million tonnes exported via the Port of Newcastle in 2016-17.
However, when Professor Roy Green was appointed as the new chairman of the port's board in December 2017 he warned of an "urgent need" to diversify both the Hunter Valley economy and the port's business.
Though the port had already started diversifying through investments in a new cruise terminal and non-coal freight facilities, he said the port needed to do more to meet the needs of a "rapidly changing" Hunter and New South Wales economy.
Green maintained, however, that coal would continue to be "central to the region's prosperity for some time to come" having been at the heart of the Hunter Valley's economy for most of the past 200 years.
"Clearly the long-term outlook for coal is a threat to the Port and Hunter region, but it is also a huge opportunity," he said.
"While the world's demand for our coal is beyond our control, our ability to invest in new sources of growth and innovation is not. Among our challenges will be ensuring a level playing field for the development of a viable and competitive container terminal."
However, recent acquisitions of coal mines in the region — such as Glencore buying 49% of the Hunter Valley Operations from Yancoal Australia Ltd. after the latter wrapped up a US$2.69 billion acquisition of Coal & Allied Industries Ltd. from Rio Tinto in 2017 — would appear to reflect confidence in the future of the coal industry.