Coal Ships Line Up Off Queensland Coast as Aurizon Miners Dispute Worsens

Coal ships line up off the Queensland coast as Aurizon dispute with miners worsens
Delays in loading coal ships is costing companies millions of dollars

MORE THAN 50 coal ships are waiting off the Queensland coast this week as the multibillion-dollar dispute between listed rail company Aurizon and Australia’s biggest coal producers looks set to spill over into next year.

Despite predictions of even longer queues at the state’s coal ports this month, Aurizon last week told the Queensland Competition Authority to delay a final decision on its draft undertaking access agreement pending the outcome of a judicial review into the regulator’s original decision to strip $1 billion in revenue from the company’s lucrative coal network.

The QCA said it was “disappointed” with Aurizon’s request, but acknowledged since the company was still pursuing its own legal action over the ruling, it made sense to wait until after the judicial review process.

“While regrettable, the QCA considers this approach is nevertheless required at this time,” it said. “The QCA is confident that it will be in a position to progress a final decision after the court has made its judgment.”

Aurizon defended the delay saying it made sense to wait for the judicial review hearing, which is due in the Supreme Court on October 22.

“Aurizon believes delaying the final decision is necessary and prudent in the circumstances and welcomes the QCA adopting this position,” a spokesman for Aurizon said.

Aurizon is seeking a judicial review of the QCA draft decision</a> saying QCA chairman Roy Green, who has been chairman of the regulator since 2015, was conflicted when the determination was handed down because he was appointed chairman of the Port of Newcastle – which is used by miners in the Hunter Valley to export coal – on December 18. The QCA has denied the allegations.

There were more than 50 coal ships waiting off the Queensland coast on Tuesday, according to logistics support company Transcoal, including 36 at Dalrymple Bay coal terminal and four at Hay Point coal terminal near Mackay, 10 at Abbot Point coal terminal near Bowen, and two at Gladstone in Central Queensland.

But IHS Markit said another 33 vessels were scheduled to arrive at Dalrymple Bay in the first half of September, which would add to the infrastructure backlog.

Long delays are costing companies millions of dollars in demurrage charges.

The estimated cost of demurrage charges for coal port congestion this week is almost $7 million.

Queensland Resources Council Chief Executive Ian Macfarlane said while there was a number of factors for the long shipping queues, including strong demand and scheduled maintenance, it was further evidence of what happens from even the smallest disruption to rail lines.

“The queue of ships off the Queensland coast reinforces the need to ensure there are no impediments to getting replacement stock to the port,” Mr Macfarlane said.

“Now is not the time for regulatory stunts that cost throughput. If Queensland fails to deliver to our international customers, they’ll find someone else who will.”

Aurizon announced in March it would modify its maintenance practices after the QCA draft decision allowed the company to earn only $3.9 billion from its network businesses between July 2017 and July 2021, nearly $1 billion less than the company believes it should make</a>.

Big miners, including BHP Billiton, Rio Tinto, Glencore and Anglo American, have threatened to shut down their production as a result of the slowdown of capacity on the state’s rail network, accusing Aurizon of reaping more than $500 million from the protracted dispute.

But with the price of coal continuing to rise, the commercial dispute is yet to impact on the bottom line of the big coal miners.

The Palaszczuk government has called on Aurizon and the miners to resolve the dispute, amid fears there could be less revenue flowing into state coffers.


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Story by the Australian Financial Review

Read the Financial Review’s full story here

 

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