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Port of Newcastle reduces shipping charge for Glencore

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Dry Bulk,

The ACCC has finalised its arbitration of a dispute between Glencore Coal Assets Australia Pty Ltd (Glencore) and Port of Newcastle Operations Pty Ltd (PNO) about terms and conditions for accessing the ‘declared’ shipping channel service at the Port of Newcastle.

The ACCC has determined that PNO should reduce its current charge for ships entering the port to carry Glencore’s coal by around 20% to AUS$0.61 per gross tonne (GT).

The port provides the only commercially viable means of exporting coal from the Hunter Valley region in New South Wales.

In January 2015, PNO increased the charge for coal ships entering the port by around 40% to AUS$0.69 per GT.

In November 2016, Glencore notified the ACCC of a dispute with PNO about the price increase and requested the ACCC to arbitrate. Since then, PNO has increased the charge to its current 2018 price of AUS$0.76 per GT.

In the course of the arbitration, PNO submitted to the ACCC that the 2018 charge for coal ships entering the port should be increased to AUS$1.36 per GT. In contrast, Glencore submitted the charge should be reduced to AUS$0.41 per GT.

The main task for the ACCC was establishing the value of assets used to provide the ‘declared’ shipping channel service. Charges for ships entering the port were then derived from this valuation.

A key part of the dispute was whether PNO should be able to charge for dredging of the shipping channel that had been undertaken or funded by users of the port. The ACCC excluded these user funded amounts from the costs that PNO could recover and determined Glencore should pay a lower price, backdated to 2016.

“PNO proposed large increases to the current price, but the ACCC found that a reduction in the price for using the shipping channel was appropriate,” ACCC Commissioner Cristina Cifuentes said.

“The ACCC also determined appropriate mechanisms for future price changes, and decided on certain non-price terms and conditions of access where the parties had been unable to reach an agreement.”

The ACCC’s arbitrated terms and conditions of access are operative until the ‘declaration’ of the shipping channel service at the port expires on 7 July 2031.

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