Glencore – To enjoy reduced charges from Port of Newcastle

  • Oct 08, 2018 AEDT
  • Team Kalkine
Glencore – To enjoy reduced charges from Port of Newcastle

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

To carry Glencore’s coal by around 20 per cent to $0.61 per gross tonne (GT), PNO should reduce its current charge for ships entering the port, as determined by the ACCC. The only commercial means of exporting coal from the Hunter Valley region in New South Wales is provided by the port.

Glencore has won a price cut to its shipping costs after the competition watchdog ruled over a dispute it had with the Port of Newcastle in which Glencore wanted to pay 41 cents per gross ton and the port wanted it to pay $1.36. The Port is half owned by China Merchants Port Holdings (CMPorts) and half owned by The Infrastructure Fund (TIF). Glencore is listed on the London stock exchange and merged with Xstrata in 2013.

For coal ships entering the port by around 40 per cent to $0.69 per GT, the ACCC says that in January 2015, the port increased the charge. Glencore notified the ACCC of a dispute with the Port owners about the price increase and requested the ACCC to arbitrate, in November 2016. Since then, the Port has increased the charge to its current 2018 price of $0.76 per GT.

The Port submitted to the ACCC, in the course of the arbitration, that the 2018 charge for coal ships entering the port should be increased to $1.36 per GT. In contrast, Glencore submitted the charge should be reduced to $0.41 per GT. Another main part of the dispute was whether PNO should be able to charge for searching of the shipping channel that had been undertaken or funded by users of the port. 

ACCC Commissioner Cristina Cifuentes said “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”, and also said that, “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.”

Backdated to 2016, the ACCC excluded these user funded amounts from the costs that PNO could recover and determined Glencore should pay a lower price. The ACCC's prices will stay in place until the 'declaration' of the shipping channel service at the port expires on 7 July 2031.

Under Part IIIA of the Competition and Consumer Act 2010 (CTH), the ACCC has a role in arbitrating access disputes for services which have been ‘declared’. By virtue of the shipping channel service at the port, defined as ‘the provision of the right to access and use the shipping channels including berths next to a wharf as part of the channels at the Port, vessels may enter a Port precinct and load and unload at relevant terminals located within the Port precinct and then depart the Port precinct.

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