The majority of Hunter Valley coal producers utilise the Port Waratah Coal Services terminals.
The majority of Hunter Valley coal producers utilise the Port Waratah Coal Services terminals.

By Rachel Dally Watkins

AUSTRALIA’S leading coal export terminal operator is pushing ahead with plans for a new facility in a bid to secure the future of the Hunter Valley region’s coal industry.

Port Waratah Coal Services (PWCS), the operator of the Kooragang and Carrington coal terminals at the Port of Newcastle, has bounced back from its early 2015 lows, indicating that the Hunter Valley coal chain is holding up well during this uncertain economic climate.

The Port of Newcastle is one of Australia’s largest ports by throughput tonnage, and, with coal comprising 97 per cent of its trade, the world’s largest coal export port. In 2014 the port handled 164.3 million tonnes of trade, up 5.3 per cent on the previous year.

Coal accounted for 159 million tonnes of exports, reflecting what the Port of Newcastle called an “increasing global demand for the region’s premium thermal and coking coal”.

“Continuing cooperation between all members of the Hunter Valley coal chain, coupled with investment in port and rail infrastructure, will provide continued growth opportunities for the port’s coal export trade,” the Port stated.

Unlisted public company PWCS has played a unique role in the Hunter Valley region’s coal operations for almost 40 years. In 1976, a group of coal shippers and Japanese investors formed PWCS to take over a stalled terminal development project at the Port of Newcastle. Since then, the company has received, stockpiled, blended and loaded coal for Hunter Valley producers for export to international customers.

The Kooragang and Carrington coal terminals have a combined capacity of 145 million tonnes per annum, and receive coal from some of the world’s biggest miners including Xstrata, Rio Tinto, BHP Billiton, Anglo American, Glencore and Peabody. In 2014, the company received and loaded about 112mt of coal onto 1228 vessels for export.

The PWCS operations run 24 hours per day, utilising automated process control systems, advanced quality control techniques, strict environmental controls and computerised management systems, which monitor and organise coal movement from mine to port.

 Terminal 4

In 2011, PWCS floated plans for the construction of additional infrastructure to support future coal demand. The Terminal 4 project initial master plan was for a site with a capacity of 120 million tonnes per annum throughput; however PWCS has since revised this down to 70mtpa to reflect current market conditions.

There has been speculation about the necessity of the project given falling coal prices and lowered coal demand. However, while the industry is yet to witness a marked improvement in the coal market, Port Waratah is forging ahead with plans for a new terminal in preparation for the Hunter Valley’s rapid production growth in the coming decade.

In early August, PWCS shipped a record 495,000t of coal in one day, reinforcing its decision to push on with the Terminal 4 project.

“Despite low prices and much gloom, Hunter Valley coal chain throughput is holding up very well,” PWCS chief executive Hennie du Plooy said in a community newsletter.

“In fact, coal chain throughput achieved a rate of almost 170 million tonnes per year in June; one of the best months on record. This is the key reason why [PWCS] continues to pursue the development approval of the Terminal 4 Project – the Hunter coal industry must be positioned to take advantage of further growth in demand, once it exceeds the capacity of the current terminals.”

According to PWCS, the master plan for Terminal 4 was shaped to ensure a “surplus of benefit” – with a range of economic, social and environmental benefits.

“By reducing to 70mtpa, we’re also reducing the volume of infrastructure requirements,” PWCS stated.

“No longer will the wharf on the Hunter River south bank be required. This means there will be no construction or traffic generated in that area, which in turn reduces the impact of the project.

“Likewise reducing to 70mtpa means less coal stockpiles and less conveyors to move the coal. While this infrastructure is reduced, the master plan still allows for future expansion up to 120mtpa.”

Coal from the Hunter Valley region is delivered to Kooragang by rail. Image: Port Waratah Coal Services.
Coal from the Hunter Valley region is delivered to Kooragang by rail. Image: Port Waratah Coal Services.

Plans for the new terminal progressed in June when the Department of Planning & Environment (DPE) recommended the project for approval and referred the application to the Planning Assessment Commission (PAC) for a final decision.

“We have been seeking approval for Terminal 4 for almost five years, and this is a very welcome next step in the process,” Mr du Plooy said at the time.

“We were broadly supportive of the outcomes of the PAC review last year and subsequently agreed with a number of the PAC’s recommendations.

“As part of the Terminal 4 engineering and environmental studies we have extensively examined the different engineering and construction options to reach an outcome that best balances the environmental, social, economic and engineering factors, and we have sought to continue to achieve this balance when responding to the PAC’s recommendations.”

In its findings the DPE recommended doubling approval for the project to 10 years.

“The department considers that a longer, 10-year lapse period is appropriate for large, complex projects with long lead times for approval, design and construction, such as [Terminal 4],” the department stated.

The project has faced ongoing opposition in the last five years from health and environmental groups over concerns about the ability to adequately control noise and dust emissions.

However the DPE was satisfied that strict conditions of approval would ensure that biodiversity, air quality, noise and other impacts were minimised, concluding that the Terminal 4 project was in the public interest and should be approved.

The project is expected to create 1500 jobs during its construction phase, and about 80 permanent positions. The project’s proposal outlines plans to upgrade local roads, fix contaminated land and protect biodiversity areas to compensate for the impact of construction.

Terminal 4 will also require approval under the Commonwealth Environmental Protection and Biodiversity Conservation Act (1999).

“[PWCS] remains confident that we can deliver a project and terminal which, like our current terminals, demonstrate leading practice in environmental, social and operational performance,” Mr du Plooy said.

Sustainable development

Now more than ever, sustainable development is a key focus for PWCS. In the company’s Sustainable Development report 2014, Mr du Plooy said that declining coal prices had pushed the company to find more efficient and effective ways of operating.

“One of the outcomes of this work was a reduction of our overall expenditure and a reduction in the number of employees,” he said.

“However, I’m pleased to report that despite these reductions, our commitment to buying and employing local remains – as reflected in the fact the overall percentage of local employment, goods and services has remained relatively constant through these changes.

“In 2014 the transition from a growth and expansion focus to one of consolidation and efficiency improvement gained significant traction. We focussed on building the capacity of our leaders to engage employees and to utilise higher levels of collaboration in the search for improvement in all aspects of our business.

“While it is our expectation that we won’t need to build more operational capacity in the immediate future, we are still undertaking work which will position us to respond to changes in capacity demand.”

Newly-appointed chairperson Penny Winn said that PWCS would continue to adjust to the difficult market conditions being experienced across the Hunter Valley region and by its customers.

“Port Waratah recognises the importance of building positive relationships and working in partnership with its stakeholders and I will encourage management to ensure that every employee understands his or her role in securing our licence to operate,” she said.