Images: Port Waratah Coal Services.
BY ELIZABETH FABRI
PORT Waratah Coal Services exports declined marginally in the 2017 calendar year, however there have been other issues under spotlight; a big question mark over the future of its long-running Carrington operation – and more recently – scrapped plans for its Terminal 4 project.
In November, Port Waratah Coal Services (PWCS) was blindsided by a NSW Department of Planning draft report which stated it would explore options to move its Carrington coal terminal to another location.
Carrington and Kooragang are PWCS’s bread and butter, and two of the three coal terminals that make up the Port of Newcastle (the third being operated by Newcastle Coal Infrastructure Group).
PWCS – the final link in the Hunter Valley coal chain— owns both terminals and leases the land from the Port of Newcastle, with its Carrington site due for a renewal in 2024.
However, the NSW Government’s draft Greater Newcastle Metropolitan plan 2036 report indicates there may be other plans in the works for the Carrington precinct.
On page 84 of the document, the Government states “The Port of Newcastle, working with Newcastle City Council and NSW Department of Planning and Environment will investigate the potential to relocate coal export facilities and bulk fuel storages away from residential areas and explore options to renew the Carrington Precinct for alternative uses (including tourism)”.
Carrington, currently the closest coal terminal at the Port of Newcastle to residential housing, has been an issue of contention within the local community and environmental groups for some time, with a history dating to 1976.
Carrington Debate
PWCS and the Port of Newcastle have both publically denied knowledge of the draft report’s contents on Carrington.
In February, the Port of Newcastle lodged a detailed submission, labelling the section on Carrington as a “significant error” and not aligned with its long term plans.
“Our submission to the NSW Government re: the Draft Greater Newcastle Metropolitan Plan noted the error in the draft plan and requested that it be corrected,” A Port of Newcastle spokesperson told The Australian Mining Review.
“Port of Newcastle supports the continuation of coal exports at the PWCS Carrington Coal Terminal.
“This land is part of Port of Newcastle’s landholdings under its 98 year lease with the NSW Government which commenced on 30 May 2014.”
PWCS also told The Herald in February it was “very surprised and concerned” and it “did not know the statement within that draft would be there”.
However, the NSW Department of Planning and Environment said it took advice from many people and agencies when preparing the draft plan.
“In relation to the Carrington coal terminal, there were concerns about the potential for conflict between the coal terminal and the adjoining residential,” a Department spokesperson said in an emailed statement.
“We were also aware of the potential for a change to the nature of parts of Newcastle Port as tourism opportunities grew.
“The draft plan has suggested some options for the potential conflict to be resolved.”
The Department said during the exhibition period the Department had spoken with residents in Tighes Hill and Carrington and key stakeholders including the operator of the coal export terminal, to discuss the future of the Port of Newcastle.
“There are long standing and opposing views from the coal export operator and the local residents about the coal export facility. The Department is listening to both views,” the spokesperson said.
“The Department will review all submissions collected during the draft plan’s public exhibition, which closed in late February. A final plan will be released later this year.”
According to the PWCS, the company has been discussing a lease renewal for Carrington with The Port of Newcastle (beyond 2024) for years, with views of coal being a continued force at the Port.
Yet some argue Kooragang can essentially handle PWCS’ share of the load at current levels.
In 2017, PWCS received, stockpiled, blended and loaded 104.6mt of coal from its Carrington (14.6mt) and Kooragang (90mt) terminals, compared to 109.6mt in 2016.
Kooragang has a licenced capacity of 120mtpa, while Carrington has a capacity of 25mtpa, which means, in theory, Kooragang is all that’s needed y to fill demand at this point in time.
A PWCS spokesperson said it was correct that tonnage only appears to require Kooragang, however “there are periods of time where we need capacity to support Kooragang”.
“There are certainly times where we’re loading ships at a very rapid rate,” the PWCS spokesperson told The Herald.
In fact, in early April PWCS’s two terminals had 11 ships waiting offshore at various points, which fell to five ships at the end of the month.
In April, the terminals shipped 8.8 million tonnes of coal; 1.2mt from Carrington and 7.6 mt from Kooragang.
Terminal 4: Cancelled
While the Carrington debate continues to play out, PWCS has also announced it no longer plans to build its $4.8 billion Terminal 4 project, also part of the Port of Newcastle.
On 31 May, PWCS said it would allow the agreement for lease to lapse when it expires in August 2019, as capacity from its existing terminals (including potential expansion options) was “likely to be sufficient to cater for future growth in coal exports”.
“With significant growth capacity available in the existing terminals, we do not expect that the conditions to support an investment of the large and long-term nature of Terminal 4 will be in place before the development approval lapses in September 2020,” PWCS chief executive Hennie du Plooy said.
“We are proud of the role our Carrington and Kooragang terminals play in connecting Hunter Valley coal with the world and we are confident that with ongoing investment in the reliability and performance of these terminals, we will be well positioned and flexible enough to adjust quickly to changes in demand.”
T4, has been in the planning pipeline for years, and was finally approved by the NSW Planning and Assessment Commission (PAC) in October 2015.
In late 2017, PWCS secured another parcel of approvals; the site management plan, priority action statement, and modification plan; giving the company flexibility to adjust to changing circumstances.
However, news PWCS will no longer be developing T4 doesn’t come as a surprise.
In recent months, the company has said T4 would unlikely be built in the near future, with a final decision on construction weighing on growing demand for coal in order for the investment to be viable.
In 2017, PWCS’ thermal coal exports decreased by 4 per cent with shipments for the year totalling 90.7mt, despite an uptick in coal prices.
Coking coal exports also saw a 7 per cent slump, with shipments for the year totalling 13.9mt.
It’s still unclear how mixed demand for thermal and coking coal will impact the Hunter Valley.
In the Chief Economist’s March Resources and Energy Quarterly it said thermal coal consumption over the midterm was forecast to increase in India, South East Asia and other parts of developing Asia to satisfy growing power generation needs, but stagnate or decline elsewhere.
“Western nations appear likely to continue to push to phase down their thermal coal use in favour of renewables and gas, the latter both for heating and power generation,” the report stated.
“Australian export earnings are expected to hit a record $22.9 billion dollars in 2017–18 before declining to $17.1 billion in 2022–23.
“Gains in Australia’s share of world seaborne trade rest on obtaining more of the (likely faster growing) Indian and ASEAN markets — the former currently being dominated by relatively low grade Indonesian and South African coal.
“The forecasts assume that Australia has some success in this endeavour: the higher quality of Australian coal will be needed to prevent the further build-up of air pollution, which is now a chronic problem in some of the larger Indian cities.”
Pushing Forward
Despite a decrease in tonnage in 2017, PWCS said its operational performance has been strong through a focus on “better planning and improved reliability”.
In July 2017, the Carrington and Kooragang terminals achieved a weekly shiploading record of 2.76mt, and a reduction in vessel turnaround times.
And on 20 January – after four days of adverse weather –a new record of 512,504t was set at the terminals, breaking the previous daily shiploading record set in May 2016 by more than 10,000t.
Mr du Plooy said the port actively continues to plan and remain flexible in changing circumstances to benefit its customers, the coal chain and the community.
“The performance is a testament to the quality of our people – working together as one outstanding team, to deliver quality, agile service for our customers and the region,” Mr du Plooy said.
In 2017, two new shiploaders were integrated at Carrington (a $60 million investment), along with other improvements, including two computer technology improvement projects which will be completed in 2018.
PWCS even partnered with its four rail haulage providers to automate all six of Port Waratah’s dump stations.
“This initiative delivered greater operational efficiencies to the Terminals while also reducing risks to employee safety,” PWCS said in its April report.
At a corporate level, the PWCS board had some new additions, following the sale of the Rio Tinto – Coal & Allied thermal coal asset to Yancoal Australia; a deal which included its 30 per cent shareholding in PWCS.
“My role and the chairperson role were retained through the transition and Port Waratah’s strategic direction has been sustained,” Mr du Plooy said.
Mr du Plooy said the company would continue contributing locally, after more than 80 per cent of its 2017 expenditure was spent in the local region (about $80 million).
“In addition, we invest three quarters of a million dollars annually in local community projects, and are proud that 74 per cent of our employees live in the Newcastle and Lake Macquarie local government areas,” Mr du Plooy said.
“Our strategic focus is to meet the changing expectations and demands of our employees, customers and community.”
