Port of Newcastle: ACCC Seeks Review of Decision on User Funding

Port of NewcastleImage Courtesy: Port of Newcastle

The Australian Competition & Consumer Competition (ACCC) has applied to the Federal Court for a review of the Australian Competition Tribunal’s recent decision on the terms of access by Glencore Coal Assets Australia to certain services at the Port of Newcastle.

The tribunal re-arbitrated an access dispute between Glencore and Port of Newcastle Operations (PNO), which was primarily about the charge for ships entering the port to export Glencore’s coal.

“While the tribunal took the same approach as the ACCC on a number of issues, the ACCC is seeking review of the tribunal’s treatment of user funding at the port,” ACCC Chair Rod Sims said.

A significant part of the dispute is about whether the costs that PNO is allowed to recover should include the costs for dredging the shipping channel that were historically funded by various users of the port.

The ACCC excluded these user funded amounts in its original arbitration and determined an access charge of AUD 0.61 (USD 0.41) per gross tonne as at 1 January 2018, while the tribunal included these amounts and determined an access charge AUD 1.01 per gross tonne. The tribunal’s decision allows PNO to recover the user funded amounts in its access charge.

“The ACCC does not consider it to be economically efficient for a service provider to be allowed to charge any user for costs of assets that have already been funded by users,” Sims explained

In 2018 the ACCC arbitrated a dispute relating to Glencore’s terms of access to the shipping channel and related services for exporting coal from the port. Both parties then applied to the tribunal for a re-arbitration of the dispute. The tribunal handed down its decision in October 2019, allowing the port to set higher fees.

The shipping channel service at the port was declared under Part IIIA by the tribunal in June 2016.

The declaration has since been revoked, however, the arbitration determination remains in force until 2031, according to the ACCC.

In a separate statement, the Port of Newcastle said that “the Hunter coal industry faces further investment uncertainty in relation to one of Australia’s most important export gateways”, following the announcement of the further legal action regarding pricing at the port.

“Port pricing should remain subject to an appropriate and efficient commercial relationship between the port and its customers,” Craig Carmody, Port of Newcastle CEO, pointed out.

Jointly owned by the Infrastructure Fund and China Merchants Group, the Port of Newcastle is a major Australian trade gateway handling 4,600 ship movements and 166 million tonnes of cargo each year.

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