Port of Newcastle will appeal an Australian Competition and Consumer Commission ruling that it should should reduce its charge for ships carrying coal for mining company Glencore by around 20 per cent to sixty one cents per gross tonne.
Part of the ACCC’s ruling was based on the fact that the port provided the only commercially viable means of exporting coal from the Hunter Valley.
Port of Newcastle increased the charge for coal ships entering the port by around 40 per cent to sixty nine cents per tonne in January 2015.
Glencore notified the ACCC in November 2016 of a dispute with the port about the price increase and requested the ACCC to arbitrate.
The port has since increased the charge to its current 2018 price of seventy six cents per tonne.
Port of Newcastle argued in 2018 that the charge for coal ships entering the port should be increased to $1.36 per tonne.
In contrast, Glencore submitted the charge should be reduced to forty one cents per tonne.
The ACCC’s role was to establish the value of the 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 Port of Newcastle 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 Port of Newcastle could recover and determined Glencore should pay a lower price, backdated to 2016.
“Port of Newcastle 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.
Port of Newcastle chief executive Craig Carmody said the ACCC ruling was disappointing.
“We will use all legal avenues available to contest the decision,” he said.
“We will be lodging a request for review with the Australian Competition and Consumer Commission.”
“It would not be appropriate to comment further when we are in a legal process.”
A Glencore spokesman said the company welcomed the ACCC decision.