Port of Newcastle will raise its shipping charges by 33 per cent next year but offer coal companies a large "discount" if they sign up for 10-year contracts.
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The port announced a new price schedule on Monday, setting a shipping fee of $1.04 per gross tonne in 2020, up from $0.78 this year, but it will charge $0.81 per tonne to companies that sign long-term deals.
"There is widespread coal industry interest in securing long-term contracts at discounted prices that give everyone business certainty and allows the Port to invest with confidence," the port said in a statement.
The $1.04 price was determined by the Australian Competition Tribunal (ACT) in October after a long-running challenge by mining giant Glencore.
The discounted price rises by 4 per cent each year, more than forecast inflation, meaning the 28 per cent first-year discount falls gradually to 10 per cent by the end of a 10-year contract.
In 2030, the port will charge $1.20 per tonne in the final year of a 10-year agreement, compared with the ACT-set price for that year of $1.33.
The $1.04 price point for 2020 is 65 per cent more than the price set by the Australian Competition and Consumer Commission (ACCC) last year.
The ACCC ruled in 2018 that the port, which is owned by The Infrastructure Fund and China Merchants, should cut the fees it charges Glencore by 20 per cent to $0.62 in 2020.
The ACT reviewed that decision and set a price point for coal ships which is more than double what the port was charging before it was sold for $1.75 billion in 2014.
The ACCC and Glencore have appealed against the ACT's ruling.
The port believes its decision to offer long-term contracts well below the ACT-adjudicated price counters claims by ACCC boss Rod Sims that the monopoly operator would exploit its "unfettered market power".
But Mr Sims told the Newcastle Herald on Monday that even the $0.81 figure meant coal companies would be charged to use assets, specifically the widened shipping channel, that they had paid for in the past.
"Why would users ever fund assets again if you're then going to have to pay for them a second time?" he said.
"The tribunal allows [the port] to earn a return - that is, it raises their asset base - on the basis of assets that the users paid for.
"They gave the port [when it was owned by the government] the capital to widen the channel. It's their money, not the port's money."
Port of Newcastle argues the shipping fees the government was charging before 2014 were inappropriately low for a facility under private ownership which needed to show a return on investment.
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In a separate but related case, Glencore mounted a campaign, approved by the ACT and endorsed by the Federal Court in 2016, to reinstate price regulation at the port.
The campaign followed Port of Newcastle raising access charges by between 40 and 60 per cent soon after taking over in 2014.
The port appealed successfully to the National Competition Council (NCC) to overturn the regulation decision, and Treasurer Josh Frydenberg sanctioned the deregulation in September.
The NCC found the port operator would self-regulate price increases to avoid "chilling" future investment in the mining industry.
A navigation charge of just over $1 per tonne amounts to about 1 per cent of the current price of thermal coal.
The price of thermal coal has fallen 29 per cent, from $1.40 to $1.00, in the past year.
The Newcastle Herald has approached Glencore and the NSW Minerals Council for comment.
Michael Parris
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
Michael Parris reports on politics for the Newcastle Herald. He started at the Herald in 1994 after working in the ABC Newcastle newsroom. Michael spent much of his career as a sub-editor before moving into political reporting in 2017. He was a finalist in the Sports Australia national media awards for his stories about a male-only tennis club in Newcastle. He has covered NSW and federal elections, state and federal budgets and local politics. He has also written extensively about the COVID-19 pandemic with a special focus on data analysis and the effects of lockdowns on the Hunter community.
