Coal Cash Crab

Newcastle Herald

Thursday September 18, 2008

Ian Kirkwood

THE State Government and the NSW coal industry are on the verge of war, with the Government saying it will auction 11 new coal exploration areas while rejecting the industry's preferred solution to ending the Newcastle coal export bottleneck.

Primary Industries Minister Ian Macdonald confirmed the exploration area auction yesterday, saying companies had a deadline of November 24 to submit bids.

The two most recent exploration areas, Watermark and Caroona at Gunnedah, were auctioned for $675 million and $230 million respectively, with the proponents, China Shenhua and BHP, putting about 45 per cent of the money in advance.

Even if the 11 new areas were auctioned for less than these amounts the Government would still expect to

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STATE'S PLAN TO TAP RICH COAL VEIN

receive hundreds of millions of dollars from the exercise.

However, the problem is that the Hunter's rail and port system cannot keep up with the demand for coal, let alone cope with production from new mines.

Former premier Nick Greiner, whom Ports Minister Joe Tripodi commissioned to solve the port bottleneck problem, said the Government was dithering over the queue.

The queue is likely to become out of control if a solution is not found by December 31, when a coal-loader quota system expires.

"It would be a good thing if Joe Tripodi spent less time sending people horse's heads and focused instead on getting a decision on the Hunter coal-loaders," Mr Greiner said.

Mr Tripodi rejected Mr Greiner's solution for the coal queue, saying yesterday that it would stop new companies joining the industry.

"The Government is committed to making sure new coal producers will have access to port facilities into the future," he said.

"This is crucial to securing growth in the Hunter Valley.

"The style of take-or-pay contract used at the Newcastle Coal Infrastructure Group terminal, if applied to Port Waratah Coal Services (PWCS), would exclude new coal producers into the future.

"PWCS can underwrite their investment by issuing take-or-pays with compression clauses.

"There is nothing precluding PWCS from doing this right now."

The Herald contacted some coal companies about the controversy yesterday but none was prepared to comment on the record.

One adviser said: "Mr Tripodi has done what no other minister could do, he has united the coal industry.

"The only problem is that he has united it against him."

© 2008 Newcastle Herald

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