Australia's PWCS announces two-year delay to start-up of fourth Newcastle coal terminal
Friday, 15 June 2012 | 11:00
First coal exports from a new A$5 billion ($4.98 billion) coal terminal planned by Port Waratah Coal Services for Australia's Newcastle port are likely to start flowing in mid-2017, which is two years later than the terminal's original start-up date of early 2015, said PWCS in a statement Thursday.
The Terminal 4 project is needed in 2015 because PWCS' two existing coal terminals of Carrington and Kooragang at Newcastle port are forecast to be operating at their maximum shipment capacity of 145 million mt/year by January 2013, said the statement.
Coal producers have already signed contracts for additional capacity for coal exports in Terminal 4, but they have now been advised by PWCS that the facility is unlikely to be operating by early 2015, as was initially intended.
A spokesman for PWCS said the Terminal 4 project's 2015 start date had been moved back for two reasons, firstly, because of the "sheer technical complexity of the project" and secondly, due to the planning approvals process.
"It has been an extraordinarily tight time frame from the outset. There are variables within the planning approvals process and we cannot cut any corners," said the PWCS spokesman.
He said it was coincidental that PWCS had announced it was postponing the start-up of its Terminal 4 project at a time when international coal prices were softening.
Although, he conceded that the present market conditions would provide some breathing space on demands for extra coal export capacity at Newcastle port.
PWCS OBLIGED TO BUILD T4
"PWCS is contractually obliged to build Terminal 4 for which coal producers have signed contracts. The company is giving a clearer indication of when the first coal exports will flow," the PWCS spokesman said.
There is an additional setback for the Terminal 4 project, in that the Hunter Valley rail system will not be able to service the new terminal by early 2015, said PWCS in its statement.
"The issue of terminal capacity being ahead of overall coal chain capacity is ongoing," PWCS chief executive Hennie Du Plooy said in the statement.
He added that more work needed to be done to ensure that coal terminal and rail system capacity were better aligned for Newcastle port.
New South Wales coal exporters have entered into 10-year take-or-pay contracts with PWCS for coal export capacity at Newcastle port, which means they must pay for this capacity whether they use it or not.
PWCS currently has take-or-pay contracts with coal producers for 176.7 million mt of coal shipment capacity at Newcastle port in the 2016 year, including 34 million mt of capacity at the proposed Terminal 4.
PWCS said it expects to ship 110 million mt of coal exports from its terminals in the 2012 year, which is within their present capacity of 133 million mt/year and soon to be expanded to 144 million mt/year later this year.
The coal terminals operator said it was obliged to be transparent about the progress of the Terminal 4 project and PWCS was engaged in a constant dialogue with the coal industry on the matter.
To date, PWCS has spent A$110 million on the Terminal 4 project, including work on prefeasibility and environmental studies and land purchases, and had recently approved another A$60 million of expenditure, said the company's statement.
The Terminal 4 project is estimated by PWCS to cost around A$5 billion, and when complete the terminal will have a capacity for coal exports of 120 million mt/year, said the company's statement.
A third terminal at Newcastle port is operated by the BHP Billiton-led coal industry consortium Newcastle Coal Infrastructure Group, and is set to expand to a capacity of 52 million mt/year by the middle of this year.
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