* Newcastle port officials ask coal producers to cut exports
* Rail logistics problems cause port congestion
* Expansion plans to boost capacity by 50 pct in two years
By Randy Fabi and Rebekah Kebede
SINGAPORE/PERTH, Sept 14 Severe congestion
problems at the world's biggest coal shipping port, Newcastle
in Australia, look set to constrain the country's coal exports
for at least another two years.
BHP Billiton (BHP.AX), Rio Tinto (RIO.AX), and other mining
companies have expanded operations to keep up with rising
Chinese and Indian coal demand, overstretching the capacity of
Australia's Newcastle port by almost 10 million tonnes on an
annual basis as it battles with bad weather and congestion.
Rail capacity from mines to the port was insufficient,
industry sources said, with some miners having sought more
loading allocations than needed, or overestimating their
ability to ship coal to the port by rail.
Coal is Australia's second biggest export earner after iron
ore and rapid growth in China and India have kept global coal
"China may have to look more to Indonesia or Vietnam if
Australia cannot meet their demands," said Lawrence Li, a
shipping analyst at UOB Kay Hian.
For a factbox on the port, click [ID:nSGE68D0BZ]
For details of India's appetite for coal [ID:nSGE6850BQ]
For details of coal's role in China's energy plan
For details of Indonesia's coal rail plans [ID:nSGE65K0AQ]
For recent Australian coal sector M&As [ID:nSGE66C099]
TERMINAL OPERATOR URGES CUTS
The Port Waratah Coal Services (PWCS), which operates
export terminals at Newcastle, has urged miners to cut coal
exports from the port because it could not cope with contracted
PWCS has secured coal producer contracts for 106.7 million
tonnes this year, but the company said it was only able to load
around 97 million tonnes.
Reducing shipping allocations due to system bottlenecks has
become a common event in recent years, industry officials said.
"The biggest problem on congestion has always been with
Newcastle. This is not a recent phenomenon," said Rahul Sharan,
shipping analyst at Drewry Shipping.
The port has sought special dispensation from the
Australian Competition and Consumer Commission (ACCC) six times
since 2004 to allow it to cut allocations to ease vessel
Another issue driving down the final exported tonnage
versus contracted tonnage is that producers repeatedly
overestimate coal shipping allocation needs, partly to escape
"Companies try to get as much allocation as they can. That
way if there's a problem, they can still continue to supply,"
said Peter Kopetz, an industry analyst with State One
Stockholding, Ltd. in Perth.
Among projects approved by port authorities is a new
terminal expected by the first quarter of 2011, which will
slowly increase annual capacity to 163 million tonnes.
"Expansion plans at Newcastle will increase coal handling
capacity by more than 50 percent in two years," Sharan said.
"This will ease congestion problems in Australia to some
Exports from Newcastle will reach 150.6 million tonnes by
2012, up from 93 million in 2009, Norwegian financial services
group DnB NOR forecast last month.
A reduction in supplies from Newcastle could provide
short-term support to coal prices and freight rates for dry
capesize vessels, some industry experts said.
"We will see an impact on coal prices. They will go up on
this," said Li.
But the market has already priced in traffic jams at
Australia's biggest coal port, others in the coal industry
"The bottlenecks have been around for years. I think
everyone's used to it," Kopetz said.
With an average waiting time between 10-15 days, more than
40 ships queue each day at Newcastle to load their coal cargo,
analysts and port officials say.
(Editing by Clarence Fernandez)