Coal news and updates

The cost of using the 85mn t/yr Queensland coal export port of Dalrymple Bay Coal Terminal (DBCT) is set to increase, after the Queensland Competition Authority (QCA) agreed to a much lighter regulatory framework.

 

The QCA has agreed that Dalrymple Bay Infrastructure (DBI), which operates DBCT, can set prices through negotiation with coal mining customers from 1 July, replacing a mandated tariff model for at least five years. This will allow DBI to increase coal handling costs for some of the more marginal coal producers in Queensland's central Bowen basin.

 

Under the mandated tariffs, DBCT's coal handling charges are slightly higher than the RG Tanna terminals at Gladstone, slightly lower than those at Adani-operated Abbot Point terminal near the town of Bowen and much lower than the Wiggins Island Coal Export Terminal (WICET) at Gladstone. But DBCT's proximity to mines in the central Bowen basin makes it the cheaper option for many mining firms once rail costs are included.

 

DBI may seek to raise its charges for certain customers so that the overall infrastructure usage fees match those of RG Tanna or Abbot Point. The problem for DBI is that is services some of the most marginal producers at a time when low prices are making them unprofitable, which means that they risk putting their customers out of business by negotiating too hard.

 

"Moving towards a commercial price setting framework will allow us to agree tariffs with individual customers that better reflect their needs and the value we provide to them," DBI chief executive Anthony Timbrell said. The take-or-pay elements in contract would stay in place until 2028, he added. Take of pay contracts lock coal mining firms into paying port fees even if they do not use the capacity contracted due to lack of demand or supply side issues, and reduce the ability of mining firms to flex production in response to market conditions.

 

DBCT shipped just 54.6mn t of coal in 2020, down from 66.7mn t in 2019 as some coal mining firms entered administration and others paid for unsent tonnage due to safety concerns at mines such as Anglo American's Moranbah and Grosvenor mines. Large firms like Anglo American have vowed to stand by their loss-making coking coal operations with a view to their long term profitability as trade flows adjust to accommodate China's ban on Australian coal imports or Beijing lifts the ban.

 

Argus last assessed the premium hard low-volatile coking coal price at $112 fob Australia on 30 March, down from a recent high of $157.25/t at the start of February, and back close to the $100-110/t seen for most of June-December 2020.

 

The other major Queensland coal port of Hay Point, which is adjacent to DBCT, is owned and operated by BHP Mitsubishi Alliance and reserved for its use.

 

Source : https://www.argusmedia.com/en/news