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Queensland Coal Ports: Shortfall or Surplus?

Date:04/11/2013   View: 1147   Tags: Queensland Coal Ports
For most of the mining boom, Queensland was scrambling to develop its ports. But did it go overboard and build too much?<br /> <br /> Arguing the affirmative, the Centre for Policy Development published a report on Monday that says the state now has surplus port capacity and is at risk of dealing with stranded assets in the longer term.<br /> <br /> For the negative, the Queensland Resources Council says the CPD is using “dodgy figures” and more port capacity is needed to avoid bottlenecks, particularly following approval for a major coal mine in the Galilee Basin.<br /> <br /> The debate comes as BHP Billiton formally extracts itself from the development of the Abbot Point port south of Townsville. The company decided back in 2012 to pull out of all growth projects in Queensland, apart from those underway, and says it has enough port capacity until 2024.<br /> <br /> It also comes as Queensland develops its ports strategy. The state government released a draft Queensland Ports Strategy in October and is taking public comments until December 13.<br /> <br /> It also comes amid criticism from the United Nations and environmentalists that massive coastal development in Queensland is threatening the Great Barrier Reef, which is priceless in ecological terms and worth $5.4 billion annually in tourism dollars.<br /> <br /> Too many ports in a storm<br /> <br /> The CPD report welcomes the recent release of a draft Queensland Ports Strategy, saying it shows the government is “now serious about coordinating more sensible investment in ports”.<br /> <br /> However, it argues the Queensland government’s policies and attitudes generally helped “to amplify rather than check the irrational exuberance of private investors”.<br /> <br /> “Until late 2012, no one in Queensland’s government provided reality checks on projections of coal or LNG exports, the port capacity needed, nor the royalties the government could expect,” the report says.<br /> <br /> “Port authorities, Queensland Treasury and Government ministers all relied on each other, and ultimately on industry data about the prospects for growth.”<br /> <br /> Instead the government’s 2010 Coal Plan relied on modelling by energy consultancy Wood Mackenzie that assumed no reduction in 2010 real price levels for either thermal or metallurgical coal in the period to 2030. That was “wildly optimistic”, given the price of coal has fallen 22 per cent from its 2010 average to $77.60 per metric tonne.<br /> <br /> The CPD report argues Queensland’s coal ports are currently operating at 65 per cent of capacity and usage may remain below the industry average of 85 per cent if the global thermal coal market shifts to structural oversupply, or Queensland loses share to cheaper producers, or both.<br /> <br /> Meanwhile, duplication of liquefied natural gas (LNG) ports on Curtis Island at Gladstone are dragging down industry competitiveness even before the first gas exports flow, the report says.<br /> <br /> The report identifies 15 trading ports along the Queensland coastline, mostly next to the Great Barrier Reef with ships passing through the World Heritage area to reach them. The Great Barrier Reef ports handle 78 per cent of the state’s inbound and outbound trade volume, with exports worth $40 billion in 2011-2012, dominated by coal.<br /> <br /> The CPD is a think tank funded by donors that include BRW Rich 200 member Graeme Wood through his philanthropic foundation.<br /> <br /> Mining industry rebuttal<br /> <br /> The mining industry has a different view.<br /> <br /> The Queensland Resources Council chief executive, Michael Roche, told ABC radio on Monday morning that the CPD used “dodgy” numbers and the industry needed to plan ahead.<br /> <br /> “We don’t rely on the Centre for Policy Development to plan our port expansion because if we did, we’d be in the same situation the industry found itself in just a few years ago,” Roche says.<br /> <br /> “It wasn’t that long ago that people were complaining there wasn’t enough port capacity, there were shortages of port capacity at places like Dalrymple Bay coal terminal and we had bottlenecks in the supply chain. It’s always important to be planning ahead, to have some spare capacity and to make sure that as the industry grows there is new capacity being planned and ready for that growth.”<br /> <br /> Roche says coal exports were up 20 per cent on this time last year and the industry was already testing the limits of the ports and rail system. A lot more infrastructure would be required to deal with the production from the Galilee Basin, with the federal government approving GVK Hancock’s Kevin’s Corner coal mine just last week.<br /> <br /> Roche says the CPD used “dodgy” figures to make its case.<br /> <br /> “What they’ve done is averaged the throughput at our existing ports over a period of about three years and slap bang in the middle of that period is the flood-affected years where the coalmines were running below capacity,” Roche says.<br /> <br /> “They’ve also ignored the fact that the Abbot Point expansion didn’t actually come online until about halfway through that period. So the numbers are dodgy and the industry has nothing to be embarrassed about in planning ahead including the expansion at Abbot Point.”<br /> <br /> <p> He adds that the most up-to-date numbers showed a greater utilisation of ports than in the CPD report. For example, the Hay Point coal terminal was doing a throughput of 42 million tonnes and had capacity for 44 million, which was why it was expanding to 55 million. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20131104/20131104171302_8838.jpg" width="600" height="337" alt="" /> </p>

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