Australia’s port expansion isn’t enough

Despite planned expansions, the ability of Australian seaports to handle increased coal shipments is unlikely to improve in the next few years, the head of the world’s largest coal producer says.

“It’s not going to happen,” Gregory Boyce, chairman and chief executive of Peabody Energy Corp told Wall Street analysts.

During a conference call to discuss Peabody’s first-quarter financial results, Boyce was asked whether recent congestion at Australian ports would be fixed soon.

“It depends on what you mean by ‘fixed,'” says Boyce.

“We’ll see some substantial increases in port capacity, but enough to satisfy demand? They will still be short.”

With demand for coal soaring, especially in Asia, companies like Peabody are shipping more from Australia, where the US-based company operates mines.

It acquired Australia’s Excel Coal Ltd in 2006 for $1.5 billion.

But some seaborne exports have been delayed because of congestion at Australian ports.

Last April, Australia’s NSW state government approved plans for a new coal export terminal at the port of Newcastle, where severe congestion has hurt exports.

The terminal, planned to start operations in 2009, will add nearly two-thirds to the port’s current capacity of 102 million tonnes a year.

The NSW government also approved a plan to expand an existing coal terminal at Newcastle.

The announcement came as queues at the port, the world’s biggest coal export terminal, reached a record level of 72 ships a month, with an average waiting time of 28 days.

The delays, caused by infrastructure constraints and maintenance work, have hurt exports of coal just as demand has soared on world markets.

Australia is the world’s largest producer of thermal coal and the delays cost the industry more than $A1 million a day in compensation to shipping firms.

Further north, on the Queensland coast, the Dalrymple Bay Coal Terminal is also being expanded from around 59 million tonnes per year to 85 million tonnes capacity.

Source: Industry Search

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