Glencore Coal looks to derail ports charging option
Miner asserts monoply power without recourse was applied by new port operator after lease sale
Resources company subsidiary Glencore Coal is seeking to do what DP World only threatened to – pull the rug from under port lease-owners’ options to increase revenue streams.
Glencore has put its case to the Australian Competition Tribunal, a move stevedore DP World said it would consider last year when the Port of Melbourne Corporation sought a huge land rent increases in the lead-up to that port’s lease offering.
The Newcastle bid follows a 40 per cent Port of Newcastle Operations’ (PNO) post-lease hike in shipping channel charges of 40 per cent on average and 60 per cent for the most common ship type.
PNO, a joint venture between Hastings Funds Management and China Merchants Group, operates the port after the lease was bought for $1.75 billion
Glencore’s path to the tribunal over the past nine months has been rocky, having failed to convince the National Competition Council and therefore acting-treasurer Matthias Cormann of its case that the control of the port ‘Service’ should be ‘declared’ under the Competition and Consumer Act’s National Access Regime.
The tribunal hears applications for review of certain ministerial or the commission decisions in access matters.
Glencore contends PNO exercised unconstrained monopoly power in raising charges and did so without consultation.
"There is no ability or means for users of the Service to negotiate or arbitrate price or terms of access or have recourse to a regulatory process order to constrain the power of PNO as the monopoly provider of the Service," Glencore’s submission says.
PNO’s action put coal miners’ profit margins in jeopardy at a time of losses and the "prospect of further monopoly price increases in the future creates uncertainty for producers and acquirers of Hunter Valley coal which materially lessens the economic efficiency of dependent markets, including raising barriers to entry, blunting incentives to invest in expansion and new developments of mines or associated infrastructure and impairing the ability of Hunter Valley coal producers to effectively compete", it adds.
Should Glencore Coal be successful, the outcome may weaken states’ infrastructure lease bargaining positions as successful bidders will have a harder time recouping the huge outlays involved.