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Coal companies delay coal port upgrade -

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Coal companies delay coal port upgrade

Reporter: Peter McCutcheon

KERRY O'BRIEN: For the past three weeks, the massive coal-loading terminal at north Queensland's
Dalrymple Bay has been at the forefront of the Federal Government's complaints that the states are
not spending enough on major infrastructure projects. More than 50 ships are now in a queue off the
coast, many of them waiting up to a month to be loaded with coking and thermal coal in high demand
around the world. This bottleneck was one of the reasons the Prime Minister gave for setting up an
infrastructure task force, while the Queensland Premier this week announced plans to relieve the
congestion by fast-tracking a proposed port and rail expansion at the nearby Abbot Point. But as
Peter McCutcheon reports, since the Queensland Government privatised Dalrymple Bay several years
ago, plans to expand the terminal are being delayed by the competing commercial demands of the coal
companies that use it and the private company that runs it.

TERRY MACKENROTH, QUEENSLAND TREASURER: Nobody foresaw the increase in coal demand that we were
going to have. I mean, none of the coal companies did.

PETER COSTELLO, TREASURER: We are not going to allow this important matter of Australia's
infrastructure to wallow in incompetence, Mr Speaker.

PETER McCUTCHEON: According to the Federal Treasurer, this is Australia's worst bottleneck. The
world is hungry for our coal, but we just can't dig it out of the ground and ship it out fast
enough. More than 50 ships are now queued up outside Dalrymple Bay in North Queensland, creating
unprecedented delays.

KEN TALBOT, CHIEF EXECUTIVE, McARTHUR COAL: The annualised cost to the industry is in excess of
$A500 million. It is important we do something about it.

PETER McCUTCHEON: Removing log-jams like this one, could well hold the key to an improved export
performance and keeping interest rates low.

PETER McCUTCHEON: So how far ou are we at the moment?

FRANK ROSS: We're 3.8 kilometres from shore right now, Peter.

PETER McCUTCHEON: Our guide for the day, Frank Ross, explains the Dalrymple Bay terminal is one of
the largest coal ports in the world. There are still a fair few ships out there.

FRANK ROSS: There are a lot of ships waiting to come alongside.

PETER McCUTCHEON: Although the terminal's capacity has expanded by a third over the past four
years, coal companies say it's still not big enough.

KEN TALBOT: There's a certain urgency on the side of the coal industry to move this matter forward.

PETER McCUTCHEON: The queue started forming here six months ago and has been growing steadily ever
since. A ship now at the end of the line can expect a delay of four weeks before making its way to
the loading berth. And is expected to get worse with predictions the bay will soon run out of safe
anchorage points, forcing ships to wait further north off Mackay. One of the pressure points is
here, where coal from 11 mines in Queensland's Bowen Basin arrives at the terminal through two
unloading points. Some coal companies are arguing for the building of a third unloading system.

KEN TALBOT: We understand there is a 1.5 hour queuing time for trains going into the DBCT terminal
in a 20-hour cycle time for trains. We're not getting the full value of the trains.

PETER McCUTCHEON: Chief executive of Macarthur Coal, Ken Talbot, is calling for urgent action.

KEN TALBOT: We're saying let's make those decisions as quickly as we can and move on and get the
facility operating properly and get that queue of vessels reduced.

PETER McCUTCHEON: But negotiations for a further expansion have been long and complex. Although
Dalrymple Bay was built by the Queensland Government, it was privatised four years ago.

TERRY MACKENROTH: We sold a 99-year lease. So a private company runs it. The money that we get we
put back into services in Queensland.

PETER McCUTCHEON: And coal companies and the private company that holds the lease to the facility,
Prime Infrastructure, have been trying to hammer out a deal since 2001.

CHRIS CHAPMAN, CHIEF EXECUTIVE, PRIME INFRASTRUCTURE: Prime Infrastructure wants to expand. Under
our agreement with the state government we are obliged to expand subject to it only being economic
and reasonable to do so.

PETER McCUTCHEON: Prime Infrastructure's chief executive, Chris Chapman, explains the central issue
is how much the terminal is able to charge port users. An independent statutory body, the
Queensland Competition Authority, has been considering the issue for nearly two years and it is
this delay the PM seized on when announcing his infrastructure task force recently.

JOHN HOWARD, PM: I think the delay that has occurred in relation to Dalrymple Bay through the
Queensland Competition Authority is ridiculous.

CHRIS CHAPMAN: The whole process has been too long. I don't think there is any shying away from
that conclusion.

PETER McCUTCHEON: Queensland's Treasurer, Terry Mackenroth, argues it's a difficult process.

TERRY MACKENROTH: The coal companies want to pay less than what Prime want to charge. The QCA are
charged with coming up with a fair price. It takes a fair amount of work to come to that point.

PETER McCUTCHEON: While the stand-off over further expansion continues, Prime Infrastructure says
the present queue is partly the result of coal companies over-selling. This month, for example,
Prime says coal companies simply aren't supplying enough coal to match the rate at which ships are

CHRIS CHAPMAN: That is really an insight into what's happening. Not a lot of coal being delivered
comparatively to the number of ships that are arriving and you end up with a queue.

KEN TALBOT: We have a different view on that. Shipments always go up and down. We can't control
that one week to another. However, over a 3-monthly period, can I say that the shipments are in
line with our contracts.

PETER McCUTCHEON: Despite the finger-pointing, the sudden surge in demand for coal has taken most
by surprise. This in turn has exposed a weakness in the process of expanding this critical piece of
infrastructure. And all parties agree they have learnt some valuable lessons.

CHRIS CHAPMAN: We need to have some time constraints and have certainty to the process and speedier

KEN TALBOT: I think in the last 3.5 years everybody needs to take responsibility. What we're saying
now is we don't want to play catch-up, it's time to make decisions and get on with business.

KERRY O'BRIEN: If only. Peter McCutcheon with that report.