December 02, 2008

Xstrata calls for halting coal mine approvals in Australia

Bloomberg reported that world's largest exporter of thermal coal Xstrata wants Australia to halt new mine approvals to help ease port congestion that has caused a fourfold increase in penalties paid by the company because of delays.

The report cited Mr Peter Coates CEO of Xstrata's coal unit as saying said that the bottleneck at Newcastle cost Switzerland based Xstrata AUD 2.2 million a week in the H1 of 2007 as compared with AUD 500,000 in H1 of 2006.

He said that “That's a massive amount. Development consent should not be given unless a coal company comes in with a clear contract for port and rail capacity. We require 32 million tonnes of capacity this year to run our business and ended up with 26 million tonnes. The crazy part about this system is because of this common user turn of arrival system we had to give away our capacity to new starters so you have growing mines taking a share of our capacity.''

According to the latest port data the line of ships waiting to load cargoes at Newcastle stretched to a record 79 on July 2nd 2007 and stood at 54 on August 20th 2007.

According to government forecasts Xstrata, BHP Billiton and Rio Tinto Group are losing sales, hamstrung by insufficient port and rail capacity and Australia risks losing as much as AUD 7.9 billion in export revenue in the next decade if port and rail congestion is not resolved.