Coal exporters concerned that China-Newcastle Port deal could push up costs

Companies that rely on Newcastle Port to export Australian coal are worried that Yancoal’s Coal & Allied deal could push up costs and create market distortion, it has been reported.

The Chinese state-owned miner is currently bidding for Coal & Allied’s 38.4% stake in Port Waratah Coal Services (PWCS), the operator which manages nearly all coal exports from Newcastle.

With the port itself already half-owned by another Chinese government-owned company, other firms are reportedly concerned that increased Chinese government control and coordination could encourage Yancoal to lift port charges at PWCS.

In turn, this would force mines in the Hunter Valley to make savings, or threaten the viability of mines, potentially putting jobs at risk.

The companies using the port are also said to be concerned about the risk of coal market distortion, with Yancoal’s parent company saying the deal would give it greater price-setting power over Asia-Pacific coal.

In recent years China has shown it is ready and willing to intervene in global coal markets, depressing or increasing the price depending on its economic needs, and the Yancoal deal is expected to increase that influence.