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Denise McMillan Chairman, HVCCLT BITRE Colloquium: June 2008, Canberra. Despite the debate about Climate Change, coal will continue to be in strong demand into the medium term – although “costs” are likely to increase with carbon taxes or equivalent:

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Presentation Transcript
coal outlook
Despite the debate about Climate Change, coal will continue to be in strong demand into the medium term – although “costs” are likely to increase with carbon taxes or equivalent:

“There will be a 55% growth in coal power generation (2.1m MW) by 2020

“ By 2020 China will have twice the coal fired power generation capacity of the US; - But only half the capacity per capita

“ Coal remains the most cost effective option for power generation”….….…. McLLvaine Report: Coal Fired Boilers; World Analysis and Forecast 2007

Coal Outlook
hunter valley coal chain the worlds largest coal export operation
Hunter Valley Coal Chain: The Worlds Largest Coal Export Operation
  • 40 Coal Mines
  • 17 Producers
  • 30 Load Points
  • > 80 Different Brands of Coal
  • 2 Above Rail Operators
  • 29 Trains/15,000 trips per year
  • 2 Track Owner/Operators
  • Haulage distances up to 350km
  • 2 Coal Loading Terminals – KCT & CCT
  • 5 Dump Stations
  • 1.5Mt of Working Stockyard
  • 5 Ship Berths and Loaders, “4 Queues”
  • Approx. 1000 vessels per year
  • Average vessel size is 84kt
  • Avg 2 Cargoes per Vessel
  • Multiple Components per Cargo
  • Tidal constrained river port
  • 10% Domestic Consumption
  • 90% Export – mostly Thermal coal
  • 70% to Japanese Power Stations
  • Turn of Arrival loading port
  • JIT cargo assembly process
  • 16 independent organisations required to move each tonne of coal
  • No control over demand – only two weeks visibility and highly variable volumes
  • Avg 5 days clean coal on stock at the mines

Q: How to maximise system throughput and drive efficient asset utilisation?

hvcclt a cooperative planning and operating model
HVCCLT: A Cooperative Planning and Operating Model
  • Joint Venture between the organisations that own the train, track, terminal and port infrastructure
  • The movement of every tonne of domestic and export coal is planned via the HVCCLT
  • HVCCLT provides a ‘system wide’ forum for pursuing operational improvements and making efficient decisions about future investment in infrastructure
  • Provides centralised planning services on behalf of its members:
    • Short term objective – focus on maximising daily capacity and throughput
    • Long term objective – realise cohesive investment planning
  • Established under an MoU in July 2005 – operates on a premise of cooperation between the member organisations
  • Membership includes all transport asset owners in the Hunter Valley – and the newest operator, NCIG, have expressed intent to participate in the model
  • 30 Employees seconded from member organisations
  • $5 million investment in state-of-the-art constraint based planning technology and models
declared capacity 2008
Minimum Throughput Estimate :

Base Coal Chain Capacity 118Mt

Less Planned ARTC & PWCS Asset Unavailability 11Mt

Less Risk Adjustment (Demand profile, Reliability, Other) 2Mt

Less 10% Unplanned Capacity Losses 10Mt

Minimum Throughput Estimate (Mtpa) ~95Mt

Declared Capacity 2008
vessel queue
Vessel Queue

Newcastle End of Month Vessel Queue Actual & Forecast

(Updated 1 June 2008)

Effect of June 8th Storms

Vessel Queue with CBS

Avg Approx 18, but with big fluctuations

Offshore

Vessel

Queue

Pre-CBS Vessel Queue

CBS Reinstated

CBS

Effectively Concluded

CBS Commenced

by PWCS

hvcclt planning for performance
Track Infrastructure:

ARTC / RIC

Port Coal Handling Services:

PWCS

NCIG

Train Operators:

Pacific National

QRN

HVCCLT: Planning for performance

Is it as simple as

“building more infrastructure”

?

the challenge
The Challenge

Target delivered capacity

3rd Track

Maitland to

Whittingham

NCIG

Full MB-A Dup

& 3 Exp aligned

Base Case unable to achieve a “target” demand of 145Mtpa of delivered capacity and results in unacceptably high vessel turn around times

hvcclt model the opportunities
Strengths

Clearer definition of issues

Integrated planning is now occurring

Formal structure

System assets utilisation is being maximised

Each member still has full responsibility for assets

HVCCLT Model – The Opportunities
hvcclt model opportunity
Weaknesses

Is a cooperative collaboration… - Fragile

Disparate data sources can lead to non shared understanding

Staff are still employed by member organisations – perceptions of independence

Model currently excludes producers as members

Pieces of the chain are ‘linked’ – not ‘bonded’….

HVCCLT Model – Opportunity
hardware vs software coal chain complexities the hvcclt model
Capacity Development: Use & Allocation

Demand Profile?

What ‘Toys’ ?

Funding

Risk Profile

Risk Sharing

Contractual Alignment

Queue Management

“Hardware” vs “Software”: Coal Chain Complexities & The HVCCLT Model
moving forward
Common understanding and alignment between Producers, Ports, Track & Operatorswith respect to:

Demand Profile

Asset suite to deliver reliable capacity

Investment Triggers

Contractual & Commercial Alignment

Certainty of Outcome

Moving Forward
hvccc proposal
“Greiner” Review Outcomes:

Agreement of Coal Chain Principles

Establishment of HVCCC as legal entity

Producer & Service Provider Board representation

HVCCC to employ staff directly

Industry commitment to 10 year take or pay rolling contracts

Contracts & performance to reflect capacity utilisation

HVCCC – Proposal
hvcclt overview of planned investment
Appendix I – For information only

HVCCLT members recognise that infrastructure planning must be undertaken as a holistic system plan

HVCCLT members are working together to ensure all plans are complementary and will meet future system needs

Note plans are constantly reviewed and future works may change subject to delivery schedules, demand expectations or better options are resolved.

The following is an outline of current planned investments

to future system development

HVCCLT – Overview of planned Investment
port waratah coal services
Port Waratah Coal Services Limited (PWCS) is an unlisted public company owned by the Hunter Valley Coal Industry (70%) and Japanese Coal Customers (30%)

PWCS is the worlds largest coal handling facility and currently exports coal valued above $5 billion per year

PWCS’ terminals are an important part of regional, state and national economies - coal exported through PWCS facilities counts as Australia’s largest commodity export

PWCS owns and operates two coal handling facilities in the Port of Newcastle, Carrington Terminal at a capacity of 25 million tonnes per year and Kooragang Terminal at a capacity of 77 million tonnes per year following the completion of the Project 3D expansion in March 2007

Port Waratah Coal Services
port waratah coal services1
Expansion to 102 Mtpa (Project 3D- new pad & stacker) was completed in March 2007, nine months ahead of schedule and under budget

Development Application approval to increase the throughput capacity of the Kooragang Terminal to 120 Mtpa (total PWCS approved capacity of 145 Mtpa) was received on 13 April 2007

Board considered expansion at May 2007 Board meeting

Announcement of further expansion of Kooragang Terminal at a cost of $458 Million to 88 Mtpa (combined PWCS capacity of 113 Mtpa) made on 20 June 2007

Expansion beyond 113 Mtpa (fourth operating berth, western extension of stockpile pads C and D, the remainder of upgrades to the original stacking stream and the replacement of the remaining two original Kooragang Terminal stacking machines) will be considered in the future in order to meet long term Customer requirements

Port Waratah Coal Services
slide20

Newcastle Coal Infrastructure Group- NCIG

  • NCIG established August 2004
  • Objective : To increase total export capacity for Port of Newcastle via construction of a third coal terminal
  • Members (shareholding):
    • BHP Billiton – through Hunter Valley Energy Coal (35.46%)
    • Centennial Coal (8.78%)
    • Donaldson Coal (11.60%)
    • Peabody Energy (17.68%)
    • Felix Resources (15.4%)
    • Whitehaven Coal (11.06%)
slide21

NCIG Status & Timetable

  • Project Approval granted 13 April 2007
  • Quarter 4 2007 : Commence construction of the project and dredging
  • Quarter 2 2009 : Complete dredging
  • Quarter 1 2010 : Commence operations (first ship loaded)
  • End 2010 : Commence full operations – 30 Mtpa
slide22

Port of Newcastle – Future Capacity

PWCS – Kooragang : 88 Mtpa – mid 2009

PWCS – Carrington : 25 Mtpa

NCIG – Kooragang : 30 Mtpa – 2010

TOTAL : 143 Mtpa 2010

artc investment
Project 2007-2012 Strategy 2007-2012

Timing Strategy Cost

Order of Magnitude

Newcastle-Muswellbrook

Sandgate Grade Separation Completed

80 km/h approaching Minimbah Bank Completed

Muswellbrook Loop & Junction Completed

80 km/h approaching Nundah Bank Completed

Antiene to Grasstree duplication Q1 2009 $ 29,891,000

Bidirectional signalling Maitland to Branxton Q3 2009 $ 22,500,000

Bidirectional signalling Grasstree – St Heliers Q3 2009

St Heliers – Muswellbrook duplication Q3 2009 $ 27,000,000

Minimbah Bank 3rd road Q4 2009 $100,000,000

Newdell Junction Q1 2010 $ 7,200,000

Drayton Junction upgrade 2011 $ 6,000,000

Minimbah – Maitland 3rd road 2012 $270,000,000

Muswellbrook – Ulan

Ulan line CTC Completed

Mangoola (304km) loop Q4 2008 $ 9,030,000

Rylestone Rd (381 km) loop Q4 2008 $ 9,000,000

Wollar (410 km) loop Q4 2008 $ 10,726,000

Aerosol Valley (370 km) loop 2010 $ 9,000,000

Worondi (348 km) loop 2010 $ 9,000,000

Radio Hut (319 km) loop 2012 $ 9,000,000

Muswellbrook – Bengalla duplication 2012 $ 30,000,000

ARTC Investment
artc investment1
Project 2007-2012 Strategy 2007-2012

Timing Strategy Cost

Order of Magnitude

Muswellbrook – Narrabri

Togar loop extension Completed

Murulla loop extension Completed

Gunnedah loop (RIC) Completed

Willow Tree loop extension Completed

Werris Creek loop extension Completed

Ardglen loop extension Q2 2008 $ 9,782,000

Breeza loop extension (RIC) Q3 2008 $ 3,500,000

Curlewis loop extension (RIC) Q3 2008 $ 3,500,000

Werris Creek to Gunnedah CTC (RIC) Q3 2008 $ 10,000,000

Gunnedah – Narrabri CTC (RIC) 2010 $ 10,000,000

Emerald Hill loop extension (RIC) 2010 $ 3,500,000

Boggabri loop extension (RIC) 2010 $ 3,500,000

Braefield passing loop 2010 $ 9,000,000

Murrundi loop extension 2011 $ 6,500,000

Werris Creek Bypass 2011 $ 17,200,000

Parkville loop extension 2011 $ 6,500,000

Scone reconfiguration 2011 $ 1,700,000

Watermark passing loop (RIC) 2011 $ 9,000,000

Muswellbrook – Koolbury duplication 2011 $ 35,000,000

Quipolly passing loop 2011 $ 9,000,000

Wingen passing loop 2012 $ 9,000,000

South Gunnedah passing loop (RIC) 2012 $ 9,000,000

New Liverpool Range alignment 2012 $290,000,000

Burilda loop extension 2012 $ 9,000,000

TOTAL PROGRAMME COST > $1 Billion

ARTC Investment
conclusion
Together, the members of the NSW HVCCLT are committed to delivering the most efficient ‘Pit to Port’ shipment of coal for customers.

The current structure ensures current system assets are being used to deliver the maximum amount of coal throughput.

Short term, HVCCLT focuses on planning & performance of current assets

Medium term, investment in complementary infrastructure and operating systems is already underway to ensure we can meet known demand.

Long term, HVCCLT members will engage in rolling review of whole of system investment strategies to create a holistic plan ensuring demand and capacity are always in alignment going forward.

Conclusion
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