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New South Wales to sell the port of Newcastle

World Coal,

The Government of New South Wales has unveiled plans to offer a long-term lease for the port of Newcastle as part of a plan to raise funds for infrastructure projects. Newcastle is the worlds largest coal port, shipping around 132.5 million t in 2012.

“We act now” – Mike Baird

The move comes after sale of 99-year leases for the ports of Kembla and Botany in April, which raised AU$ 5.06 billion. “The success of Port Botany and Port Kembla dictates that we act now,” Mike Baird, the New South Wales treasurer, said. Port Kembla shipped 12.9 million t of coal in the 2012 – 2013 financial year, while Botany is the nation’s second largest container port.

But not all are in favour of the move. John Robertson, leader of the state opposition, labelled the plan as “absurd”: "What you've got is a community asset that provides economic opportunities for the Hunter [Valley], provides jobs in the Hunter, provides revenue to the budget, and the government is now just going to flog it off and that's going to have a detrimental impact on the economy in the Hunter," he said.

Coal downturn?

It also comes at a time when the Australian coal industry is suffering from low prices for its coal, as well as rising costs of production at home. As a result, the state royalties received from the coal industry were AU$ 1.305 billion, down from the forecasted AU$ 1.878 billion.

Supplementary royalties introduced on the back of the federal government’s Mineral Resource Rent Tax (MRRT) were also revised down to zero from an estimated AU$ 1.5 billion over four years in the previous year’s budget. This follows a drop in the federal government’s estimated revenue from the MRRT.

Despite this, there is still interest in Australian mining assets from abroad with Marubuni Corp., a Japanese trading house, Shenhua Group, China’s largest coal company, and India’s Aditya Birla Group and Coal India all reported to be eyeing assets owned by Rio Tinto.

Written by Jonathan Rowland.

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