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Australia: Coal puts heat on ports

THE ships in this photograph are costing Australian mines and their clients more than $2 million a day or $720 million a year.

The fleet of 30 carriers has been virtually stranded off Mackay this week while millions of tonnes of valuable export coal remain on shore.

Queensland's coal producers are struggling to get the product to the coast and onto the boats because of the state's inadequate port facilities.

The state should be taking full advantage of a tripling in world coal prices over the past 18 months but basic transport is holding up profits.

As soon as one ship prepares to steam off with up to 200,000 tonnes on board, another moves to take its place in a continuous process now pushing port infrastructure to its limit.

Dalrymple Bay is processing up to 17 trains a day and loading ships via many kilometres of conveyor belts, but even with the port running at full capacity, the ships lying offshore can face a wait of up to a week or more.

Despite massive port expansion plans along the coast, the situation could get worse, with forecasts that the exports will continue to increase by about 7 per cent a year until 2010.

And the queue is expected to lengthen considerably unless this crucial export bottleneck is eliminated - a job which must occur in stages and will take at least three years to complete.

The state-run port of Gladstone is undergoing expansion. BHP Billiton Mitsubishi Alliance has also committed to expand its Hay Point terminal.

And next door to Hay Point, Prime Infrastructure now finds itself under immense pressure to push ahead with a $600 million expansion of its leased Dalrymple Bay Coal Terminal.

"Dalrymple Bay is fundamentally important to the coal industry in Queensland," Premier Peter Beattie said this week. "We've got a huge problem.

"We've got the coal and we've got to get it out and we want to see expansion."

Prime says it is pushing ahead with all the planning work, but won't be making a decision to go ahead until after next April when the Queensland Competition Authority is due to finalise the price mines can be charged for coal handling.

Coking coal prices have virtually tripled to more than US$135 a tonne in the past 18 months due to soaring and largely unforeseen demand from China.

Consequently, miners like Macarthur Coal and Rio Tinto, which have capacity to lift production, are anxious to cash in quickly on the spike in demand and higher prices on offer.

So too is the Queensland Government as Treasury salivates over the prospect of rising royalty payments as a percentage of gross sales topping up the State's coffers.

The crisis in coal exports has come amid demand for increased spending to service a growing population and economy.

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