Port Waratah Coal Services – Expansion Plans and Future ... · PWCS is the World’s largest export coal handling facility and currently exports coal valued at well above $5 billion

Commercial in Confidence © PWCS 2008. All Rights Reserved

Port Waratah Coal Services – Expansion Plansand Future ChallengesPort Waratah Coal Services – Expansion Plansand Future Challenges

Australian Coal Preparation Society Presentation

Shaun Sears, Manager Live Run and Operational Improvement

July 2008

2Commercial in Confidence © PWCS 2008. All Rights Reserved

Content

� Port Waratah Coal Services Ownership

� Recent Coal Chain Performance– Coal Chain Overview– 2007 Performance– 2008 Performance (year to date)

� Capacity Balancing System History

� Port Waratah Coal Services - Expansion and Improvement Plans– Expansion History– Future Expansion Options







Coal & Allied

Newcastle Coal Shippers

3.5% BloomfieldImporters

2.8% Bloomfield1.7% BHP Billiton

Anglo Coal

PWCS

Coal & Allied

Xstrata

Other

Port Waratah Coal Services Effective Ownership Newca stle Coal Shippers Effective Ownership

30.0%

29.6%

36.9%

6.7%

20.0%22.7%

37.1%

PORT WARATAH COAL SERVICES OWNERSHIP STRUCTURE

9.0%

PWCS Ownership Structure

� PWCS is an unlisted public company owned by the Hunter Valley Coal Industry (70%) and Japanese Coal Customers (30%)

� PWCS is the World’s largest export coal handling facility and currently exports coal valued at well above $5 billion per year

� PWCS’ terminals are economically and socially an important part of regional, state and national economies

� PWCS owns and operates two coal handling facilities in the Port of Newcastle, Carrington Terminal at a capacity of 25 Mtpa and Kooragang Terminal at a current capacity of 77 Mtpa (incremental increases in capacity to Q1 2010)

No. of

Directors

Newcastle Coal Shippers 4

Bloomfield Collieries

Coal & Allied 3 (including

independent Chairman)

Japanese Trading 3

Japanese Power, Cement, Oil

Total 10


PWCS Coal Terminals

Carrington CoalTerminal

Kooragang CoalTerminal







Hunter Valley Coal Chain - The Worlds Largest Coal Export Operation

• 40 Coal Mines • 16 Producers• 27 Load Points• > 80 Different Brands of Coal

• 2 Above Rail Operators• 30 Trains/15,000 trips per year• 2 Track Owner/Operators• Haulage distances up to 350km

• 2 Coal Loading Terminals • 5 Dump Stations• 2.2 Mt of Working Stockyard• 5 Ship Berths and Loaders

• Approx. 1000 vessels per year• Average vessel size is 89kt • Avg 2 Cargoes per Vessel• Tidal constrained river port

• 10% Domestic Consumption• 90% Export – mostly Thermal coal• 65% to Japanese & Korean

markets

Operating “Rules”

� Turn of arrival, cargo assembly vessel servicing

� Approx 1.2Mt to 1.5Mt of Terminal working stockpile capacity

� Approx 3.0Mt to 4.0Mt of total working washed coal stockpile capacity at mines

� Average cargo assembly task;– 260,000t/day, 42 train trips– 17 to 19 load points/day required


Hunter Valley Coal Chain Performance - 2007

98.895.7

88.284.6

3.10

0.930.13 4.34

1.88

0.15 0.04 0.1 1.60.5 0.9

0.7

80

85

90

95

100

105

Target P

lanned

Rat

e

Capacit

y Varia

ncePlanned

Rate

ARTCHVCCLT PN

PWCS

QRNational

RailCo rp

Member D

el ivere

d Capa

city

Roll-In/O

utCus

tome r

Over/U

nder L

oading

Wea

ther

Other

Throug

hput

Achieve

d(M

tpa)

2007 Operational Performance Summary

0.4Mt variance due to June storm included

2.1Mt variance due to June storm included



� Set a new record safety performance as measured by number of consecutive days serious injury free

� Commissioned expansion of Project 3D under budget and ahead of schedule (March 2007)

� Commenced Project 3Exp whilst undertaking 3D expansion and operating at record levels

� Made major improvements in operational reliability, finished the year under budget.

� New Certified Agreement for employees covered under award – Christmas Day is now a normal “Working Day”

� Formed new operating department, Live Run and Operational Improvement group

� From June 2007 worked closely with NPC, Vessel Owners / Agents / Operators to improve ship loading performance. Significant improvements in Vessel and Gross Load rates achieved;

– VLR up from average 5,100tph in 2006 to 5,800 tph – GLR up from average 3,800tph in 2006 to 4,800 tph

KCT Load Rates 2007

3000

3500

4000

4500

5000

5500

6000

6500

Jan-0

7

Feb-07

Mar-07

Apr-07

May-07

Jun-0

7

Jul-0

7

Aug-07

Sep-07

Oct-07

Nov-0

7

Dec-0

7

Tonn

es p

er h

our

Average Gross Load Rate Average Vessel Load Rate

Vessel suitability & performance monitoring

commenced

PWCS Days Cancellation Free

0

5

10

15

20

25

30

Jan-

05

Apr-0

5

Jul-0

5

Oct-05

Jan-

06

Apr-0

6

Jul-0

6

Oct-06

Jan-

07

Apr-0

7

Jul-0

7

Oct-07

Day

s

Control system issues

3.13 conveyor issues

Power outage, stacker & conveyor issues



Numerous receivals and shiploading records established.

1,224102Dec-07Total number of vessels loaded

Vessels/YrVesselsMonthRecord

1018,438Dec-07PWCS monthly total shiploading

97.68,137Dec-07PWCS monthly total receivals

MtpaKtMonthRecord



Hunter Valley Coal Chain Performance - 2008 YTD (End May 2008)

106.0103.8

93.290.6

2.13

1.260.19

0.08 0.19

0.70.30.11.7

2.58

6.37

80

85

90

95

100

105

110

115

Targe

t Pla

nned

Rate

Capac

ity V

arian

cePlann

ed R

a te

ARTCHVCCLT PN

PWCS

QRNation

alLiv

eRun

Mem

ber D

elive

red C

apac

ityRoll

-In/O

utCus

tomer

Over/U

nder

Loadin

gW

eath

er

Other

Throu

ghpu

t Ach

ieved

(Mtp

a)







Historical Vessel Queues

Offshore Queue at Newcastle

0

10

20

30

40

50

60

70

80

90

1 Ja

n 04

1 M

ar 0

41

May

04

1 Ju

l 04

1 Sep

04

1 Nov

04

1 Ja

n 05

1 M

ar 0

51

May

05

1 Ju

l 05

1 Sep

05

1 Nov

05

1 Ja

n 06

1 M

ar 0

61

May

06

1 Ju

l 06

1 Sep

06

1 Nov

06

1 Ja

n 07

1 M

ar 0

71

May

07

1 Ju

l 07

1 Sep

07

1 Nov

07

1 Ja

n 08

1 M

ar 0

8

Ves

sels

Offs

hore

Capacity Distribution System introduced in April 2004

Capacity Balancing System introduced in January 2005

Producers voted to switch off Capacity Balancing System in September 2006

Modified Capacity Balancing System reinstated for 2007

Major storms / flooding causing port closure and impact rail track


History of Allocation Systems

99 Mt

2005

� PWCS introduced 1 year binding take or pay demand nominations.

� In January 2005, PWCS introduced a medium term Capacity Balancing System (CBS). The CBS was authorised by the ACCC until the end of 2007. The CBS required the support of producers to continue each year.

� Producers voted to continue the CBS in 2006.

� PWCS provided the opportunity for producers to reduce their existing binding take or pay demand nominations.

� In April 2004, PWCS introduced a Capacity Distribution System (CDS) with ACCC authorisation until the end of 2004.

2004 2005 2006

� PWCS introduced 3 year binding take or pay demand nominations.

� Producers voted notto continue the CBS in 2007.

� PWCS sought indicative long term demand forecasts from producers.

165 Mt150 Mt132 Mt119 Mt103 Mt

2010 *2009 *200820072006

116 Mt107 Mt

20082007

* Indicative only12 Mt 16 Mt







0

20

40

60

80

100

120

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

PWCS Expansion Ahead of Coal Chain Throughput Over Last 15 Years

PW

CS

Thr

ough

put C

apac

ity (

Mtp

a)

46 to 57 Mtpa

1993-1994Stage 2A Kooragang Terminal Expansion

• 2nd berth – K5

57 to 66 Mtpa

1995-1996Stage 2B Kooragang Terminal Expansion

• Stockyard extension• 2nd rail receival – DS 2• 2nd ship loader – 7.09

66 to 77 Mtpa

1997-1999Stage 3A Kooragang Terminal Expansion

• 3rd berth – K6

1999-2002Stage 3B &C Kooragang

Terminal Expansion• 3rd rail receival – DS 3

• Additional stockyard – Pad C• 3rd reclaimer – 4.11

• 3rd ship loader – 7.10

A$330m77 to 89 Mtpa

2005-2007Stage 3D KooragangTerminal Expansion

• 4th stacking stream – 3.22• Additional stockyard - Pad D

A$175m89 to 102 Mtpa

2007-2010Stage 3Exp (Phase 1) Kooragang

Terminal Expansion• Additional stacking stream – 3.21

• Belt upgrades – 8500tph• 4th reclaimer – 4.12

• Integrity Works

A$458m102 to 113 Mtpa

PWCS CapacityActual Throughput


Project 3D - Completed in March 2007

New half Pad Dconstructed

New Stacker 3.22constructed


Project 3D - Completed in March 2007

New Stacker3.22


Project 3Exp – Update

04.12

03.18

03.21

03.17 03.16

03.1303.19

03.12

03.14

03.0

8

03.0

9

03.1

0

01.20

01.21

01.3501.26

01.22

02.01

01.27

01.28

01.36

01.37

Up-rating works

New plant works

04.18

� The expansion involves:– Upgrade the in-loading rate from 6,600 tph to 8,500 tph and the stacker travel time from 25

metres per minute to 40 metres per minute on two conveyor streams – One conveyor stream to remain at 6,600 tph to minimise operational impact– New reclaimer on Berm D and new stacker on Berm E– Replacement of two original reclaimers and two original stackers


Project 3Exp – Schedule Summary

F M A M J J A S O N D J M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

GEN General Site Works

4.18 New Half Conveyor

3.21 New Stacker 03.21


3.18 Deconstruct Stacker 03.18


3.19 Deconstruct Stacker 03.19

4.12 New Reclaimer 04.12



4.09 Deconstruct Reclaimer 04.09

4.10 Deconstruct Reclaimer 04.10

2010

SCHEDULE SUMMARY

PWCS PROJECT 3EXP

STATUS LINE

Outage G. 0309/0313

Outage J. 0310/0314

2007 2009

GENERAL WORKS

2008F

MAJOR OUTAGES

EXPANSION SCOPE

ON SITE CONSTRUCTION, ISOLATIONS & PRE COM AWARD/FABRICATE PERIOD


Project 3Exp – Cost Summary

� $220M forecast to be spent in the local area

� $360M total forecast to be spent in Australia

� Remainder being spent on procurement of reclaimer and stacker components from overseas vendors

� Site engineering, construction, and supervisory work force will peak at around 230

� Major focus of the project team is to eliminate unplanned impact on capacity

$458MTOTAL

$148MReplacement of reclaimers

$82MReliability work on existing plant

$228MNew capacity


04.12

03.18

03.21

03.17 03.16

03.1303.19

03.12

03.14

03.0

803

.09

03.1

0

01.20

01.21

01.3501.26

01.22

02.01

01.27

01.28

01.36

01.37

03.15

04.18

Phase 2 Expansion works in BLUE

07.04

K7

Pad C West

Pad D West

Beyond Project 3Exp – Future KCT Expansion Options


Beyond Project 3Exp - Sequence and Delivered Capacity

145Future Full Expansion Part 2

– 4th Receival and 4th Ship Loading Stream (with Wait to Sail delays)

128

Future Full Expansion Part 1– 4th Arrival Road– Stacking Stream 1 upgrade– K7 Berth– Full Pads C & D

113Project 3Exp

Delivered PWCS Capacity (Mtpa)Expansion Option


Questions?


HVCC Capacity Master Plan Summary

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Trains:� PN: - 330 additional wagons on order� Terminal capacity at KCT (i.e. 6 Dep. Rds)

Track:ARTC/RIC:� Muswellbrook Yard� Ulan CTC� Antiene to Grasstree duplication

� 3 Ulan loop extensions� 5 Gunnedah loop extensions � Werris Creek Gap - Alternative Route� Werris Creek to Gunnedah CTC (RIC)

� Bi-di signalling Maitland to Branxton � Minimbah 3rd road � Newdell junction � St Heliers-M’brook duplication � Bi-di signalling Grasstree - St Heliers� Allandale re-signalling for 8-minute headways� 2 Ulan loop extensions� Gunnedah - Narrabri CTC (RIC)� 6 Gunnedah loop extensions � Drayton Junction upgrade

� 3rd Road Maitland to Mininbah� 3 Ulan loop extensions� 2 Gunnedah loop extension� Muswellbrook – Koolbury duplication

PortPWCS:� Project 3D� Project 3Exp – Phase 1� Project 3Exp - Phase 2� Phase 2 Expansion OptionNCIG� Phase 1

Planned Infrastructure Investments, Statusand Capacity Benefits

~*105Mtpa~** 115Mtpa

CommencedCommitted

105 Mtpa

110 Mtpa?

115 Mtpa?

145 Mtpa?

CompleteCommencedCommenced

CommittedCommittedCommittedCommitted

PlannedPlannedPlannedPlannedPlannedPlannedPlannedPlannedPlannedPlanned

Under EvalUnder EvalUnder EvalUnder Eval

Capacity:

102 Mtpa113 Mtpa123 Mtpa

+30 Mtpa

Status:

CompleteCommencedUnder Eval.

Planned

Note(*): Rolling stock system capacity at end of 2007 is approx 105 Mtpa in a stand alone configuration as modelled by HVCCLTNote(**): Refuelling and other terminal activities at KCT are being reviewed. Anticipated that sufficient capacity will enable 2008 target of 95Mt

Q411

Under Eval: B eing modelled/ designed or evaluated

Planned: Intended, but not yet at commitment

Committed: Final board approval, funding & other approvals in place

Commenced: Construction is underway

Completed: Project completed and commissioned


Industry discussions 2007/2008

� In January 2007, Producers formed a Producer Working Group (PWG) to urgently consider options to reduce queue and demurrage costs.

Jan Mar May Aug Oct Nov Dec Jan 07 07 07 07 07 07 07 08

� The ACCC granted CBS authorisation for 2007 only.

� Recommendations of the PWG included;

� PWCS apply to the ACCC to reinstate the CBS for 2007.

� The PWG continue to investigate short term systems to address potential demand and capacity imbalances for 2008.

� A number of Producers would only support the reinstatement of the CBS in its current form for 2007.

� PWG considered a number of options to respond to the capacity and demand imbalance for 2008.

� PWCS independently develops principles for a compromise solution.

� PN attempted to broker a solution around a lesser of port or rail.

� Producers could not reach agreement� It appeared that, based on the interpretation

of rail contracts by rail providers, some mines may not be able to deliver their coal to the port.

� PWCS compromise solution circulated to producers for their meeting on 10 October 2008 in a further attempt to reach industry agreement.

� Whilst some producers indicated willingness to compromise collectively producers still could not reach agreement.

� PWG was disbanded.� In the absence of a solution from producers the

default position is effectively the lesser of port or rail contracts.

� In the absence of a solution, PWCS, PN and QRNational jointly develop a Vessel Queue Management System (VQMS) and seek ACCC authorisation.

Con

sequ

ence

s

A

ctio

ns

� Newcastle Port Corporation (NPC) and Donaldson Coal make application to the ACCC to continue the CBS in 2008.

� ACCC does not grant interim authorisation for the VQMS.

� ACCC grants interim authorisation to continue the CBS in 2008.

� Producers surveyed in relation to Coal Chain allocation for 2008 and beyond.

� Based on support from Producers, PWCS Board agrees to implement the NPC’s proposal to continue the CBS in 2008.

� NSW Government announce the appointment of the Hon. Nick Greiner to assist the Hunter Valley coal industry to develop a new allocation system.

Documents

Port Waratah Coal Services – Expansion Plans and Future ... · PWCS is the World’s largest export coal handling facility and currently exports coal valued at well above $5 billion