MELBOURNE – Glencore and five other miners backing the world’s most expensive coal port in Australia face extra annual charges of A$150 million after the restructuring of one of their partners this month, the latest to buckle under slumping commodity prices.
The additional charge will deal a blow to the remaining backers of the A$2.6 billion ($2 billion) Wiggins Island Coal Export Terminal (WICET) in east Australia at a time when they are grappling with floundering coal markets.
Mining and trading giant Glencore and seven partners began negotiations to build WICET in 2008 near the height of a coal boom, but prices have plunged 75 percent since then on global oversupply, China’s slowing economy and competition from natural gas.
Expecting coal markets to remain strong, the partners had agreed to pay port fees for 27 million tonnes whether they shipped that volume or not – setting themselves a tonnage charge as much as five-times higher than other coal ports.
The project currently charges around A$20 a tonne, several people familiar with the terms said. Neighboring RG Tanna coal port at Gladstone charges about $5 a tonne. WICET Chief Executive Marcus McAuliffe declined to comment on the charge.
But adding to the partners’ woes – and those of their 19 lenders, owed more than $3 billion – coal prices have now pushed two of WICET’s original owners, Cockatoo Coal and Bandanna Energy, into administration.
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