BHP (ASX:BHP), Coal and Allied (ASX:CNA) and Xstrata (LON:XTA) are itching to get more coal out of port. So the trio, along with 11 other coal miners, is proposing a private expansion of Newcastle port.
They’re putting up AU$2.5 billion to double Newcastle’s capacity. The port can manage to ship about 100 million tonnes of coal per year at the moment. Of course, 200 million tonnes would be better.
Newcastle currently prices coal at $174.70 per tonne. It’s the biggest coal port in the world, so we suspect coal prices would drop if miners could shift more of the stuff. But if coal firms can lock in the expansion, there’s potential tens of billions of extra revenue in it for them.
At this stage, the state government has worries the private deal would block new entrants. It probably would, if the companies involved had anything to say about it. So this deal is up in the air. But we’ll keep an eye on where it floats. Remember, a lot of coal companies have lost a third of their market value in the last few months alone. That’s a big discount.
