The Hunter Valley Coal Chain (HVCC) is the chain of coal delivery in New South Wales, Australia from (mainly open-cut) coal mines in the Hunter Region to the Port of Newcastle and domestic coal-fired power stations in the Hunter Valley. The HVCC essentially follows the path of the Hunter River travelling south-east from the mining areas in the Hunter Valley to Newcastle.
The HVCC mainly deals in the sea-borne export coal trade, especially to Asia (Japan and Korea in particular). It is one of six major coal chains in Australia: four in Queensland: Abbot Point, Dalrymple Bay/Hay Point, Gladstone and Brisbane; and two in New South Wales: the Ports of Newcastle (also known as Port Waratah) and Port Kembla.
The port of Newcastle is the world's largest coal export port. Rising demand for coal, particularly in the Asian region has resulted in a strong increase in the volume of coal exported through the port. In 2013 port throughput was 150.5 million tonnes, up from 68 million tonnes in 2000.
The chain
Coal generally goes through the following stages between mine and port: The producer makes arrangements to sell coal to a buyer on certain terms. The coal is mined (most of the coal mines in the Hunter Valley are open cut mines, also known as open pit mines), processed, blended and stored either at a railway siding located at the mine or at a coal loading facility (used by several mines). The coal is then transported to the Port of Newcastle, almost exclusively by rail. Some coal is transported to the port by road, but this generally requires permission from the local council (due to the effect on roadways and other infrastructure) and is also usually more costly per tonne than rail transport. The coal is offloaded at the port onto stockpiles in the Port Waratah Coal Services and Newcastle Coal Infrastructure Group facilities. Once the vessel arrives at the port, the coal is loaded onto the vessel. The vessel then transports the coal to its destination determined by the buyer.
HVCCC
In 2003 the Hunter Valley Coal Chain Logistics Team (HVCCLT) was established to improve the movement of coal from Hunter Valley mines to the port's coal loaders and then to markets across the globe. In 2009 the Hunter Valley coal industry went through a detailed view and major restructure of the contractual arrangements for the movement of coal. As a result, the Hunter Valley Coal Chain Coordinator (HVCCC) formally replaced the HVCCLT in August 2009 and expanded to include all Hunter Valley coal chain producers and service providers.
HVCCC coordinates the resources of port operators Newcastle Port Corporation, terminal operators Port Waratah Coal Services and Newcastle Coal Infrastructure Group, railway operators Aurizon, Pacific National and One Rail Australia, railway infrastructure managers Australian Rail Track Corporation and Producers.
Producers
The major coal producers in the Hunter Valley are: Bengalla BHP Bloomfield Collieries Pty Ltd Centennial Coal Company Limited Glencore Coal NSW Pty Ltd Hunter Valley Operations (a joint venture of Yancoal and Glencore) Idemitsu MACH Energy Peabody Energy Whitehaven Coal Yancoal
Consumers
Most coal produced in the Hunter Valley is sold directly by coal mines (producers) to overseas buyers. About 20% of coal is sold by traders who do not mine coal but act as agents or intermediaries in coal sales.
The majority of Australian coal was traditionally sold to Japanese steel mills or power utilities in accordance with long-term contracts. Those contracts were the subject of annual price and volume negotiations. The Japanese steel mills, operating in a co-ordinated manner and collectively known as the "JSM", negotiated prices for coking coal. One of the steel mills would be appointed as the lead negotiator for the initial contracts with producers. Prices in subsequent contracts would be based on these 'benchmark prices', adjusted for coal quality. This led to "JSM terms" being the benchmark for the industry. While coal is still sold under JSM terms, a greater variety of other contract terms now exist.
Rail infrastructure
The railway corridor used is part of the Main North railway line. The Hunter Valley infrastructure is owned by the State Government owned RailCorp and managed by the Federal Government owned Australian Rail Track Corporation under a 60-year lease until 2064. In November 1994, it was announced that the line would be opened up to other operators. Prior to only FreightCorp and its predecessors operated trains. The other infrastructure associated with coal transport, such as load points, is privately owned, usually by a mine or a coal loader.