Coal miners in the Hunter Valley region of New South Wales state have agreed to a coal export plan that the state's government said could see Australia's biggest coal export port of Newcastle double its capacity in the next six years.

The port has long been a notorious bottleneck, crimping Australian export earnings and costing miners millions of dollars in demurrage charges as dozens of bulk carriers queued offshore waiting to be loaded.

The Newcastle Coal Infrastructure Group, made up of six miners led by BHP Billiton Ltd. (BHP.AU), has now agreed to the new plan for distributing port capacity, a plan already supported by the government and Port Waratah Coal Services, whose shareholders include Rio Tinto Ltd. (RTP) and Xstrata PLC (XTA.LN).

New South Wales Premier Nathan Rees said Friday the plan will support thousands of new jobs and boost Australia's annual coal export revenue by about A$6.5 billion by 2016.

"This plan cements Newcastle's position as the world's biggest coal port with export capacity expected to double to 180 million tons over the next six years," he said.

The export plan will see NCIG grant new coal producers access to some of the capacity of future expansions of its export facilities at Newcastle.

Federal Infrastructure Minister Anthony Albanese said in a statement that the plan complemented the A$1.2 billion investment the government and the Australian Rail Track Corporation is making to more than double the capacity of the Hunter Valley's rail network.

The accord allows coal loading and rail operations to be underpinned by 10-year contracts, giving producers as well as rail and port operators the certainty they need to make long-term investment decisions and grow their businesses, he said.

It will also guaranteed access to new producers wanting to enter the market, Albanese said.

The port group, made up of BHP Billiton, Centennial Coal Co. Ltd. (CEY.AU), Peabody Energy Corp. (BTU), Donaldson Coal, Felix Resources Ltd. (FLX.AU) and Whitehaven Coal Ltd. (WHC.AU), is close to completing the first stage of its coal terminal development, which will have a capacity of 30 million tons a year.

Under the agreement, they will make available up to 12 million tons a year of any further expansion to new coal producers.

"With these agreements in place, the coal industry will have long-term certainty over future access to vital port capacity, which will support our future expansions and growth of the region," BHP Billiton President of Energy Coal Jimmy Wilson said in a statement.

A spokesman for NCIG confirmed that all the capacity framework documents for the access regime have now been signed by all parties and said the agreements are now subject to approval by the Australian Competition and Consumer Commission.

PWCS General Manager Graham Davidson said the agreement set the scene for historic change in the way coal is exported from the Hunter Valley.

"We now effectively have all key players reading off the one road map, meaning everyone has a far better idea of what infrastructure should be built, and where and when," he said.

The plan gave certainty to coal producers in terms of their export capacity and would deliver capacity for those seeking to expand mines or launch new operations, he said.

PWCS operates the two existing coal terminals at Newcastle and is close to completing a A$458 million upgrade that takes its capacity to 113 million tons a year, although the limitations of the rail system mean exports are capped at 91 million tons a year for now.

As part of the new export plan, the government has agreed to lease more land to PWCS on Kooragang Island for the construction of another coal loading terminal, and PWCS said feasibility work on this development is already underway.

Currently, with export capacity falling short of demand from Hunter Valley miners, a capacity balancing system has been in place to allocate tons to producers.

PWCS said it is now applying to the ACCC to allow it to continue this system for the remainder of 2009, until the new export plan comes into place at the start of 2010.

 
   -By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com 
  (Andrew Harrison in Melbourne also contribute to this story.)
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