Glencore challenges Australian goverment to lower Newcastle port access fees

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Australia's largest coal miner launched a legal bid against the government to reduce port access fees. Glencore Coal Pty Ltd challenges the recent decision of the Australian Competition Tribunal (ACT) to not declare services provided by the Port of Newcastle.

According to Financial Review, in May 2014, New South Wales' government sold a 98-year-old lease over the port for $1.75 billion. The said lease is owned through a partnership in equal measure by China Merchants and Hastings Funds and Management. The new owners did two things during the turnover; hike the fee schedule for the coal boats that use the shipping channel to pass in and out of the port, and upgrade the book value of their investment from the reported purchase price to a whopping $2.4 billion.

Glencore's head, Peter Freyberg said such move from the Port of Newcastle is a "clear example of a genuine monopoly exercising price-setting powers without fear of competition." He added that the ability of the Port of Newcastle to increase its profits by increasing the price for the same services, and with no justification and transparency, 'is effectively imposing an arbitrary tax on the mining industry.'

Glencore's legal challenge followed the government of New South Wales' decision to privatize the Port of Newcastle. The Guardian reported that the the privatization immediately increased port fees by 40 percent and 60 percent for vessels to access the port.

The lawsuit is significant since access matters like this do not often come before ACT, says Lexology. Reports say that this is the first time the ACT will conduct a review since its power is limited by legislative reform and the High Court has criticized its approach under the old law.

Although ACT will focus on technical issues involved in competition laws, it will also center its discussions on privatization of state assets, price increases and long-term viabilities of coal mining ventures in Australia.

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