Port bottlenecks threaten $2.8 billion of Queensland coal shipments to India’s Tata Steel

COAL shipments to India valued at $2.8 billion could be under threat because of worsening bottlenecks at Queensland ports and rail networks.

Delays to send a ship to India from Dalrymple Bay has blown out from 22 days to 44 days. Picture: Daryl Wright

COAL shipments to India valued at $2.8 billion could be under threat because of worsening bottlenecks at Queensland ports.

Indian industrial giant Tata Steel says it could be forced to look elsewhere for metallurgical coal if current delays were not sorted out. Tata currently each year buys about 12 million tonnes of metallurgical coal, worth about $2.8 billion, from Queensland mines including those run by BHP and Peabody.

Tata Steel chief executive T V Narendran said of particular concern was the Dalrymple Bay Coal Terminal near Mackay where the time period to send a ship to India had blown out from 22 days to 44 days.

Coal loading at the terminal has been affected by maintenance in the past few months, with up to 40 ships anchored offshore waiting to come into the port.

“In this situation, no one is making money,” said Mr Narendran in Brisbane on Monday. “The ship owner is burning more oil and it is a cost to the entire supply chain.

Tata Steel managing director TV Narendran. Picture: AAP/David Clark

“We need a lot more coal and Queensland’s coal is good quality because of its low ash content. But if the supply chain gets too unpredictable, we will have to look at other options.”

Mr Narendran said there also were major issues with delays on the coal rail network run by Aurizon. Brisbane-based Aurizon is locked in a battle with the state’s competition watchdog about the returns it can make from its monopoly coal rail network in Queensland, with the company warning it may have to cut maintenance.

“This dispute is not helping matters,” said Mr Narendran, who joins Japanese steelmakers in expressing concerns about the reliability of coal shipments from Queensland.

Mr Narendran is meeting State Govenment officials and mining companies in Brisbane this week to discuss the supply problems.

Tata says demand for Australian metallurgical coal is set to soar once a planned joint venture between Tata and Germany’s Thyssenkrupp gets regulatory approval from European regulators. The venture will be Europe’s second-largest steelmaker after ArcelorMittal.

Dalyrmple Bay Coal Terminal has been contacted for comment.