$1bn funds Newcastle port coal rush

GOOD NEWS: Port Waratah Coal Services general manager Graham Davidson.
GOOD NEWS: Port Waratah Coal Services general manager Graham Davidson.

A $1 BILLION federal rail-building program and a port expansion agreement brokered by the state were both revealed yesterday in a historic day for the Hunter's coal industry.

If all goes according to plan, Newcastle could double its coal exports to 200 million tonnes within seven years, with up to a third of the coal coming from 300 kilometres away in the Gunnedah Basin.

Prime Minister Kevin Rudd and Infrastructure Minister Anthony Albanese announced the federal rail funding program as part of a $4.7 billion package designed to lift gross domestic product by as much as half a percentage point, creating about 32,000 jobs.

Mr Rudd said $1.2 billion would go to the Australian Rail Track Corporation, $711 million to roads and $1.6 billion to higher education.

Corporation chief David Marchant said the Government was providing $580 million of the $1.2 billion to help expand the Hunter Valley coal rail lines.

The corporation would borrow another $420 million on the open market, taking its Hunter commitment to $1 billion.

The biggest item on the construction plan is a new route through the Liverpool Ranges to the Gunnedah Basin, costed at about $290 million, with another $508 million on projects between Ulan, Muswellbrook and Maitland.

"As far as the Hunter rail lines are concerned, this announcement is not so much about the timing of the work as it is about the certainty of funding," Mr Marchant said.

The coal industry, which was unable to maximise its profits during the three years of the coal boom because demand far outstripped the rail and port system's ability to supply the commodity, welcomed the rail track plan unveiled by Mr Rudd and the "coal terminal access agreement" struck by Ports Minister Joe Tripodi.

After announcing earlier in the week a plan to deal with coal queues by asking the ships to stay away , Mr Tripodi described yesterday's deal as a modified version of the one proposed by former premier Nick Greiner, but with added protection for small mining companies and a levy on export tonnages to help fund new export capacity.

Graham Davidson, general manager of coal loader operator Port Waratah Coal Services, said the agreement added a dose of commercial reality to the coal chain.

"It's in everyone's interests for PWCS and Newcastle Coal Infrastructure Group to expand as quickly as possible to cater for incumbent and new producers, and it now looks as if the pieces are finally falling into place to make that possible," Mr Davidson said.

The agreement guides access to the two PWCS loaders and to a third terminal being built by Newcastle Coal Infrastructure Group and due to operate from early 2010.

Mr Tripodi has also pledged that PWCS will be able to build a fourth loader, known as " T4".