New Kooragang terminal in doubt as PWCS cuts coal contract tonnages PORT Waratah Coal Services (PWCS) has agreed cut the amount of coal it carries for Hunter Valley miners, putting in doubt a proposed $5 billion new export terminal in Kooragang that it had been hoped would create 1500 jobs. PWCS chief executive Hennie du Plooy said coal producers had advised PWCS that the reduction in future demand for coal handling services was due to several factors, including lower-than-forecast production growth, resulting from significantly lower prices for export thermal coal and higher production costs. Miners had also highlighted concerns around the length of time taken to receive project approvals. Rio Tinto warned this week that it could cut hundreds of jobs from its Warkworth mine this year following last month's ruling by the Land and Environment Court of New South Wales to stop Rio's expansion plans at the NSW operation. The Warkworth extension project decision is the first time a NSW court has overturned a major project approval to extend an existing open-cut mine, and the industry sounded a warning that the decision had set a precedent with the potential to affect mining and other industries in NSW. PWCS, which is backed by a consortium of miners led by Rio Tinto and Xstrata, said today that despite the capacity shortfall, it will continue to seek development approval for the new terminal, known as T4, as the need for additional terminal capacity could arise at any time. A complex approvals process had seen the company to delay several times the expected timeframe for first exports from T4, which was originally targeted at 2015 or 2016, before slipping to 2017 and then more recently to 2018 at the earliest. Mr du Plooy told a coal conference last month that falling demand meant that the company was considering expanding its existing Kooragang loading facility as an alternative to the T4 proposal. PWCS's customers have been shipping almost 20 per cent less than they were contracted to provide, signalling that a need for the new terminal was increasingly unlikely. The T4 project was targeting 70 million tonnes of export capacity per annum in the initial stages of development and then increasing that to 120 million tonnes a year. The initial stage of T4 was estimated to create around 1500 construction jobs. Mr du Plooy said today that the decision to accept reduced tonnages was a positive and appropriate outcome for the industry in challenging times. Coal producers who do not require all tonnages previously contracted for have been able to reduce their exposure to ship or pay obligations while producers who still require greater capacity for coal handling and were expecting to rely upon T4 now have access to existing capacity, increasing certainty of access and timing, he said. "At a time when the industry is experiencing significant economic challenges, PWCS has also been able to reduce coal handling costs for producers by avoiding unnecessary project expenditure," he said.