Perth (Platts)--27Nov2012/424 am EST/924 GMT

Port Waratah Coal Services said Tuesday it has finalized the design for a scaled-down version of its Terminal 4 facility for coal exports at Australia's Newcastle port and expects to submit its plan for state government approval in early 2013.

Terminal 4 will have a coal export capacity of 70 million mt/year in its first stage, with the option to expand to up to 120 million mt/year.

"Targeting a smaller initial approval supports delivering this capacity at the lowest possible cost for an industry that is adjusting to a changing economic environment," PWCS chief executive Hennie du Plooy said in a statement.

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The company in June delayed the planned operational start-up of Terminal 4 by two years to 2017 because of its "sheer technical complexity" and the process involved in obtaining planning approval.

The timing of that announcement coincided with a collapse in seaborne prices for Newcastle thermal coal. Spot prices have yet to recover to levels seen earlier in the year of around $90/mt FOB for high ash coal.

A PWCS spokesman said Tuesday the time frame for the Terminal 4 project had moved a little, but the company believed the relevant planning approval would be granted by the end of 2013. "Construction will start some time after that and the terminal will start operating in 2017," he added.

At an initial capacity of 70 million mt/year, Terminal 4 is expected to cost A$5 billion ($5.2 billion). PWCS said it would submit its plan to the state of New South Wales' Department of Planning and Infrastructure in the next two to three months.

A number of Australian coal producers have already signed contracts for coal shipment capacity at Terminal 4. PWCS' two existing terminals at Newcastle are poised to reach their combined maximum capacity of 145 million mt/year in 2013.

"To fulfill its obligations under Newcastle's coal export plan [long-term commercial framework], PWCS is pursuing the T4 development to meet contracted coal industry demand for export capacity above what can be delivered from the existing terminals," du Plooy said in the statement.

There are currently three coal terminals at Newcastle port: Carrington and Kooragang operated by PWCS, and the Newcastle Coal Infrastructure Group terminal operated by five coal producers that include BHP Billiton, Peabody Energy and Yancoal Australia.

PWCS was on course to ship 108 million mt of coal in 2012, the company spokesman said. The NCIG terminal was expanded mid-year to have a capacity of 53 million mt/year. Terminal 4 will be built adjacent to Kooragang.

--Mike Cooper, michael_cooper@platts.com --Edited by Wendy Wells, wendy_wells@platts.com

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