Australia Minerals Council Advice on Hunter Valley Access Undertaking

The problem

The efficiency of the Hunter Valley coal supply chain was under threat by the proposed privatization of the national rail system operator, Australian Rail Track Corporation (ARTC).

The flow of coal through the coal supply chain is efficient due to the unique voluntary coordination arrangement between ARTC, the ports, mining companies, and the train operators. Participants in the supply chain were concerned that, if privatized, the new owners would likely focus on their own commercial interests rather than participate in the voluntary coordination arrangements.

How we helped

Castalia made a submission to the government as part of the scoping study on the privatization of ARTC. We developed detailed analysis to show why supply chain coordination was important and how the incentives would change if ARTC was privatized. We recommended changes to the regulatory regime to ensure the arrangement was entrenched through regulation if privatization went ahead.

Impact

The privatization of ARTC did not go ahead, and the efficiency of the Hunter Valley coal supply chain continues.