NORTH QUEENSLAND SHIP TRAFFIC GROWTH STUDY. SUPPLEMENTARY REPORT For public release

Transcription

1 NORTH QUEENSLAND SHIP TRAFFIC GROWTH STUDY SUPPLEMENTARY REPORT For public release Prepared by Braemar Seascope 22 March 2013

2 Braemar Seascope Perth 335 Hay Street Subiaco, Western Australia 6008, Australia research@braemar.com i

3 Contents Abbreviations... v List of Figures.vi 1. Introduction Background Terms of Reference Project Factors Scope and Limitations Removal of Thursday Island and Quintell Beach Ports Data Collection Sources of Information Base Year Shipping Route Rules Ship Size Ranges Average Vessel Size Port Profiles North Queensland Bulk Ports Corporation Ltd Abbot Point Hay Point Mackay Port of Townsville Townsville Lucinda Ports North (Far North Queensland Ports Corporation Ltd.) Cairns Mourilyan Cape Flattery Gladstone Ports Corporation Ltd Gladstone ii

4 3.4.2 Bundaberg Port Alma (Rockhampton) Coal Introduction Coal Trade Forecasts Coal Traffic Analysis BREE Cases Impact upon Port Capacity Other Bulks Introduction Tonnage Sourcing Other Bulk Commodity Categorisation and Growth Projection Cargo Lift Ratio Route Breakdown Notable Port Developments Impact to Growth Queensland Phosphate Rock Project Magnetite Growth Cyclone Yasi Damage Yarwun Alumina Refinery Expansion Liner Services LNG Introduction Explanation of numbers Explanation of Routes LNG Destination Calculations Findings Introduction Trade Impact upon Routes Coal Findings Other Bulks Findings iii

5 7.5 LNG Findings Conclusion Disclaimer Australian Maritime Safety Authority (AMSA) References iv

6 Abbreviations ABARES Australian Bureau of Agricultural and Resource Economics and Sciences AMSA Australian Maritime Safety Authority BREE Bureau of Resources and Energy Economics BS Braemar Seascope CBM Cubic Metre DTMR Department of Transport and Main Roads DWT Dead Weight. The sum of the weight of cargo, fuel, fresh water, ballast water, provisions, passengers, and crew for a ship. In summary it is an indication of the cargo carrying capacity of the vessel GBR Great Barrier Reef GPC Gladstone Ports Corporation Limited GNEC Great North East Channel Mmt Million Metric Tonnes MSQ Maritime Safety Queensland Mtpa Million tonnes per annum NQBP North Queensland Bulks Ports PNG Papa New Guinea PSSA Particularly Sensitive Sea Area v

7 List of Figures Fig Queensland Ports... 1 Fig Queensland Shipping Routes... 7 Fig Torres Strait Shipping Route... 8 Fig Outer Route Justification... 9 Fig Port Route Matrix Fig Average Vessel Sizes (selective years) Fig Panamax, Supramax and Handysize Ship Size Growth Fig Capesize Ship Size Growth Fig Vessel Calls Fig BREE Coal Import Forecast Fig Australia BREE vs. BS Coking/Steam Coal Breakdown Fig Queensland BREE vs. BS Coking/Steam Coal Breakdown Fig BREE High Assumed Coal Export Capacity by Port Fig BREE Med Assumed Coal Export Capacity by Port Fig BREE Low Assumed Coal Export Capacity by Port Fig BS Assumed Coal Export Capacity by Port Fig Gladstone Coal Trade ( 000mt) and Coal Percentage Split Fig Indian Cape Requirement Fig Part Cargo Justification Fig Cargo Lift Ratios Fig Vessel Size Breakdown Fig Route Breakdown by Route Fig Resulting Tonnage Breakdown Fig Queensland Phosphate Rock Project Coming Online Fig Magnetite Increase Fig Lucinda Sugar Terminal Damage Fig Mackay Impact vi

8 Fig Bundaberg Impact Fig Yarwun Refinery Impact Fig Liner Service Justification Fig LNG Route Justification Fig Queensland Curtis LNG 8.5 Mtpa Fig Gladstone LNG Project (GLNG) 7.8 Mtpa Fig Asia Pacific LNG (APLNG) 4.5 Mtpa (then 9 Mtpa from 2018) Fig Arrow Energy 8 Mtpa Fig Gladstone LNG Fisherman s Landing 3 Mtpa Fig Queensland Commodity Volumes Fig Dry Bulk Route Utilisation Fig LNG Route Utilisation Fig Coal Scenarios Tonnage Growth Fig Coal Scenarios Traffic Growth Fig Movement to Capesize Vessel Majority Fig Other Bulks Growth Fig Supra/Handymax Vessel Size Majority Fig Premier Port Growth Fig LNG Traffic Growth vii

9 1. Introduction 1.1 Background AMSA is seeking analysis in relation to the likely future growth in shipping traffic transiting the Great Barrier Reef, originating from Queensland ports, as a consequence of increasing export trade. The traffic growth forecasts are highly correlated to commodity growth. The region of interest ranges from Bundaberg in the South to the Torres Strait in the North. Figure shows the range and coverage of ports included in the study. The commodity trade and traffic forecasts are required on an annual basis through to 2025, with consideration not only of Braemar s own forecast but also with regard to some forecasts produced by BREE. Fig Queensland Ports 1

10 1.2 Terms of Reference The following terms of reference were provided by AMSA: AMSA is seeking the following analysis in relation to the likely growth in shipping traffic for commodities at Queensland ports in the region from Bundaberg to the Torres Strait over the period of the next 10 years and 15 years: 1. Consideration of the findings and commodity export forecasts in the report by the Commonwealth Bureau of Resources and Energy Economics (BREE) report of July 2012 Australian Bulk Commodity Exports and Infrastructure Outlook to 2025; which is available at: Report.pdf 2. Provide comment to AMSA as to whether the forecasts in that BREE report are significantly different from other commodity export forecasts for Australia which are available to Braemar Seascope Pty Ltd and identify, in summary form, the nature and magnitude of those differences. 3. After AMSA has considered the Braemar Seascope advice in relation to (2) above, use the BREE commodity export forecasts (unless alternative forecasts are agreed as substitutes) to generate forecasts of shipping movements by port, by ship type and by ship size, for the region specified, over 10 and 15 year periods and advise AMSA of the outcomes of that analysis, including commentary as to possible constraints or influences on the projected shipping movements, such as ship size capacity limits at specific ports (acknowledging that possible infrastructure developments may increase such limits). These forecasts will also need to identify the likely routes to be taken by these ships within the set of routes through the Great Barrier Reef Area as advised by AMSA to Braemar Seascope Pty Ltd. Some sensitivity analysis may be appropriate in this study, given the degree of uncertainty in forecasts over a 10 to 15 year timeframe. 2

11 2. Project Factors 2.1 Scope and Limitations During the early phases of the research during when we were obtaining data from many different sources, it became evident that there were many data records that were not relevant to the core objective of the study. In particular, the data we have received from port authorities was indiscriminate of vessel type and size and therefore our investigation has led us to discard a number of vessel types and sizes. This we felt allowed us to streamline the study data to ensure accuracy of findings. The focus of the research was towards bulk carriers and gas vessels which pose the greatest threat to the integrity of the Gt. Barrier Reef. With this in mind and with the approval of AMSA, we applied a series of limitations to the data sets used. These limitations include removing vessels of an insignificant size and ship types such as service vessels (e.g. tugs), RO-ROs and livestock carriers. This pragmatic approach also enabled a more accurate risk assessment and the reduction of the total number of unnecessary vessel entries produced a more precise and relevant project analysis. The specific data restrictions include removal of vessels of the following criteria: Vessels <10,000 dwt All liquid tankers have been removed for the purpose of the study. This includes all variations of oil tankers Car carriers Livestock carriers Service vessels, such as tugs Passenger vessels Generally, the quality of data collected for this project has been accurate, comprehensive and fit for purpose. A relatively small quantity of data was removed from the analysis due to quality concerns. A number of data sources have provided Braemar with results which can be applied to more than one area of this project. As to be expected, different data sources were strong in different areas. In order to take maximum benefit from all data sources we have, on occasions, made a reasoned assumption in certain weak areas in order to use the rest of the strong data within the project. All assumptions have been based on a pragmatic basis utilising our real world industry knowledge. For example, a data set which provides comprehensive data for traffic out of Hay Point has provided us 3

12 with the dwt of vessels thereby allowing for ship size traffic analysis. However the cargo type section of the data is incomplete. Our research has led us to establish that Hay Point is solely a coal port, thus applying our assumption that the missing cargo type will be coal. At the commencement of this project we were provided with two data files from AMSA that were used as the initial data source for the research task: NthQLDArrivals2007to2011 and 2011PilotedVoyages. This provided an indication of the types of data we would subsequently require for the project. The file NthQLDArrivals2007to2011 had some limitations, although the supplementary file 2011PilotedVoyages was used as a reference data source to confirm findings from other sources. The specific limitations of the AMSA data included: Absence of cargo type details limiting our ability to conduct cargo specific analysis. This meant we needed to spend an extended period of time researching alternative data sources which provided this data. The AMSA data did not have complete data for previous_national_port and next_overseas_port and therefore was limited to produce a comprehensive route analysis. The AMSA data did not include sailing draft and therefore did not allow us to determine which vessels could transit the Torres Strait which has a maximum draft limitation of 12.2m. The 2011PilotedVoyages file was restricted to only areas of compulsory pilotage. 2.2 Removal of Thursday Island and Quintell Beach Ports Once we had removed the vessel types not of interest to the core of the project (see above), we discovered that there were no vessel departures out of Thursday Island or Quintell Beach. In 2011, Thursday Island traffic made up 218 vessels, but with an average dwt of 2,382. In comparison Abbot Point recorded traffic volumes of 174 vessels and an average dwt of 96,026, putting into perspective the irrelevance of including such minor data entries. Therefore Thursday Island and Quintell Beach have been removed from analysis. 4

13 2.3 Data Collection Due to the limitations referenced above, acquiring a range of data sets was crucial to ensure accuracy of the final results. The various databases were cross-referenced to create a widespread data catalogue which could be used for the many different facets of analysis the project required. In order to facilitate the acquisition of data, we aimed our data collection task at various employment positions within ports and organisations. Responsibility for providing data differed from port to port and ranged from Commercial Managers to Statistical Analysts. Initially, we drew up a contacts list for all the ports and on contact it became evident that some authorisation and accreditation from AMSA was required to facilitate the release of data. 2.4 Sources of Information On receipt of the AMSA letter of Authorisation, the data flow accelerated significantly from external sources. The full list of data providers includes: Braemar Seascope Chartering Department o Specific brokers aligned to the particular Queensland projects Government Agencies o Australian Maritime Safety Authority (AMSA) o Maritime Safety Queensland (MSQ) o Australian Transport Safety Bureau o Australian Bureau of Agriculture, Fisheries and Forestry o Australian Department of Transport and Main Roads o Department of Infrastructure and Transport Pilotage Authorities Port Authorities o North Queensland Bulk Ports Corporation Ltd. (NQBP) Abbot Point Hay Point Mackay o Gladstone Ports Corporation Ltd. (GPC) Gladstone Port Alma (Rockhampton) 5

14 o o Bundaberg Ports North (Far North Queensland Ports Corporation Ltd.) Cairns Mourilyan Cape Flattery Port of Townsville Ltd. Townsville Lucinda Base Year In order to forecast through to 2025 we needed to have a base line year as a solid datum from which to apply our growth rates. We had selected 2011 due to the commencement of the project being at a time when full 2012 data was not available. 2.6 Shipping Route Rules A major requirement of the research was to establish the export traffic volumes along shipping routes out of Queensland. Although there are is a large number of potential shipping routes that can be used by vessels transiting around the Queensland waters, we have identified that there are in reality four established key points of relevance when analysing shipping routes out of Queensland. The particular exit route used by a vessel is dependent upon vessel size, vessel type and destination. We have established a number of route rules based upon the information collected. A diagram visualising our shipping route rules is shown in Fig The Torres Strait shipping route is enlarged in Fig

15 Fig Queensland Shipping Routes 7

16 Fig Torres Strait Shipping Route 8

17 Torres Strait The export route through the Torres Strait. During discussions with ports agents and contacts from pilots, we established that there is a draft restriction of 12.2m imposed through this stretch of water known as the Prince of Wales Channel. All transits through the Torres Strait are bound by compulsory pilotage. As shown in Fig 2.6.2, heading north along the Inner GBR Route, compulsory pilotage starts at the port of Cairns and ceases at Booby Island, the last outgoing pilotage point in the Torres Strait. The outer route to the Eastern end of the Great North East Channel is for oil and chemical tankers and gas carriers. This is a precautionary step to reduce environment risk within the PSSA (Particularly Sensitive Sea Area) of the GBR in case of an incident. These vessels will transit via the Outer GBR Route, onto the GNEC and through to Booby Island. This variance in ship type by route is reflected in Fig Fig Outer Route Justification With regard to the vessels of interest for the study, namely bulkers, we have assumed that ships of 12.2m draft or below to certain destinations will transit the Torres Strait due to a reduction in distance compared with going Southbound or via Jomard (see below). The destinations that would use this route include: India Singapore Thailand Middle East Southern Chinese ports (south of Hong Kong) Jomard This is the exit point from Queensland ports via Jomard Island, where transits go around the North of Papa New Guinea. This route does not have any draft restrictions; as a result it is most common for Capesize and Panamax vessels and those 9

18 transiting towards North Asia. An alternative Northbound route to Jomard Island is via Rossel Island shown in Fig However during our investigation we were informed by a number of organisations, including pilotage authorities that this route option is not used for commercial operational activities. Destinations that use Jomard Island include: China Taiwan Korea Japan Hong Kong Eastern Russia Papa New Guinea Torres Strait route destinations over 12.2m draft Pacific Is a route eastbound across the Pacific Ocean. Destinations that use the Pacific route include: North America East & West coast South America East & West coast Southbound This route includes transits from Southern Queensland and also all coastal routes Southbound along the Queensland coast. A study conducted in the 1980 s by Captain John Foley, established that when taking into account weather, seas and a number of other factors, transiting around Southern Australia was a quicker route to Europe than taking the Jomard Island route. Transits to Europe are normally undertaken by Capesize vessels which cannot use the Torres Strait route. As a result all transits to and from Europe use the Southbound route. Destinations that use the Southbound route include: New Zealand Majority of domestic Australian transits Europe Mediterranean countries 10

19 Although there are over 20 shipping routes from various Queensland ports, there are also 9 coastal routes that allow the vessel to access international routes as previously mentioned. The coastal routes are: Hydrographer s Passage Palm Passage Grafton Great North East Channel One and a Half Mile Opening Two Mile Opening Swain Reef Inner GBR Route Outer GBR Route We have produced a route matrix, as shown in Fig which establishes the association between Queensland ports, coastal shipping routes and our route rules as designated above. 11

20 Fig Port Route Matrix Abbot Point Port Jomard Torres Strait Pacific Southbound Hay Point Mackay Gladstone - Bulks Gladstone - LNG 1) Inner GBR Route (N) 2) Palm Passage via West Rib Reef 3) Palm Passage to Jomard 1) Hydrographer's Passage 2) Hydrographer s Passage to Jomard 1) Hydrographer s Passage 2) Hydrographer s Passage to Jomard 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Jomard 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Jomard 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Gladstone North to Swain Reefs 2) Gladstone North to the Outer Route 3) Outer GBR Route (N) 4) Great North East Channel Bundaberg 1) Sandy Cape to Jomard 1) Inner GBR Route (N) Port Alma Cairns Mourilyan Cape Flattery Lucinda Townsville 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Jomard 1) Grafton Passage 2) Grafton Passage to Port Moresby 3) One & a Half Mile to Jomard 1) Inner GBR Route (S) 2) Palm Passage to East Rib Reef 3) Palm Passage to Jomard 1) Inner GBR Route (N) 2) One & a Half Mile Opening 3) One & a Half Mile to Jomard 1) Palm Passage via East Rib Reef 2) Palm Passage to Jomard 1) Palm Passage via West Rib Reef 2) Palm Passage to Jomard 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 1) Inner GBR Route (N) 2) Palm Passage via West Rib Reef 3) Palm Passage to East 1) Hydrographer s Passage 2) Hydrographer s Passage to Jomard-East 3) Palm Passage to East 1) Hydrographer s Passage 2) Hydrographer s Passage to Jomard-East 3) Palm Passage to East 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Rossel Island 4) Palm Passage to East 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Rossel Island 4) Palm Passage to East 1) Sandy Cape to Jomard 2) Saumarez Reefs to Rossel Island 3) Palm Passage to East 1) Gladstone North to Swain Reefs 2) Gladstone East to Swain Reefs 3) Swain to Rossel Island 4) Palm Passage to East 1) Inner Route (S) 2) Palm Passage via East Rib Reef 2) Palm Passage to East 1) Inner Route (S) 2) Palm Passage via East Rib Reef 2) Palm Passage to East 1) Inner Route (S) 2) Palm Passage via East Rib Reef 2) Palm Passage to East 1) Palm Passage via East Rib Reef 2) Palm Passage to East 1) Palm Passage via West Rib Reef 2) Palm Passage to East 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) N/A No route traffic 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) 1) Inner GBR Route (S) Fig demonstrates the variety of routes applicable to ports dependent upon final destination route designation. 12

21 2.7 Ship Size Ranges For the purpose of reflecting different sizes of vessel in the analysis, we have utilised the four main industry standard dry bulk size ranges. By providing the analysis by different ship sizes, it is clearer to identify the traffic growth areas in the database which are of greater risk. Generally Capes will pose the highest risk to the Gt. Barrier Reef due to their greater size, deeper draft and higher fuel capacity. Cape (100,000+ dwt) Panamax and Post-Panamax (60,000 99,999 dwt) Handymax and Supramax (40,000 64,000 dwt) Handysize (10,000 39,999 dwt) There is a cross-over between Panamax and Supramax ships in the 60,000 64,000 dwt range. In this size range BS defines modern ships fitted with cranes as Supramaxes, or Ultramaxes as they are sometimes referred to. This is essentially a distinction between geared and non-geared ships. However, few such ships were involved in Queensland commodity trades as their gear could be put to better use in areas of the world without sufficient port infrastructure. 2.8 Average Vessel Size Calculating average vessel size was required to establish how vessel dwts will change over the period To ascertain this, we examined the current fleet and by adding newbuilds coming onto the market over the next few years and removing old ships likely to be scrapped through to 2025, we were able to forecast the average dwt for each year through to The average dwt increases year on year for all vessel sizes, as shown in fig 2.8.1, except for Panamax, which plateaus in Panamax vessels are limited by the Panama Canal and in particular the locks which limits vessel beam to 32.2 metres. Recent advances in naval architecture have resulted in larger dwts, whilst maintaining the same beam. This is reflective of the dwt increases from , with older, smaller Panamax vessels being replaced by modern, larger Panamax vessels. However these advances have been somewhat exhausted and the impetus has ended due to work 13

22 Average dwt Braemar Seascope March 2013 currently underway on expand the Panama Canal in It is also unclear after 2017 what the Panamax size classification will refer to as the future expected size limit is currently occupied by vessels currently referred to as mini-capes. Fig Average Vessel Sizes (selective years) Figures & show the results graphically. Fig Panamax, Supramax and Handysize Ship Size Growth 80,000 Vessel Size Growth Panamax, Supramax and Handysize 70,000 60,000 50,000 40,000 30,000 20,000 10, Panamax (dwt) Supra/Handymax (dwt) Handysize (dwt) 14

23 Average dwt Braemar Seascope March 2013 Fig Capesize Ship Size Growth 193,000 Vessel Size Growth Capesize 191, , , , , , , , , Capesize (dwt) The purpose of estimating these average dwts over time is to calculate how many vessels will be required to lift export tonnes. Clearly if a trade remains static in terms of volume exported but the average ship dwt increases than fewer ships will be required to transport the cargo. 15

24 Export Traffic ( Vessel sailings) Braemar Seascope March Port Profiles In order to make forecasts on future trade, we were required to establish a datum year from which to base projections was deemed to be the latest year for which we could obtain comprehensive trade statistics and the overview picture of 2011 traffic figures is shown in figure Fig Vessel Calls Export Port Traffic (Vessel Sailings) Berth not operational for the majority of North Queensland Bulk Ports Corporation Ltd Abbot Point Abbot Point is solely a coal port, located 25 km north-west of Bowen on the north-west Queensland coast. It is placed between Townsville to its north and Mackay in the south. The port comprises of rail in-loading facilities, coal handling and storage facilities. There is a single trestle jetty and conveyor connecting to two offshore berths and ship loaders, 2.8km offshore. A 35 million tonne per year expansion project is being proposed by the operator of Abbot Point. The expansion will also include construction of a further 2 berths. 16

25 There is further development taking place currently, looking to fully utilise Abbot Point by increasing exports to at least 60Mtpa from terminal 3 alone Hay Point Hay Point is one of the largest coal exporting terminals in the world. It is situated 40 km south of Mackay. It comprises of two bulk coal terminals at Dalrymple Bay and Hay Point. Dalrymple Bay Coal Terminal is leased from the state government by Dalrymple Bay Coal Terminal Pty. Ltd. (DBCT). Hay Point is owned and operated by the BHP Billiton Mitsubishi Alliance. These two terminals service the mines of the Bowen Basin, linked via an integrated mine-to-port rail system. Facilities include rail in-loading facilities, onshore stockpile yards and offshore wharves. The offshore wharves are serviced via conveyor systems on a jetty allowing for deep water loading. Plans are progressing for the proposed Dudgeon Point Coal Terminals Project. This expansion at Hay Point involves two new coal terminals in the port, with an estimated capacity of up to 180 Mtpa Mackay Mackay is situated 950 km north of Brisbane. It is Queensland s fourth busiest multicommodity port in terms of cargo throughput, servicing Bowen Basin mining communities and also has one of the world s largest bulk sugar terminals. 3.2 Port of Townsville Townsville Townsville is the third largest multi-commodity sea port in Queensland after Gladstone and Brisbane and services the mining community at Mount Isa and the Greenvale Nickel Refinery. Townsville will become the principle port for the export of phosphorous rock industry due to come online in Lucinda Lucinda is operated by Lucinda Bulk Sugar Terminal and is solely a bulk sugar exporting port and is a sister port of Townsville located 100 km away. The sugar exports come from the Ingham sugar growing district located in close proximity to the port. Lucinda suffered damage in February 2011 preventing any exports until August Lucinda has one of the world s longest loading jetties at 5.6 km. 17

26 3.3 Ports North (Far North Queensland Ports Corporation Ltd.) Cairns The port of Cairns is situated 1,750 km from Brisbane. It handles cargo and passenger vessels. Although primarily a cruise liner port, it plays an important role as a transhipment port up to remote coastal communities north of Cairns and mining ventures in PNG Mourilyan Mourilyan exports bulk sugar from the local sugar growing regions and is operated by Mourilyan Bulk Sugar Terminal. It has recently had the addition of wood products exporting operation from the port Cape Flattery Cape Flattery is situated 54 km north of Cooktown. It exports bulk shipments of silica sands from the Cape Flattery mine operated by Cape Flattery Silica Mines Pty Ltd the world s largest exporter of Silica Sands. The port has a single berth serviced by a conveyor belt ship loader. 3.4 Gladstone Ports Corporation Ltd Gladstone Gladstone is Queensland s largest and Australia s fourth largest multi-commodity port and includes one of the world s largest coal export terminals. It is situated 520 km north of Brisbane. It is well placed in a mineral rich area, and is a naturally sheltered deep water port. Alumina refinery expansion came online in the 3 rd qtr of 2012 leading to an increase in Alumina exports. Although not required for this project, we recognise that this increase in Alumina output will require an increased import of Bauxite from Weipa. The new Wiggins Island Coal Export Terminal will form part of the existing port of Gladstone. The project has been through two feasibility studies both for a forecast 32Mtpa and the capability to accept vessels up to 220,000 dwt. 18

27 3.4.2 Bundaberg Bundaberg has recently been acquired by Gladstone Ports Corporation. Bundaberg is focussed on the bulk export of sugar and includes a wharf solely for the loading of bulk sugar. The sugar terminal includes 300,000 tonne capacity storage sheds, one of which is the largest in Queensland Port Alma (Rockhampton) Due to the close proximity of Port Alma and Rockhampton their statistical data are combined. As a result, for this report, we shall refer to the two ports as Port Alma. Port Alma is a niche port specialising in ammonium nitrate, explosives and scrap metal. Studies are currently underway to facilitate a coal exporting facility at Balaclava Island in Port Alma s middle harbour. 19

28 4. Coal 4.1 Introduction Having created a base year (2011) coal voyage database for Queensland ports, Braemar Seascope (BS) has now used the data to complete coal traffic forecasts by port. These include four case studies using BREE high, medium and low forecast scenarios plus an independent BS forecast. This process has not been easy as BS has had to integrate different data sources and forecasts. Nevertheless, we have strived to ensure that we have overall traffic volumes that match BREE forecasts of Queensland coal exports, that fully reflect the observed ship utilization on individual trades from the coal voyage database and, to the best of our ability, that reflect likely shifts in trade patterns on individual routes. We have also sought to ensure that traffic forecasts for individual ports lie within expected port capacity constraints and that there is recognition that average ship sizes will gradually alter to reflect overall fleet changes and any shifts to using larger vessels on particular routes to gain economies of scale. The best way to explain how we have gone about this task is to work through the spreadsheet analysis provided. 4.2 Coal Trade Forecasts We started out by building an analysis of coal trade volumes by individual ports. At the start, we show BREE coal import forecasts for selected key coal importing nations. As shown in Fig Fig BREE Coal Import Forecast Unfortunately these forecasts do not show how that trade is sourced, e.g. how much is expected to be imported from Australia domestically. We also show BREE coal export 20

29 forecasts for both total Australia and Queensland under the three BREE scenarios. Another problem is that there was only one set of import forecasts but three scenarios for exports. While this can be handled by assuming that Australia s share of the coal market will change under each scenario, we would normally expect that different scenarios would also be driven by varying country import forecasts. In order to cover the full range of coal export markets that Queensland supplies, BS has added its own trade forecasts for countries not included in the BREE analysis. One thing to note is that BS s split between coking coal and thermal coal tends to be different to the BREE analysis, with BS s coking coal numbers being a smaller proportion of total coal. As shown in Fig Fig Australia BREE vs. BS Coking/Steam Coal Breakdown The reason for this is that the BS forecasts are driven by analysis of importing country coal requirements and the pattern of trade reflected in importing country coal trade statistics. Australian trade statistics generally show a higher proportion of coking coal shipments to specific markets which reflects a different approach to grading coal. We suspect that this includes classing PCI (pulverised coal injection) coals as coking coal. Wherever possible, we have tried to have the forecast numbers for thermal and coking 21

30 coal trade driven off of Australian analysis in order to stay consistent with BREE s forecasts. Looking at the BREE high case analysis, we initially developed forecasts of total Australian thermal and coking coal exports. For minor countries, we used our own model forecasts and pro-rated 2011 trade against overall trade import forecasts. For the main importers covered in the BREE forecasts, we estimated Australian percentage share of the markets for India, Japan and Korea and calculated the balance between BREE s high case coal trade forecasts and our non-chinese trade forecasts as Chinese trade. This process ensured that we matched BREE totals. We also sought to produce our best view of the distribution pattern of trade by adjusting the estimates of percentage share of the market and adding our 2025 estimates for minor trading partners. The next stage was to produce a similar analysis for Queensland coal trade, as shown in Fig The BS trade model does not breakdown trade by individual states within countries. However, we did obtain base 2011 trade data for Queensland split between thermal and coking coal. We then applied a similar logic to building forecasts by route specifically for Queensland coal trade. One difference was that we used India as a balancing trade given that this was the most dynamic trade over time. Once again, we kept the overall total matched to BREE Queensland coal trade forecasts. We also noted the percentage of total Queensland trade accounted for by coking coal for each individual route (this is used later to split ship traffic between coking and thermal coal). 22

31 Fig Queensland BREE vs. BS Coking/Steam Coal Breakdown After this, we worked on splitting Queensland total coal trade forecasts into forecasts by individual port. We began by recording the total cargo volumes on individual routes in the 2011 base year using the data from the coal voyage database. It is important to note that the cargo volumes recorded loaded onto individual ships do not indicate the coal grade (coking v. thermal). We held Brisbane trade constant as we know of no plans to handle additional coal at this port. Looking down the individual ports, you will see that we have also recorded our estimates of future throughput capacity and we have made a series of adjustments to individual trade to ensure that we, firstly, do not exceed projected capacity and, secondly, that total port traffic on individual trades matches the total Queensland trade forecasts. This is shown in Fig 4.2.4, Fig 4.2.5, Fig and Fig We endeavored to make the most sensible fit from our research perspectives. For the BREE high case we assumed Wiggins Island (Gladstone) full expansion and that T3 (Abbot Point) goes to 60 23

32 Mmt, as shown in Fig This gave us sufficient capacity to meet BREE s high case except for 2024 and 2025 where we assumed 40 Mmt of new capacity at Abbot Point. Fig BREE High Assumed Coal Export Capacity by Port Abbot Point assumes T3 goes to 60 MMT In the BREE medium case, we adjusted the analysis to run off of BREE medium case Australian and Queensland coal trade forecasts. This also required us to amend our forecasts of percentage share of trade in key markets. We kept T3 and the Wiggins Island expansions as theses were needed to meet the BREE medium case forecast. We made similar adjustments in the BREE low case, as shown in Fig However, in this case we did not need Wiggins Island expansions to cover trade. Fig BREE Med Assumed Coal Export Capacity by Port 24

33 Fig BREE Low Assumed Coal Export Capacity by Port Finally, we added our own BS case, as shown in Fig We extracted Australian coal trade forecasts from our in-house trade model and pasted the results into the analysis. The BS model not only forecasts total coal trade by country but trade on individual country to country routes as this is a key driver to fully understanding ship demand (very important for a shipping services organization). Our analysis produces trade forecasts below that of the BREE low case. In some ways, this is not surprising in that the BREE analysis came out just before last year s crash in commodity prices which dampened expectations. In addition, the BS analysis is kept up to date by the inclusion of latest available commodity trade data which has acted to lower our 2012 trade forecasts below those contained in the BREE report. In order to extend out the BS trade analysis to 2025 we have assumed the same growth in trade between 2020 and 2025 as included in the BREE low case. Fig BS Assumed Coal Export Capacity by Port 4.3 Coal Traffic Analysis Fig represents a sample of our Gladstone ship traffic forecasts, we start off by pasting over both our Gladstone coal trade forecasts and our percentage Queensland 25

34 coking coal forecasts. Should AMSA wish to perform what if type analysis then this data can be linked in rather than pasted across. We then use our 2011 base year coal voyage analysis to build total cargo loaded into ships by route and forecast this out using the Gladstone coal trade forecast. We also split out Australian coastwise trade and trade loaded on ships for completion at another Australian coal loading port, splitting the latter into Northbound and Southbound movements. Fig Gladstone Coal Trade ( 000mt) and Coal Percentage Split 26

35 Again using the 2011 coal voyage database, we have added 2011 ship traffic by route in both deadweight (dwt) and ship numbers split between four size categories of bulk carrier as follows: Cape (100,000 dwt+) Panamax and Post-Panamax (60,000 99,999 dwt) Handymax and Supramax (40,000 64,000 dwt) Handy (10,000 39,999 dwt) The first step in the methodology used to forecast ship traffic was to forecast total dwt by route within size categories by pro-rating 2011 traffic against forecast coal trade on that route. We then adjusted forecast future average deadweight to reflect the fact that the average size of ships within ship categories tends to increase over time as new orders are placed for larger, modern designs while older, smaller ships are removed. We chose not to base this on an overall fleet analysis and opted to do it on a more pragmatic route by route basis to reflect, for example, whether larger classes of ship were already in a particular trade or whether port constraints, such as in Taiwan, suggested to us that ship size growth would be limited. We then simply divided total dwt by average dwt to get number of voyages (taking care to round to single voyages). We also took into account that much of the growth in ship size in the Cape class has been driven by iron ore trades rather than coal trades. However, ship size is expected to increase in coal trades with the introduction of so-called Newcastlemaxes and other large bulk carrier designs (as opposed to large ore carrier designs). Looking across trades, we conclude that most are mature and will not see significant shifts between ship size categories. This includes China where there is already a large network of Cape ports built to service the massive demand for iron ore imports. Many of these ports can also handle coal. However, we believe that there is a significant exception, namely India, where trade is set to expand rapidly and we are already starting to see more Capes playing a role, and this is reflected in Abbot Point s Cape traffic figures shown in Fig The benefits of economies of scale associated with Capes is expected to drive up their participation in Indian coal imports with the Indian companies already investing in new Australian Cape coal terminal infrastructure. Therefore, we have added in a mechanism to adjust the percentage share of Indian trade between ship size categories. 27

36 Fig Indian Cape Requirement The port traffic numbers in the different cases are essentially driven by the different projections of coal trade by port developed for each case. We have also provided separate estimates of traffic for coking and thermal coal by route using the percentages of total Queensland coal trade by route that is coking coal. 4.4 BREE Cases Impact upon Port Capacity Finally, it is worth making the point that we have not simply pro-rated ship traffic against different scenarios of overall coal trade. We have looked at likely port capacity under the different scenarios, removing terminal expansions where not needed. This approach means that the distribution of coal traffic by port can vary significantly within each scenario depending on whether terminal expansion goes ahead. In the case of Abbot Point this means that we ended up with slightly more ship traffic in the BREE low case in certain years (e.g. 2020) compared to the BREE medium case. The reason for this was that the Wiggins Island expansion was dropped in the BREE low case resulting in less traffic going through Gladstone. To compensate, we then have marginally more coal going through Abbot Point (still well within capacity) and a significant switch back to Abbot Point in Indian coal trade which pushes up our ship traffic estimates for the port. However, overall ship traffic in coal trades across all ports in the BREE low case is still reduced in comparison to the BREE medium case results. 28

37 5. Other Bulks 5.1 Introduction Other bulks is the bulk cargo commodity group which does not include coal or LNG. The primary focus of the project is focused on coal and LNG and therefore Other bulks is a supplementary commodity group which unlike coal does not require comparison or explanation in relation to the BREE cases. In order to produce a data set in line with the project scope established by AMSA, we have removed transported goods such as liquids, containers and livestock as these are not required for the purpose of the research. 5.2 Tonnage Sourcing The BS in house model provides commodity forecasts for Australian wide trade movements and does not provide a state by state breakdown. In order to gauge the Queensland specific commodity environment we have collected data from a number of industry sources. The source which provided the most comprehensive tonnage information was from the Department of Main Roads and Transport (DTMR). Due to the fact that they annually publish a report titled Trade Statistics of Queensland Ports, which provides a detailed list of commodities including quantities that are shipped through all the ports relevant to our investigation. In order to ensure continuous formatting, we have sought to present the Other Bulks database in calendar year format as per the BREE report. Ports mentioned within the DTMR report issue data in financial year format. This is because data is produced by the ports for financial reports and tax accounts, and as such is collated in such a manner to remain consistent. In order to establish commodity tonnages for calendar year format, we have taken an average value of two financial years & This value has been cross referenced to ensure the values produced are within an appropriate margin of error. 5.3 Other Bulk Commodity Categorisation and Growth Projection Using the BS in house model we have applied a system of groupings to categorise similar commodities, for example phosphorous rock and fertilisers are grouped together. When forecasting Other Bulks out to 2025, we have applied an annual average growth rate using the BS model which forecasts the total number of tonnes shipped for each commodity within that particular grouping. 29

38 Other Bulk commodity groups include: Agri Bulks: Wheat, coarse grains, oilseeds, oilmeals, rice and sugar Aluminium: Aluminium BauxAlum: Bauxite and alumina Forest: Woodchip, rough wood and sawn wood Iron Ore: Magnetite & hematite Minor Bulks: Cement/ clinker, petroleum coke, salt and sulphur Minor Ore: Copper ore, lead ore, manganese ore, nickel ore and zinc ore Minor Steel: Coke, DRI (direct reduced iron), pig iron and scrap metal Other Bulks: General cargo PRFert: Phosphorous rock and fertilisers Steel: Finished steel 5.4 Cargo Lift Ratio A cargo lift ratio is the relationship between tonnes loaded and the dwt of a vessel, used to convert tonnage data into a dwt equivalent for vessel traffic analysis. Normally these two numbers are fairly close (within a few thousand tonnes) however there are some trades where the difference is significant on a continuous basis and some where occasional part cargoes are evident. For example as shown in Fig we can see the difference between the dwt of the vessel and the tonnes loaded are considerable enough to establish that this is a part cargo. Fig Part Cargo Justification Vessel name Tonnes Loaded Commodity Sailed Date DWT Ship Size Destination Port African Puma 10,630 Bulk Sugar 25-Nov-11 26,411 Handysize Korea Ulsan Therefore we needed to establish a technique to allow for part cargoes, as a percentage of the total traffic that will not load a full cargo. This we achieved by establishing a cargo lift ratio factor in order to allow us to build in a part load factor to apply to ship traffic forecasts. This ratio is produced by calculating the sum of tonnes loaded of a particular commodity and the sum of vessel dwt associated with that commodity. Then dividing both numbers to produce a ratio figure which dictates on average the sum of tonnes loaded to vessel dwt. This allows us calculate an associated tonnage with a built in variance factor for vessels with a part load. 30

39 One problem associated with this particular technique occurs when looking at unique port trades, for example Aluminium exports from the port of Gladstone, as shown in Fig This particular trade route is not indicative of Queensland wide commodity movements. This is because the cargo lift ratio needs to take into consideration that this is a parcel trade, only loading a particularly small proportion of the vessel at any one time. The PRFert trade from Townsville on the other hand represents full loads, compared with the normal part loads from all other ports for the highlighted commodity. As a result we have adjusted the cargo lift to reflect these individual trades for each port. As discussed in section 5.2, we sought to ensure familiar presentation to that of the BREE report. As such we recognise that numerical data presented within the database, is shown as integers. However when calculating traffic volumes from the cargo lift ratio we have found that the decimal point can still equate to a considerable trade volume value. To overcome this issue we have enforced a rounding technique which rounds the value to the next, not nearest, full number. Fig Cargo Lift Ratios Vessel Size Commodity Group Cargo Lift Ratio Panamax Supra/Handymax Handysize Agri Bulks 1.18 BauxAlum 1.29 Agri Bulks 1.35 BauxAlum 1.13 Forest 1.25 Iron Ore 1.11 Minor Bulks 1.06 Minor Ores 1.2 Other Bulks 1.06 PRFert 1.08 (Townsville Exclusive) Agri Bulks 1.48 Aluminum 2.54 (Gladstone Exclusive) BauxAlum 1.1 Minor Bulks 1.19 Minor Ores 1.3 Minor Steel 3.84 Other Bulks (Standard) PRFert 1.08 (Townsville Exclusive) 31

40 5.5 Route Breakdown Destination specific data was used to assign specific routes to vessels taking into account the vessel type and achievable draft of a vessel. For example, a Handysize vessel with a draft less than 12.2 m with a destination of Singapore would take the Torres Strait. However a Panamax vessel, going to the same destination must take the Jomard Island route, as the draft exceeds 12.2m. Once a route had been assigned to each data entry, the vessel size and the commodity group breakdown were used to calculate a route percentage. Fig 5.5.1, and reflects the sequence of actions that have produced the route percentage from the initial port commodity breakdown (Fig 5.5.1), leading to commodity group breakdown for ship size and route (Fig 5.5.2) and then how these percentages form a tonnage breakdown (Fig 5.5.3). Fig Vessel Size Breakdown 32

41 Fig Route Breakdown by Route Fig Resulting Tonnage Breakdown 5.6 Notable Port Developments Impact to Growth Throughout the construction of the Other bulks database, consideration was given to current and future developments which will influence the output of the ports in question beyond organic growth. To establish how the impact of future projects would influence the exports from ports, we conducted detailed research to examine the feasibility for the project to go ahead, commencement date, expected output and future growth expected from the project. Where projects have an approximate likelihood on whether they go ahead or not, we have generally assumed they would go ahead. However it should be recognised that our growth figures for mining projects for future developments are based on mining company expectations. Factors that influence growth are not limited to mining developments. A port is susceptible to the impact of seasonal weather; as a result harsh weather can impact upon day to day operations. 33

42 5.6.1 Queensland Phosphate Rock Project The Queensland based phosphate rock mining development, the impact of which is related to the port of Townsville. The project is currently in the development stage but, an expected output of 1 million tonnes by 3 rd qtr of 2015, ramping up to 3 million tonnes within two years. All product is expected to be exported to India. Existing fertiliser exporters are expected to export into the domestic market. As shown in Fig combined exports of phosphate rock and fertilisers are forecast to increase by 77.7% between 2013 and Both projects have a forecasted conservative growth rate of 2.3% after ramp up has been achieved. Fig Queensland Phosphate Rock Project Coming Online Magnetite Growth The first quantities were shipped from the port of Townsville in June We have forecast a growth in output of 41.7% between 2012 and 2015 as both projects become fully operational, with a forecasted growth of 2% thereafter as shown in Fig Fig Magnetite Increase 34

43 5.6.3 Cyclone Yasi Damage In February 2011 the Lucinda Sugar Terminal was damaged by Cyclone Yasi to a point that all exports ceased during repairs. The terminal recommenced exports in August This drop in output is reflected in the traffic chart shown in Fig and Fig Fig Lucinda Sugar Terminal Damage In order to make allowances for this change in output, we have shown a reduction to output of 85% (shown in Fig ) to reflect this sudden drop. In order to account for the port coming back on line, we built in an allowance factor which enables Lucinda to return to normal operating output during The impact of cyclone Yasi in 2011 was also felt at the ports of Mackay and Bundaberg, both of which have large exports of bulk sugar. This is reflected in both Fig (Mackay) and Fig (Bundaberg) which both show a reduction in exports from the port during 2011, as sugar plantations recover from floods as a result of the cyclone. As a result of the flooding an increase of 12% output is registered for the following year, shown in Fig Mackay Impact 35

44 Fig Bundaberg Impact Yarwun Alumina Refinery Expansion The Yarwun Alumina Refinery completed an expansion project which will impact on exports from Gladstone. This increased capacity became operational in 4 th qtr of 2012 with forecast exports of 6 million tonnes by year end of This is an increase of 36% between 2011 and Once the 6 million tonne limit has been reached, we forecast this to remain constant out to 2025, due to there being no further announcement for expansion. Although this analysis does not look at the influence of imports, it must be recognised that the growth in alumina exports will increase the volume of imports from Weipa to Gladstone of Bauxite; the raw material for the production of Alumina. Fig Yarwun Refinery Impact Liner Services The substantial alumina / aluminium trade from Gladstone is in the form of Alumina, as discussed in Fig 5.6.4, the exports of aluminium metal are part of a much smaller, unique trade movement encompassing the whole of the east coast of Australia. Small parcels of aluminium and other base metals are shipped from a number of ports along the eastern Australian coast. These parcels form the core business of liner services which encompasses unique vessels to this trade. Once a parcel of aluminium is loaded from Gladstone, the vessel will transit Southbound as shown in , collecting parcels from other ports, explaining why traffic from Gladstone only uses the Southbound route. The vessel will then transit north heading to Asia or continues southbound to the Middle East. There is no growth forecast on this liner service and this is reflected in the database. 36

45 Fig Liner Service Justification 37

46 6. LNG 6.1 Introduction The LNG database provides a breakdown of anticipated LNG traffic associated with the Queensland LNG projects. All projects will see the shipping fleet export from Gladstone, using three routes as they service their respective destinations. The routes in question are: Torres Strait, Jomard Island and Pacific. There will be no traffic from Gladstone that will employ the Southbound route, as reflected in Fig Being tankers, all LNG Carriers will follow the outer GBR route when they transit towards the Torres Strait. Fig LNG Route Justification 6.2 Explanation of numbers The number of vessels per year is based on a combination of the following factors: LNG buyers and associated destination, amount of LNG per buyer, size of vessels employed by the sellers (when the cargo is delivered by them i.e. DES), size of vessels employed by the buyers (when the cargo is delivered by them i.e. FOB), anticipated increases in vessel sizes and anticipated destinations for LNG from the projects that have yet to reach Final Investment Decision (FID). 38

47 Obviously there are several variables involved as previously stated and given that no LNG carriers presently operate on the Queensland coast, the figures involved are all based on Braemar LNG s assessments given the best information that we have available to us. It is conceivable that significant step-changes in the LNG industry may occur and these in turn could see LNG that was destined for one market, redirected to another. As far as this occurs, the only significant impact would be that some vessels that were predicted to use the Torres Strait route may in turn use Jomard route and vice versa. All calculations are based on the most direct route to the destination port and on a routing speed of 18 knots. All round-trip calculations include cargo loading and unloading time. One cubic metre (cbm) is 0.45 tonnes for the purposes of this study meaning that all vessel cbm capacities are multiplied by 0.45 to arrive at their LNG capacity in tonnes. This figure is then used to calculate the number of trips per year based on the overall delivery commitment, for example: 3.6 Mtpa (or 3,600,000 tonnes per annum) when shipped by vessels with 76,500 tonnes capacity will result in 47 trips per year. 6.3 Explanation of Routes Torres Strait route will be employed for vessels with a draft of 12.2 metres or less transiting to the following countries: India, Taiwan, Singapore and Malaysia. Jomard route will be employed for all vessels with a draft of greater than 12.2 metres (which for calculation purposes is assessed as loaded vessels of greater than 145,000 cbm) and for the following destinations: China, Korea and Japan. The Pacific route will be employed by vessels transiting to South America. Note: Given the extra distance involved in transiting via Jomard over Torres Strait, we assess that charterers will employ vessels of 145,000 cbm or less (to ensure that a draft of 12.2 metres or less is maintained in their loaded condition) when transiting to the countries that can be serviced by Torres Strait. To this end, calculations in the attached Spreadsheet are based on this fact meaning that the larger vessels (greater than 145,000 cbm) are assessed for use only when the destination port is in Korea, China or Japan. 39

48 6.4 LNG Destination Calculations Based on the existing Sale and Purchase Agreements (SPAs) for the three projects that have reached FID, the destinations are assessed as per the below and the number of voyages have been calculated with this in mind. For the pre-fid projects, the destinations are an estimate based on the Joint Venture (JV) partners involved. Post-FID Projects December Fig Queensland Curtis LNG 8.5 Mtpa China = 3.6 Million Tonnes Per Annum (Mtpa) BG portfolio commitments Assess 170,000 cbm (76,500 tonnes) vessels 23 day round trip Jomard route 40 Port calls per year Chile = 1.7 Mtpa - GNL Chile Assess 155,000 cbm (69,750 tonnes) vessels 35 day round trip Pacific route 25 Port calls per year Japan = 1.5 Mtpa - Tokyo Gas and Chubu Electric Assess 155,000 cbm (69,750 tonnes) vessels 21 day round trip Jomard route 22 Port Calls per year Singapore = 1.7 Mtpa - BG Aggregation at SLNG Assess 142,000 cbm vessels - loaded to 140,000 cbm (63,000 tonnes) 19 day round trip Torres Strait route 27 Port calls per year 40

49 July Fig Gladstone LNG Project (GLNG) 7.8 Mtpa Malaysia = 3 Mtpa Petronas Assess 145,000 cbm vessels - loaded to 140,000 cbm (63,000 tonnes) 19 day round trip Torres Strait route 48 Port calls per year Korea = 3.5 Mtpa Kogas Assess 160,000 cbm vessels - will charter in to replace older existing fleet (72,000 tonnes) 21 day round trip Jomard route 48 Port calls per year India = 0.8 Mtpa Total Assess vessels of size TBC - loaded to 140,000 cbm (63,000 tonnes) 31 day round trip Torres Strait route 13 Port calls per year Singapore = 0.5 Mtpa Total Assess vessels of size TBC - loaded to 140,000 cbm (63,000 tonnes) 19 day round trip Torres Strait 8 Port calls per year Fig Asia Pacific LNG (APLNG) 4.5 Mtpa (then 9 Mtpa from 2018) July 2015 January 2018 China = 4.5 Mtpa (all of Train 1) Sinopec Assess 160,000 cbm (72,000 tonnes) vessels 23 day round trip Jomard route 63 Port calls per year 41

50 January China = 7.6 Mtpa Sinopec Assess 180,000 cbm vessels - will increase size to capitalise on economies of scale (81,000 tonnes) 23 day round trip Jomard route 94 Port calls per year Japan = 1 Mtpa Kansai Electric Assess 180,000 cbm (81,000 tonnes) vessels 21 day round trip Jomard route 13 Port calls per year Singapore = 0.4 Mtpa Spot Market Assess vessels of size TBC - loaded to 140,000 cbm (63,000 tonnes) 19 day round trip Torres Strait route 7 Port calls per year Pre-FID Projects January Fig Arrow Energy 8 Mtpa China = 4 Mtpa Petrochina Assess 180,000 cbm (81,000 tonnes) vessels 23 day round trip Jomard route 50 Port calls per year India = 2 Mtpa Shell Assess 135,000 cbm (60,750 tonnes) vessels 31 day round trip Torres Strait 33 Port calls per year 42

51 Singapore = 2 Mtpa Shell Assess 135,000 cbm (60,750 tonnes) vessels 19 day round trip Torres Strait route 33 Port calls per year January Fig Gladstone LNG Fisherman s Landing 3 Mtpa China = 3 Mtpa - CNPC Assess 180,000 cbm (81,000 tonnes) vessels 23 day round trip Jomard route 37 Port calls per year 43

52 7. Findings 7.1 Introduction The basis of our investigation was built around producing a database made up of coal, LNG and Other bulks. This database established tonnage quantities of exports and traffic volumes for commodities engaged in the North Queensland region, primarily around the Great Barrier Reef area. Based upon the tonnages associated with the particular trades we have established the traffic volumes required for such quantities. During this investigation and after establishing the total quantities of commodities involved in the Queensland raw materials trade, we can present the Coal, Other Bulks and LNG trades into a comparative format. As shown in Fig 7.1.1, it becomes clear the extent of Queensland commodity market is and will be dominated by the coal trades, bringing the quantities of Other bulks and LNG into some perspective. Even when LNG and other bulks are totalled together, in 2015 coal represents an 81.8% of total trade and by 2025 the difference remains substantial at 80.5%. What this research has concluded, is that from a Queensland commodity outlook perspective, LNG and Other bulks are relatively insignificant when compared against the total output of coal in terms of both tonnage and traffic volumes. 44

53 Million Tonnes Braemar Seascope March 2013 Fig Queensland Commodity Volumes 350 Commodity Volumes Total Other Bulks LNG Coal (Average of BREE H,M,L & BS Cases) 45

54 7.2 Trade Impact upon Routes Our findings have found a direct correlation between the traffic utilising particular shipping routes and growth in singular trades. We have noticed that with the substantial growth identified within the coal trade, that transits via the Jomard route, demonstrate a clear increase; this is demonstrated in Fig This is because as the coal trade increases, the employment of larger vessels sailing to destinations such as China or India will be increased in order to take advantage of economies of scale. Additionally it is a natural progression as vessel construction processes become more technologically advanced this will increase the average size of vessels in the market. As a result of this increase in vessel size, the shipper is limited by the route they can use. The Jomard route is not restricted by draft, as such the larger Panamax and Capesize vessels are limited to using this route. This as a consequence should normally reflect a reduction in the traffic that utilises the Torres Strait if all other factors remained even. However, with substantial phosphate rock projects coming online, the majority of cargoes will be shipped to India on Supra/Handymax and Handysize vessels which will use the Torres Strait, as this is the most direct route to the final destination. The expected drop in traffic from the coal trade through Torres Strait is offset by an increase in traffic from the fertiliser and phosphate rock trade. 46

55 Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Torres Str. Jomard Pacific Southbound Export Traffic (Vessel sailings) Braemar Seascope March 2013 Fig Dry Bulk Route Utilisation 3000 Dry Bulk Vessel Traffic Capesize Panamax Supra/Handymax Handysize 47

56 Export Traffic (Vessel sailings) Braemar Seascope March 2013 Fig LNG Route Utilisation 325 LNG Vessel Traffic Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str. Southbound Pacific Jomard Torres Str ,000 dwt - 90,000 dwt (165,000 cbm - 185,000 cbm) 70,000 dwt - 79,000 dwt (145,000 cbm - 165,000 cbm) 60,000 dwt - 69,000 dwt (125,000 cbm - 145,000 cbm) 48

57 7.3 Coal Findings BS has developed three forecasts of Queensland coal traffic from ports impacting the Great Barrier Reef area based on our interpretation of the projections contained in the BREE coal trade report. In addition, we have added a fourth coal case based on our inhouse commodity trade model. Details of how we put together an analysis of all Queensland coal shipping movements in a base year (2011) can be found in section 4 of this supplementary report. Information is also provided on the assumptions made about underlying coking and thermal coal trade, new port capacity developments and the process used to derive ship traffic projections by route. Summary tonnage data extracted from the four case studies can be found in Fig and traffic data can be found in Fig The average annual growth in coal ship traffic between 2011 and 2025 in the BREE High Case was 6.31%. This fell to 5.12% in the BREE Medium Case, to 3.71% in the BREE low case and to 3.06% in the BS Case. The main reason why the BS Case tracked lower than each of the three BREE cases was that BS had the advantage of putting together its report after the recent crash in commodity prices which has resulted in the reevaluation coal trade prospects and a reassessment of many mining and infrastructure developments. 49

58 Million Tonnes Braemar Seascope March 2013 Fig Coal Scenarios Tonnage Growth 450 Coal Tonnage Growth 400 BREE cases remain constant until Totals BS Case Totals BREE Low Totals BREE Medium Totals BREE High 50

59 Export Traffic (Vessel sailings) Braemar Seascope March 2013 Fig Coal Scenarios Traffic Growth 4250 Coal Traffic Growth BREE cases remain constant until Totals BS Case Totals BREE Low Totals BREE Medium Totals BREE High 51

60 Export Traffic (Vessel sailings) Braemar Seascope March 2013 It is also worth pointing out that the assessment of overall growth in coal ship traffic has been moderated by two factors. Firstly, as trade expands we have assumed that there will be a gradual switch to greater reliance on Capes to gain economies of scale; this is reflected in Fig 7.3.3, demonstrating the increased Capesize traffic engaged in the coal trade. Secondly, we has also assumed modest growth in average ship size within the various shipping size sectors, a trend that occurs as the bulk carrier fleet expands and renews itself. Fig Movement to Capesize Vessel Majority 4,500 Capesize Prominence 4,000 3,500 3,000 2,500 2,000 1,500 1, BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case BREE High BREE Medium BREE Low BS Case Total Traffic Total Cape Traffic 52

61 Finally, it may be useful to comment on port developments. In the BREE High Case we have assumed that T3 terminal is fully developed at Abbot Point. We also assumed that capacity at the Wiggins Island terminal at Gladstone is fully expanded from 57 to 81 Mtpa. Even with these two expansions, it was still necessary to assume that a further 40 Mtpa capacity would have to be added to meet the BREE High Case forecasts for the tail end of the forecast horizon. This did not apply in any of the other case studies. In all cases we have assumed that the T3 Terminal will proceed although full expansion to 60 Mtpa is not required to meet the BS Case traffic forecasts. In both the BREE Low Case and the BS Case we have assumed that the Wiggins Island expansion from 57 to 81 Mtpa does not proceed as it is not required to meet traffic forecasts. These comments on terminal capacity are given simply from the perspective of the capacity requirements needed to meet our various ship traffic forecasts. We do not make any judgments as to whether individual terminal developments should proceed as this is bound up with a whole variety of other considerations such as the logistics of linking coal mines to individual coal terminals, ownership of mines and terminals and the economics of individual projects etc. The impact of increasing coal tonnages will result in higher traffic volumes. Depending on the applied scenario, the lower end of the spectrum (BS case) has forecast by 2025 total coal traffic of 2,512 vessels, this equates to almost 7 sailings a day. However taking the other extreme i.e. the BREE high case, there could potentially be as many as 4,004 vessels in 2025, equating to 11 vessels a day. Taking into account the vessel traffic flows over all four cases, approximately 80% of all coal traffic will transit via the Jomard Island route. This is compared with only 6.5% of all traffic transiting via the Torres Strait, which equates to 3 vessels a week for the BS case or 6 for the BREE high case scenario. As a result, the increases to coal traffic should not have a substantial bearing upon the Great Barrier Reef area. This is partly because of the relatively low number of additional ships as explained above, but also because the transit period for the majority of expanded coal traffic (i.e. those transiting via Jomard Island) is relatively short. 53

62 To illustrate the transit time from the various coal ports through the Great Barrier Reef area, transit calculations are shown below, which are based on transit speeds of 13.5 knots: Hay Point: Approximate transit period within the GBR area is hours Gladstone: Approximate transit period within the GBR area is hours Abbot Point: Approximate transit period within the GBR area is hours Transiting via the Torres Strait requires a longer duration within the GBR region, (e.g. around 70 hours from Gladstone). However this is only relevant for smaller vessels (less than 12.2m draft) which are only 6.5% of all coal traffic. Growth in the coal trade is creating demand for larger vessels which in turn are required to transit via Jomard Island and hence the vessel is in the Great Barrier Reef area for a reduced time; hours versus 70 hours for Gladstone. As such, existing trades may also shift to larger vessels through consolidation of volumes. Also the point needs to be made that these numbers are representative of all coal ports in North Queensland and not a singular port. As a general comparison to the iron ore trade, Port Hedland sail up to 6 large laden bulk carriers every day on the high tide with 30 minute sailing separations. 54

63 Million Tonnes - Commodity Groups Braemar Seascope March Other Bulks Findings Our investigation into Other Bulks has led us to the construction of a database from which we can formulate justifiable and realistic conclusions. Total Other Bulks for our base year 2011 totalled 15,513,605 tonnes; this produced traffic of 562 vessels made up of Panamax, Supra/Handymax and Handysize vessels. This is compared to 30,693,150 tonnes and traffic of 932 vessel sailings forecast by the year This produces an increase of 98% in tonnage and a 66% increase in traffic associated with this tonnage. Between 2011 and 2025 there are a number of projects which are due to come online during that period and it is these such projects that substantiate the majority of Other Bulks growth. However, aside from these projects, growth is primarily made up of organic growth, as production techniques become more efficient, programmes to upgrade facilities are introduced and mining companies continue exploration and expansion. Fig presents the total Other Bulks and the commodity group break down. It emphasises the positive growth of total tonnage between 2011 and Fig Other Bulks Growth Other Bulks Growth Minor Steel Forest Aluminum Iron Ore Minor Ores Other Bulks Minor Bulks PRFert Agri Bulks BauxAlum Total Other Bulks (RH Axis) Million Tonnes - Total Other Bulks 55

64 It needs to be emphasised that the extraordinary growth rates seen from the specific projects will produce commodity expansion not ordinarily seen in organic growth. For example, upcoming phosphate rock projects result in a PRFert growth increase between 2011 and 2025 tonnages of 413%, against the organic growth of Forest products which registered a growth of just 18% between 2011 and 2025 tonnages. As is typical during a 3-4 year ramp up phase of any project, such sustainable growth is not possible. Thereafter, growth levels after ramp up are at more reasonable levels as seen in organic growth. Therefore in making this point we acknowledge that such peaks in other bulks growth is highly dependent upon a small number of projects coming online over forthcoming years. During our research, we have established a pattern between the vessel types such as Supra/Handymax and Handysize and Other Bulk commodities of refined material. This is because some of the particular commodities that are incorporated in our Other Bulks analysis involve commodities in a partially or fully processed state. For example the export of BauxAlum from Gladstone, represent the alumina partially refined in the Yarwun Alumina Refinery, as reflected in Fig The vessel type primarily utilised in this trade is Supra/Handymax size vessels. The primary component of alumina is bauxite. Large quantities are required to produce a much smaller refined quantity of alumina. The refined product offers more practical properties meaning that smaller quantities are required at the destination to produce the finished products. Additionally smelters will not wish to purchase singular quantities larger than that carried on Supra/Handymax or Handysize vessels. Fig Supra/Handymax Vessel Size Majority We have identified within the Other Bulks sector that Townsville, Gladstone, Cape Flattery and Mackay are the four busiest ports by throughput and traffic in Queensland. Fig demonstrates between 2011 and 2025 that Townsville will overtake Gladstone 56