Hunter Valley Coal Chain

The Hunter Valley Coal Chain (HVCC) is the chain of coal delivery in New South Wales, Australia from (mainly open-cut) coal mines in the Hunter Region to the Port of Newcastle and domestic coal-fired power stations in the Hunter Valley. The HVCC essentially follows the path of the Hunter River travelling south-east from the mining areas in the Hunter Valley to Newcastle.

The HVCC mainly deals in the sea-borne export coal trade, especially to Asia (Japan and Korea in particular). It is one of six major coal chains in Australia:

The port of Newcastle is the world’s largest coal export port. Rising demand for coal, particularly in the Asian region has resulted in a strong increase in the volume of coal exported through the port. In 2013 port throughput was 150.5 million tonnes, up from 68 million tonnes in 2000.

Coal generally goes through the following stages between mine and port:

In 2003 the Hunter Valley Coal Chain Logistics Team (HVCCLT) was established to improve the movement of coal from Hunter Valley mines to the port's coal loaders and then to markets across the globe. HVCCLT pools the resources of port operators Newcastle Port Corporation and Port Waratah Coal Services, railway operators Aurizon and Pacific National, and railway infrastructure managers Australian Rail Track Corporation and RailCorp into one logistics team.

The major coal producers in the Hunter Valley, which utilise approximately 70% of the HVCC capacity, are:

The remaining 30% of coal exported is produced by the small coal producers including:

Most coal produced in the Hunter Valley is sold directly by coal mines (producers) to overseas buyers. About 20% of coal is sold by traders who do not mine coal but act as agents or intermediaries in coal sales. The coal traders operating in the Hunter Valley include:

The majority of Australian coal was traditionally sold to Japanese steel mills or power utilities in accordance with long term contracts. Those contracts were the subject of annual price and volume negotiations. The Japanese steel mills, operating in a co-ordinated manner and collectively known as the "JSM", negotiated prices for coking coal. One of the steel mills would be appointed as the lead negotiator for the initial contracts with producers. Prices in subsequent contracts would be based on these ‘benchmark prices’, adjusted for coal quality. This led to "JSM terms" being the benchmark for the industry. While coal is still sold under JSM terms, a greater variety of other contract terms now exist.

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