BUNBURY, AUSTRALIA — WA Chip & Pulp Co Pty Ltd (WAPRES) is a step closer to exporting bulk grains for Bunge from its Bunbury, Australia port following the Sept. 2 release of a draft determination by the Australian Competition and Consumer Commission (ACCC) to exempt WAPRES from portions of the Wheat Code.
The code, which started on Sept. 30, 2014, regulates bulk wheat port terminal service providers to ensure that exporters have fair and transparent access to terminal facilities. Where appropriate, the ACCC may reduce regulation at a specific port terminal by exempting the relevant port terminal service provider from certain provisions of the code.
WAPRES, which is owned by Marubeni Corp., has contracted with Bunge for the export of bulk grains, including wheat, barley and canola. In 2014, Bunge built a grain storage facility adjacent to the WAPRES terminal. It is connected to the WAPRES ship loader by a belt conveyor.
With respect to other exporters, WAPRES said that due to its limited size and lack of dedicated bulk wheat facilities, export via the Bunbury terminal is unlikely to be a viable option without further significant investment. However, WAPRES said other bulk wheat exporters in Western Australia will benefit from the reduced demand at other port terminals from the operation of the Bunbury terminal.
The core business of WAPRES is the wood fiber industry, as a producer and exporter of woodchips. But the company is looking to diversify and increase its revenue base by increasing the capacity utilization of its ship loading assets.
In its exemption application with the ACCC, the company said it expects further utilization will benefit the Western Australian economy through increased economic activity and employment. But to be viable, it said it must compete with CBH’s port terminals and must be on a level playing field, making it essential for WAPRES to also be exempt from parts of the Wheat Code.
“The ACCC’s draft view is that WAPRES will face sufficient competitive constraint to warrant granting it an exemption from certain parts of the code when providing services at its Bunbury facility,” ACCC Commissioner Cristina Cifuentes said.
The ACCC’s preliminary assessment is that, if an exemption is granted to WAPRES, it is likely to remain a viable option for grain grown in the Bunbury catchment area to be transported to CBH’s Kwinana or Albany port terminals, especially given CBH’s extensive upcountry network. The ACCC considers that in the absence of full regulation under the code, WAPRES will continue to face strong competition for bulk wheat volumes from CBH’s terminals.
“Granting an exemption to WAPRES would place it on a level regulatory playing field with CBH, who is the dominant provider of port terminal services in WA and has already been granted an exemption at its WA ports by the Minister for Agriculture,” Cifuentes said.
If the ACCC makes a final determination to grant an exemption to WAPRES at its Bunbury facility, WAPRES will not be subject to a number of the code’s provisions at this port, including obligations to provide non-discriminatory access, resolve access disputes through prescribed processes, get ACCC approval for capacity allocation systems and publish certain information.
The ACCC will also undertake monitoring of the bulk wheat terminals and level of competition in WA. The ACCC has taken a similar approach following exemption determinations regarding port terminals in other port zones.
The ACCC’s draft determination in relation to the WAPRES port terminal facility at Bunbury is set out in its draft determination document.
The ACCC invites submissions from interested parties on its draft determination. The closing date for submissions is Sept. 14.
In the past few months the ACCC has released several drafts proposing to exempt bulk wheat terminals at ports throughout Australia.
Most recently, on Aug. 27, the ACCC released a draft proposing to exempt Queensland Bulk Terminal (QBT) and GrainCorp from having to comply with Parts 3 to 6 of the Wheat Code at their Port of Brisbane bulk wheat port terminals.
“The ACCC’s draft view is that the two Brisbane port terminals face sufficient competitive pressures to warrant granting both port terminal operators exemptions from certain parts of the code when providing services at their Brisbane facilities,” Cifuentes said.
The main reason for proposed exemptions are due to that the “ACCC believes there is sufficient competition in the market for the bulk wheat terminals.”
Exempt service providers are still obliged to deal with exporters in good faith and publish information about how capacity is allocated and the current state of the shipping stem.