UPDATE: Aston To Appeal To Competition Regulator Over Coal Port Limits

Fledgling coal miner Aston Resources Ltd. (AZT.AU) will appeal to Australia's competition regulator over a decision to limit its allocation at the port of Newcastle to 20% of its request over the next four years, holding up an estimated A$2 billion of planned coal production.

The decision by Port Waratah Coal Services, the main operator at the world's busiest coaling port, demonstrated that agreements governing the port were failing to support the local industry, Aston said in a statement Wednesday.

"It is inconceivable that, despite (Newcastle's) port capacity almost doubling over five years, there is no significant capacity available for new entrants until at least 2015," said Todd Hannigan, Aston's Chief Executive.

The company would ask the Australian Competition and Consumer Commission to review its approval of a 2009 agreement on capacity allocation at Newcastle port.

"This is a disappointing outcome for the New South Wales coal industry and demonstrates that, at the first critical test, the capacity framework arrangements have failed to deliver a balanced long-term solution," he said.

Aston had sought 2 million tons at the port in 2012, 5 million tons in 2013, and 10.5 million tons a year from 2014, but will instead receive 1.7 million tons a year in 2013 and 2014 and 10.5 million tons a year from 2015, the miner said.

That will give the company just over 20% of the 17.5 million tons it had sought during its first three years of production. The 13.1 million ton shortfall would be worth around A$2.00 billion, based on consensus commodity forecasts for 2012 and Aston's planned production mix.

Aston bought the Maules Creek mine in New South Wales state's Gunnedah Basin from Rio Tinto PLC (RIO)-controlled Coal & Allied Industries Ltd. (CNA.AU) in 2009, paying A$480 million in cash.

The company, founded by 34-year-old electrician-turned-mining-millionaire Nathan Tinkler, was then floated in August with an enterprise value of A$1.35 billion.

Infrastructure bottlenecks are a major problem for Australian coal miners, and the improvement in planned export capacity was cited at the time as a major factor in the near-threefold increase in Maules Creek's value.

Aston plans to produce 10.8 million tons a year of the coking coal used in steelmaking and thermal coal used in power stations from the mine.

In public statements since Aston's initial prospectus was launched, the company said it did not expect port capacity to be a problem: "Even assuming highly bullish production growth from NSW coal producers over the next five years, there is still likely to be significant excess capacity at Newcastle," the company said in a presentation slide last month.

Newcastle's two port operators, Port Waratah Coal Services and Newcastle Coal Infrastructure Group, are in the process of expanding capacity at the port from 143 million tons a year at present to 176 million tons a year from 2013.

Both operators are owned by consortia of miners, with Rio Tinto PLC (RIO) and Xstrata PLC (XTA.LN) dominating PWCS and BHP Billiton Ltd. (BHP) the major shareholder in NCIG.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]