The Hunter Valley Rail Project (HVRP) represents most of the coal
producers using the Hunter Valley Rail System in NSW to haul coal to the
port of Newcastle. This system carries over 70 per cent of NSW's coal
exports, comprising over 30 per cent of total Australian coal exports. Hunter Valley coal is the largest export industry in NSW, and one of its
largest export growth opportunities. However, the industry is under
intense pressure in international markets from existing and new coal
producers and from other energy sources. Whilst potential growth in
demand is substantial, particularly for thermal coal in Asia, excess world
supply has pushed prices down, and this underlying trend may well
continue. The industry has lost international competitiveness and as a
result, investment has dropped 44 per cent over the last two years. The industry must be rapidly structured to compete and attract
investment on the basis that these pressures will continue. Substantial
productivity improvement and cost reductions must be made for the
industry to regain competitiveness, otherwise growth will not occur and
the industry will decline, with serious implications for the Australian and
NSW communities. The introduction of internationally competitive rail
freight rates is an urgent and essential part of this process. It is the key
objective of the HVRP.