Form G Commonwealth of Australia

Trade Practices Act 1974 - subsection 93 (1) NOTIFICATION OF EXCLUSIVE DEALING

To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with subsection 93 (1) of the Trade Practices Act 1974, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3), (4), (5). (6) , (7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.

PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM

1. Applicant

(a) Name of person giving notice: (Refer to direcrion 2)

Nq 3170 Glad.stone Ports Corporation Limited ACN 131 965 896

(b) Short description of business carried on by that person: (Rclfer to direction 3)

Section 275 and other related sections of the Transport Infrastructure Act set out the function of the Corporation. Relevant to this notif;cation the Corporation is responsible for: a) establishing, managing, and operating effective and eficient port

facilities and sendces in the Port: b) making land available for the establishment, management and

operation of effective and efficient port facilities and services: C) providing and arranging for the auxiliary services or M J O ~ ~ S necessary

for the efective and efficient operation ofthe Port; and d) keeping appropriate levels of safety and security in the provision and

operation o f the facilities and services in the Port;

(c) Address in Australia for service of documents on that person:

19 Yarroon Street

Gladstone

QLD 4680

2. Notified arrangement

(a) Description of the goods or services in relation to the supply or acquisition of which this notice relates:

The c~crrenl exclusive licence ,fi)r /Ire po1,ision o f t o ~ ~ a g e .services in ihe Porl qf Glad.stone expires or7 30 .lttite 201 0. The current licensed opera~or is

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S1'lTZER C;krdstone. The Gladstone Ports Cbrl7orcrtion 1iu.s lotlged un trpplicotiotl to cste~id /he current licence to 31 Decenther 2010 lvkich is still p~~ l~ i i t lg .

(b) Description of the conduct or proposed conduct:

I.4)II ~v.s.sels requiring toi<.age seriVices it7 tlte Port o f Glucl~tone n7t1st use the seri~ices of the holtler o f the exchrsh~e Tug Licence ,fir the Port of Glud.rtone - (Licence to he u~vurded). This notificufion i.s to be lodged in respect yf mnhrct to occur hehiven I Jantrcrr?~ 2011 und 31 Dece~nber 31 December 2018. (Five (5) jlcur licerice ivith possihle option to extendfbr three (3) veurs)

(Refer to direction 1)

3. Persons, or classes of persons, affected or likely to be affected by the notified conduct

(a) Class or classes of persons to which the conduct relates: (Refer to direction 5)

Thb notification i . ~ likely to affect current import and erporting operators, including but not limited to the ,following trades in the Glad.~tone urea: Aluminium, Petroleunl, Bauxite, Caustic Soda, Calcite, nmenite, Magnesia, Liquid Ammonia, Fly Ash, Cement. Coal, Nickel and Grain. Tltis not~ficution will also affcct any future industry developments not mentioned above that may commence operations prior to 31 December 2010.

(b) Number of those persons:

(i) At present time:

The Port of Gladstone c~nrently sen*ices approximatelj~ 1.350 vessels per year through jve (5) d~fferent wharf centres.

(ii) Estimated within the next year: (Refer to direction 6)

The Gladstone Ports Corporation currently expects vessel numbers to increase to approximafely 1,100 in the next.financia1 year.

(c) Where number of persons stated in item 3 (b) (i) is less than 50, their names and addresses:

Rio Tinto Alcan ; Level 10, 300 Ann Streer, Brisbane Qld 4000

Orica ; 1 Nicholson Street, Melbourne I'ic 3000

Origin : .John Oxley Centre. 339 Coronation Drive, Milfon Qld 1061

Centent Aztstraliu ; Alton Street, Coopers Plains Qld 4108

Qtreensland Alumina Limited : Parsons Point. Gladstone Qld 1680

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G1ad;Ftone Port Logi.~rics . 8/43 Tankstreet, Gkuddstone Qld 4680

Inchcape Shipping : 6/25 Tank Street. Gladstone Qld 4680

Hetherington Kingsbury Shipping Agency . Is' Floor, Gladstone Ci1.v

Centre. 100 Goondoon Street, Gladstone Qld 4680

McArther Shipping &Agency : Level l/lOO Goondoon Street. Gladstone Qld 4680

PDL Toll. Lower Level /33 Goondoon Sweet, Gladstone Qld 4680

Ironmonger Shipping Agencies ; PO Box 305. Gladstone Qld 4680

Monson Agencies Ausiralia ; Unit I . 148 Auckland Street, Gladstone Qld

4680

GulfAgency Company, Unit 7 Centrepoint. 136 Goondoon Sweet. Gladstone Qld 4680

Wilhemsen Ships Service, PO Box 51 66. Gladstone Qld 1680

Please note that due to the diverse market impacted by tourage operations

uithin the Port of Gladstone, it is not possible to list all persons likely to be qfected by this notification. Jff'e have listed the major industries and

shipping ugencies (service all vessels) currently operating within the port.

4. Public benefit claims

(a) Arguments in support of notification: (Refir to direction 7)

A ,five (5) year licence iz,itli possible o/)/ron lo extend jbr three (3) jjecrrs w.ould .sti1171rlate tug o/)el.ritor interest as if a1loir.s ,for longer ,financial recoiwrj: especinlly giile17 the crrrrent global ecortomic do~rfn turn. A,firrther argument in ,fuvour of a 5+3 year term, is the szibstanfial 18 months. not~ficatioii required by u neuJ o))ercr/or.

(b) Facts and evidence relied upon in support of these claims:

Extracts from "Economic Regulation of Harbour Toivage and Related Services -Inquiry Report Report No. 24. 20 Aupst 2002':

There is some suggestion that economies of scale ,for a (minimum) ttrgjleet (and one operator) could be exhausted at around 8000 tug jobs per year. This need not imply, however, that two operators ~ ~ o u l d be eficient at this scale of operation -- returns to scale may not decrease until tnuch higher volumes are reached. The Port of Singapore, with 84 000 tug jobs per year, has issued sLx licences, equivalent to 14 000 tug jobs per licence.

Enduring competition within inost, if not all. Australian ports is urzlikely due to low levels of demand, 'lumpy' investments and economies o f scale. 112 the longer term, only one operutor is likely to survive in any parricular port.

Contracting and licensing can be used by towage users and port authorities to exert even more pressure. This ha.^ occurred a f many regional ports. Competitive tenders for the right ro operrrte at multi- user ports,for upxed period like~sise could be used to promote more competitive towage outcomes.

To remove any uncertainty about their powers, port azithorities should be given explicit discretion to license towage operators, subject to safeguards that protect and promote tou~age user interests. including.

- user consultation processes, deinonstrcrrion o f net benej2.s o f licenses and transparent and 'arm's length' tender processes and license conditions.

5. Market definition

Provide a description of the market(s) in which the goods or services described at 2 (a) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions): (Refer to direction 8)

The operator to be mlarded the licence will be the exciusi~~e provider o f towage services in the Port of' Gladstone. The closest comparable geographic supply can be offered ,j?om Dalrymple B q d H q Point towage opertrrom

6. Public detriments

(a) Detriments to the public resulting or likely to result from the notification, in particular the likely effect of the notified conduct on the prices of the goods or services described at 2 (a) above and the prices of goods or services in other affected markets: (Refer to direction 9)

The Corporation do not foresee any detriments on the prices of the towage service as a result o f this application.

(b) Facts and evidence relevant to these detriments:

Extract >om "Economic Regulation of Harbour Towage nnd Related Services - Inquiry Report, Report No. 24, 20 August 2002 ".

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Clompctitil~e tendering can help user.? search .for a supplier who

proi~ides appropriate q~raliy,for the lowest-possible price.

Extract,fiom "Glad.stone Ports Corporation - To~vuge Market Anczlysis. 12 November 2008".

This report considers whether or not the inhoduction of separate towage ser~~ices provider.^ at the Port of Gladstone is likely to increase the cost o f toufage sentices to Port users, and t f so by ivhat anlount ... ... Our anulvsis suggests thaf, on a direct-cost basis, the separation of towage sentice pro1~ider.s in~poses a cost efjciency penalty ofport users collecti~~ely.

Operating costs are closely linked to tug numbers (eg crewing costs

and maintenar~ce costs). A set number ofcrews are required ro man

each tug with limited opportunity disperse crew costs across a larger ,fleet. The addition of a second rowage provider/rug jleet involves the replication of other,fixed operating costs such as berth leasing and administration costs. Operating costs, therefire. increase signt$cantly with the addition of new tugs to the port.

7. Further information

(a) Name, postal address and contact telephone details of the person authorised to provide additional information in relation to this notification:

Mr L. M Zussino

Gladstone Ports Corporation Limited

PO Box 259

Gladstone

QLD

1680

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Dated ........ ........ &/a/- ...... ...... ............. ..... . ........... Signed byton behalf of the applicant

(Signature)

Leo M Zussino (Full Name)

The Gladstone Ports Corporation Limited (Organisation)

Chief Executive Officer (Position in Organisation)

DIRECTIONS

1. In lodging this form, applicants must include all information, including supporting evidence that they wish the Commission to take into account in assessing their notification.

Where there is insufficient space on this form to furnish the required information, the information is to be shown on separate sheets, numbered consecutively and signed by or on behalf of the applicant.

2. If thc notice is given by or on behalf of a corporation, the namc of the corporation is to be inserted in item 1 (a), not the name of the person signing the notice, and the notice is to be signed by a person authorised by the corporation to do so.

3. Describe that part of the business of the person giving the notice in the course of the which the conduct is engaged in.

4. If particulars of a condition or of ir reason of the type referred to in section 47 of the Trade Practices Act 1974 have been reduced in whole or in part to writing. a copy of the writing is to be provided with the notice.

5. Describe the business or consumers likely to be affected by the conduct.

6 . State an estimate of the highest number of persons with whom the entity giving the notice is likely to deal in the course of engaging in the conduct at any time during the next year.

7. Provide details of those public benefits claimed to result or to be likely to result from the proposed conduct including quantification of those benefits where possible.

8. Provide details of the rnarket(s) likely to be affected by the notified conduct, in particular having regard to goods or services that may be substitutes for the good or service that is the subject matter of the notification.

9. Provide details of the detriments to the public which may result from the proposed conduct including quantification of those detriments where possible.

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