Port Waratah will lodge a lengthy submission with the Department of Planning on Wednesday after confirming it was “very surprised and concerned” to see a draft Greater Newcastle Metropolitan Plan proposal to investigate relocating coal export facilities and bulk fuel storages from the Carrington site and explore options for alternative uses, including tourism.

“We did not know that statement within that draft would be there,” a PWCS spokesperson said of the investigation, which the draft plan said would be conducted by the Port of Newcastle, “working with Newcastle City Council and the Department of Planning”.

The draft plan did not refer to Port Waratah Coal Services, which operates the Carrington terminal on a lease with the Port of Newcastle that expires in 2024. The two groups have been in talks about the lease renewal for several years. PWCS also operates a larger Kooragang terminal with capacity to handle 120 million tonnes per year. The older Carrington terminal has capacity for 25 million tonnes per year but processed less than 15 million tonnes in 2017, or less than 70 per cent capacity.  

While PWCS would not respond to questions about the symbolic significance of the NSW Government at least considering reducing export facilities at the world’s biggest coal port, environment groups including Lock the Gate said closing Carrington coal terminal “would be a profound symbol of change for Newcastle”.

Tighes Hill Community Group spokesperson Charlotte McCabe said the community was “delighted” the NSW Government was open to exploring closing the city’s oldest and most urban export coal terminal and concentrating all coal exports on Kooragang Island, further away from residential areas.

“This investigation is consistent with the decision by the Port of Newcastle to promote diversification. Relocating the Carrington coal terminal and stockpiles will free up prime real estate that could much more beneficially be used for new export or tourism industries such as the proposed Carrington Cruise Ship Terminal, uses that are compatible with a residential area,” Ms McCabe said.

The community group would lodge more than 300 submissions with the department on Wednesday supporting the terminal’s closure.

The first-ever draft Greater Newcastle Metropolitan Plan, released by the NSW Government in November as a document to guide planning until 2036, aimed to “capitalise on investment through a collaborative approach”.

But in a statement on Tuesday in response to questions from the Newcastle Herald, a Port of Newcastle spokesperson said the section of the draft plan about relocating Carrington terminal facilities was an error and “We have written to the Department of Planning to seek a correction in the final plan”.

The Department of Planning did not respond to Herald questions about whether the Carrington section of the draft plan was an error, and said it was a plan “with a vision for how Greater Newcastle can match a great lifestyle with economic prosperity”.

“The Department of Planning and Environment wants to hear from the public to get their feedback on the draft plan. The public has until Wednesday to make comments. We will closely consider all submissions received during the exhibition,” a spokesperson said.

The Port of Newcastle said it “supports the continuation of coal exports at the PWCS Carrington Coal Terminal”.

“This land is part of Port of Newcastle’s landholdings under its 98 year lease with the NSW Government which commenced on 30 May 2014,” a spokesperson said.

The draft Greater Newcastle Metropolitan Plan was released less than a month before the Port of Newcastle’s new chairman, Professor Roy Green, said there was an “urgent need to diversify the Hunter economy and the port’s business”, after acknowledging coal had been “at the heart of the Hunter's economy for the better part of two centuries”.

Professor Green described one of the port’s challenges as “ensuring a level playing field for the development of a viable and competitive container terminal”, after the Herald in 2016 revealed a “strictly confidential” deed that protected Port Botany from container competition

Coal represents about 96 per cent of the Port of Newcastle’s revenue.

Parliamentary secretary for the Hunter, Scot MacDonald, said the Department of Planning and Planning Minister Anthony Roberts were well aware of PWCS’s concerns about the Carrington terminal alternative use investigation proposal after the group made immediate representations to government after the draft plan’s release.

“We’re aware of PWCS concerns over the draft plan and implications for its operations at Carrington and NSW Planning is considering the issue,” Mr MacDonald said.

In its submission to be lodged on Wednesday Port Waratah Coal Services said closing the Carrington facility was inconsistent with other recently-released NSW Government strategic planning documents for the region, including the Hunter Regional Plan 2036 and Transport for NSW’s draft Freight and Ports Plan.

The proposed investigation also came after PWCS spent millions of dollars over the past few years modernising and upgrading environmental infrastructure.

PWCS acknowledged Kooragang and Carrington terminals have operated considerably below full capacity for a number of years.

PWCS saw its shipments fall from 109.6 million tonnes in 2016 to 104.7 million tonnes in 2017, a decline of almost 5.5 per cent.

In contrast, NCIG, which runs the newer loader on Kooragang Island and has a capacity of 66 million tonnes per year, saw its throughput rise from 51.5 million tonnes in 2016 to 55.2 million tonnes last year, an increase of 7 per cent.

Combined coal exports from the three Newcastle terminals in 2017 was 159.9 million, down from 161.1 million tonnes in 2016. Closing Carrington would leave the port with 186 million tonnes per year capacity, or more than 26 million tonnes per year more capacity than total exports in 2017. But a PWCS spokesperson said Carrington, which has been handling smaller vessels, was “an important part of maintaining delivery at a rate that our customers expect”.

“On average over the year it’s true the tonnage appears to require only Kooragang but there are periods of time where we need capacity to support Kooragang. There are certainly times where we’re loading ships at a very rapid rate,” a PWCS spokesperson said.

In January the NSW Department of Planning acknowledged a slowing of coal exports from Newcastle by confirming PWCS was not required to complete pre-construction works for the proposed T4 terminal site until it decided to proceed with the project.

Energy analyst Tim Buckley said the global thermal coal export market peaked in 2014 and was “flat-lining” as the world shifts to renewable energy.

The Institute for Energy Economics and Financial Analysis, where Mr Buckley is a leading analyst, predicts that within a 40-50 year time frame even high quality export thermal coal mines will see their end markets disappear permanently.

The institute predicts that within the next five years export credit agencies in Japan and Korea will no longer provide capital subsidies for imported coal-fired power plants. Without the capital subsidy financial institutions will no longer provide finance and coal markets will progressively shrink, Mr Buckley said.