Pike River Coal In Talks With Asian Customers

Pike River Coal is in "ongoing discussions" with groups in China and Korea, despite most of its production already committed for at least the next three years.

The country's only listed coal mining company, Pike River is mining the Brunner seam on Department of Conservation land on the Paparoa Ranges, 50 miles north-east of Greymouth in the South Island's West Coast.

The underground mine holds 58.6 million tonnes of hard coking coal, with a further potential of 8 million tonnes from the three Paparoa seams below the Brunner seam. Pike River expects to recover at least 18 million tonnes over the mine's 18-year life-span.

Plagued by delays to its planned production, the company is now preparing for its first shipment from Lyttelton to India in the first quarter of 2010.

Chief executive Gordon Ward said Pike River was entering the export market at a good time, as demand for hard coking coal recovered, due mainly to record imports by China this calendar year and international spot prices trading above the contract price.

Pike River has already sold three-quarters of its output over the next three years to Japan and India, with two Indian cornerstone shareholders committed to 55% for the life of the mine.

Mr Ward said there was also strong interest from other countries, including China and Korea. "In the last three to four months there's been increasing interest, which is reflective of increasing spot prices."

The company contracted coal sales to March 2010 at $US128 per tonne, but prices increased after that up to the $US170 mark, he said.

While Mr Ward said discussions were ongoing, it depended on how much tonnage the company "locked down."

"Ideally we'd have 10% to 20% available for the spot market," he said. "Then we might only have 5% to 10% available...it may just be purchased on a short-term contract."

At full production, Pike River expected to mine at the rate of one million tonnes a year, operating the second largest export coal mine in New Zealand (to Solid Energy).

Source: National Business Review