Xstrata To Get More For Its Australian Coal

Prices up by up to 114 per cent

Coal miner Xstrata says it has settled most of its annual Asian thermal coal contracts in at a price level some 38 per cent higher than it achieved last year.

Quarterly semi-soft coking coal prices have risen 114 per cent and the company says its production of coking coal in Australia has risen 83 per cent.

Essar Buys Indonesian Coal Mines

Local media reports from Indonesia suggest that Essar has acquired the Aries coal mines in Indonesia. The purchase will give Essar secured access to an additional 100 million tonnes of thermal coal resources and mineable reserves of 64 million tonnes.

Essar is currently building six power stations in India which will increase its power capacity from 1220Mw to 6100Mw by 2012.

The transaction is expected to be completed by April.

Mahagenco Looks To Import 3.35 Million Tonnes Of Coal

Mahegenco, the state-owned Maharashtra State Power Generation Co, has announced that it is looking to import 3.35 million tons of steam or thermal coal in the year commencing 1 April 2010, an increase of 40 per cent on the 2.4 million tons the company will import in the year ended 31 March.

The company supplies power to the Indian state of Maharashtra, which includes the country’s commercial centre, Mumbai.

Mahagenco has said that it will be looking at prices linked to global coal prices instead of fixed price contracts.

A tender notice has been sent to traders this week to feed the company’s power plants at Nasik, Bhusawal, Khaparkheda, Parli and Chandrapur. Bids are due in on 13 April.

Newcastle Coal Shipments Fall 24 Per Cent

Coal shipments from Australia’s Newcastle port, the world’s biggest coal export harbour, fell 24 percent last week. The number of vessels waiting to load also fell.
The volume exported in the week ended 7 a.m. local time on Monday dropped to 1.11 million metric tons from 1.46 million tons in the preceding week, Newcastle Port Corp. said.

Fifty vessels, waiting to load 3.94 million tons of coal, were outside the harbour, down from 55 a week earlier with ships waiting to load for an average of 15.64 days, from 16.35 days a week earlier, the port authority said. General cargo vessels wait an average of 0.13 days.

India To Import Colombian Coal

India’s biggest coal importer, Adani Enterprises Ltd., has agreed to buy thermal coal from Colombia for the first time. A company official said that surging electricity demand meant the company had to diversify its purchases.

The first cargo of fuel – expected to be at least 110,000 deadweight tons – is expected to land at either Mundra or Dahej ports on India’s west coast.

Although neither the source of the coal nor the quantity have been indentified it is known that Cerrejon, the Colombian company that runs the world’s largest open-cast coal mine, has been touting for sales in India after describing prices there as “much better” than those in Europe.

BHP Billiton Ltd., Anglo American Plc and Xstrata Plc each own a third of Cerrejon, which will produce 31 million to 32 million metric tons of coal in 2010. Last year, the mine cut production because of weak demand in Europe and the U.S. Colombian coal accounts for about 10 per cent of global coal trade.

India imported 60 million tons of coal in 2009 – almost double the 2008 figures – and that figure is exported to hit 200 million tons by 2012, according to Macquarie Group. Imports in February were a little more than 6 million tons, up by more than 20 per cent of a year earlier.

NTPC To Burn 27 Per Cent More Coal This Year

India’s largest electricity generator, NTPC, has announced that it will burn 27 per cent more coal this year.

The company’s chairman, RS Sharma, said that the company, which supplies 20 per cent of India’s power generation capacity, will burn 160 million metric tonnes of coal in the fiscal year beginning 1 April 2010 – up from 126 million tonnes in the current year.

Coal imports may be as much as 14 million tonnes. The country’s junior power minister, Bharatsinh Solanki, told parliament last week that India may need to import as much as 47 million tonnes of thermal coal for its power plants next year.

NTPC is looking to add 4000 megawatts to meet the country’s soaring demand for power in the coming year.

India's Essar Group Set To Buy Trinity Coal

India’s Essar Group looks set to buy the American coal miner, Trinity Coal, from its current owners Trinity Denham Capital Management in a deal worth $550-600 million. It is Essar’s first major coal acquisition abroad and the deal looks set to go through in the next two weeks.

Trinity is one of the top 10 coal producers in the US with reserves of 200 million tonnes and an annual output of about 7 million tonnes.

The deal will provide Essar with coking coal and thermal coal linkages for its steel mills in North America and for a power project currently under construction in India. Essar has a steel plant in Minnesota plus a plant at Sault Ste Marie in Ontario, Canada, which it acquired in 2007 for $1.63 billion. Capacity at Minnesota Steel is being expanded in two phases, with a 4.1 million tonnes per annum (mtpa) pellet plant and another 1.5 mtpa steel plant, which is expected to be completed by 2012 and 2015, respectively. It is also planning to expand capacity of Algoma Steel in Sault Ste Marie to 5 mtpa from 4 mtpa.

Essar Power, has a 1,200-Mw power project being built in Gujarat, which will be dependent on imported coal. It is also setting up a power project at Salaya near Jamnagar in Gujarat which will also be dependent on imported coal and which is due to be completed by 2011.

Essar is one of a number of Indian power producer to look abroad for sources of coal.

Newcastle Coal Exports To China Down As Coal Snap Ends

Port Waratah Coal Services, the operator of two terminals at Newcastle, the world’s biggest coal export harbour, has said that exports to China fell by 67 per cent in February as cold weather in the country receded.

The port exported 7.87 million tonnes of coal in February; around 5 per cent of this went to China but thus was down from 15.6 percent in January, 15.9 percent in December and 16.15 percent in November.

Poor weather is being blamed by analysts for the fall as China’s coldest winter for 50 years meant disrupted the country’s internal transportation system making it easier to import coal from the coast.

According to figures from Chinese customs the country imported 16.4 million tons in December, a sixfold increase over December 2008. Around 80 per cent of exports from Newcastle is of steam – or thermal – coal, used by power stations.

Xstrata Puts USD100 a Tonne Tag On Thermal Coal

Reuters has reported that Xstrata Plc has offered Japan's Chubu Electric annual thermal coal contracts starting in April at $100 a tonne, up by 43 percent from the settled price last year, sources said on Wednesday.

"The Xstrata guys are in town at the moment and they have tabled an offer at $100 a tonne," said a source from Chubu with knowledge of the negotiations. Chubu are said to be holding out for $85-90 a tonne.

Last year’s contract prices were between $70 and $72 a tonne and represented a 44 per cent fall on the 2008-09 price. Sources suggest that Chubu will adopt a ‘wait and see’ stance and weigh up demand from other Asian customers such as China or India.

Xstrata was successful in achieving an $85 a tonne price for contracts that began in January.

Anglo-American Profits Fall 53 Per Cent

Profits at mining giant Anglo American Plc fell 53% in 2009 as metals prices fell sharply as a result of the global economic downturn. The company also blamed falling demand, especially for its metallurgical coal and thermal coal.

The London-based firm reported full-year net profit of $2.42 billion, or $2.02 per share, compared with $5.22 billion, or $4.34 a share, in 2008.

Group revenue fell 25% to $24.6 billion from $32.9 billion.

Shaanxi Facing Coal Shortage As Stockpiles Fall

The Chinese province of Shaanxi has been hit by what has been described as a "serious" coal shortage, with just one week’s worth of supplies to power the province’s 13 biggest utility power plants in January.

Official government figures released on Monday suggested that 1 million tons of thermal coal was stockpiled by utilities, a drop of 28 per cent over the December figure.

Local coal mines boosted output by 13% in January to help boost stockpiles but there is now concern about rationing in the region. It is thought that supplies will be imported from Indonesia and Australian to alleviate the situation.

Indian Coal Ministry Calls For Cut In Thermal Coal Import Duty

India’s coal ministry wants the country’s finance ministry to reduce the 5.1% import duty on thermal coal and to continue with the existing zero import duty on coking coal to facilitate larger imports by power and steel companies.
The demand for coking coal by India’s steel sector is expected to go up by 18-20% in 2010-11, however Coal India Ltd (CIL), which currently supplies 82% of the power sector’s thermal coal, will not be able to keep pace due to delays in developing new mining projects.

The Australian government wants the coal ministry to lobby for reducing the import duty on thermal coal and persist with the zero import duty on coking coal, since it eyeing an opportunity to supply more coal to India from Australia.

An Australian trade commission delegation, which recently came to India, presented a paper to the coal ministry saying reducing the import duty of thermal coal and keeping the zero import duty on coking coal intact would not only strengthen bilateral ties but would also enhance the availability of affordable inputs for two Indian infrastructure industry-power and steel.

An Australian trade commission delegation recently presented a paper to the coal ministry pointing out that coking coal imports, which were 12 million tonnes from Australia in 2006-07 would reach 18-20 mt in 2010-2011 and 25 mt in 2012, taking into account India’s increasing steel capacity.

The ministry estimatesthat import of coking coal and thermal coal would be a total 62.75mt by the end of 2009-2010, of which thermal coal would be around 40 mt. In 2008-09, India’s total thermal coal imports were 37.92 mt and coking coal 21.08 mt. Most of India’s thermal coal imports come from Indonesia however Australia is also looking for a slice of the thermal coal business.

Taiwan Coal Imports Increase In July

Taiwan imported 6.05 million metric tons of coal in July, up 13% from a year earlier and up 16% from July, mainly due to a lower base of comparison for coking coal, the Bureau of Energy said in a monthly report Wednesday.

Imports of thermal coal, used in power generation, were also up - 11% - from a year earlier to 5.02 million tons in August, likely due to inventory replenishment by the Formosa Plastics Group. Imports of coking coal, used in steelmaking, rose 41.5% to 334,450 tons, the bureau said.

In August, thermal coal importers paid an average of $83.78 per ton, cost and freight, up 0.7% from July but down 39% on year.

The price of coking coal, cost and freight, fell 58% from a year earlier to US$121.86/ton, and was down 8.6% from July.

Source and further data: Trading Markets

India May Become Biggest Destination For SA Coal

South African coal exports may rise to 100 million metric tons a year by 2020 and India may become the biggest destination for steam coal, said Xavier Prevost, a coal analyst at XMP Consulting.

“The Asian continent, especially India, is very eager to use more steam coal from South Africa,” Prevost said in a speech at the Coaltrans conference in Johannesburg today. India’s purchases are “increasing and may prove to be our new main trading partner for the future.”

South Africa’s Richards Bay Coal Terminal, Africa’s largest coal-export facility, shipped about 61.8 million tons last year, mainly to Europe. Anglo American Plc, BHP Billiton Ltd. and Xstrata Plc are the largest coal producers in the country.

“Wood MacKenzie expects coal demand in India to grow at a faster rate than any other country in the world,” Dirk Fourie, vice president for consulting in Africa at Wood MacKenzie, said at the conference, adding that South Africa and Indonesia are the largest coal suppliers to India.

Coal India Ltd., the state-owned monopoly producer, said on Aug. 27 it may spend as much as $1.5 billion to buy overseas mines. The country, the world’s most populous nation after China, faces a coal shortage by 2012, Coal India estimates.

While South Africa can supply India with better-quality coal than rival Indonesia, the African country’s coal industry has higher costs and faces logistics constraints, Fourie said. “Rail constraints could limit South Africa’s exports to less than 65 million tons this year,” he said.

Securing long-term coal supply in a “highly unpredictable” international market has become more important than prices, Pradeep Lenka, chief executive officer of thermal coal at Mumbai-based Lanco Infratech Ltd., said at the conference. South Africa has the “right balance” between quality and logistics, he added.

India’s government is building power plants to match electricity demand estimated to rise to 950,000 megawatts by 2030. The country imports between 6 percent and 7 percent of its total coal demand, Lenka said.

South Africa has not successfully diversified its coal exports market to date, Argus Media Ltd. business development manager Jim Nicholson said at the conference. South Africa’s efforts to diversify coal export markets are “not really enough to replace the stagnation in Europe.”

South Africa may ship about 1 million tons coal or more to Taiwan this year, he said, adding the country’s share of the Taiwanese coal imports has fallen to “virtually zero” from about 40 percent in about 1990.

Source: Bloomberg

US Steam Coal Exports At A 12-Year High

US steam coal exports hit a 12-year high in December with exports totalling 2.5 million tonnes. This compared with 1.8 million tonnes in December 2007 and was the highest since December 1996.

Annual steam coal exports for 2008 increased for the fourth consecutive year, at 17.6 million tonnes, the highest annual level since 1999. US coking coal exports in December were down by 45% from November 2008 to 1.6 million tonnes, the lowest monthly total for the year. However, annual coking coal exports for 2008 were35.3 million tonnes, an increase of 36.4% YoY.

Source: Tex Report