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.

Tata To Send Mozambique Coal To Europe

Benga Coalfield Inaugurated

Tata Steel is expected to start sending coal to its Corus operations in Europe from a new $1 billion coalfield in Mozambique by the end of this year.

The groundbreaking ceremony was attended by Mozambique’s president Armando Emilio Guebuza, who officially inaugurated the Benga coal project in the country’s Tete province on Tuesday.

Tata has a 35 per cent stake in the project, with the remainder held by an Australian company, Riversdale Mining, in which Tata has a 21 per cent stake.

Tata has the right to buy 40 per cent of the mine’s two million tonnes a year initial output, 85% of which is good quality hard coking coal with the remainder low ash thermal coal. Production is expected to rise to almost 8 million tonnes over the next few years. The same level of production is likely to continue for 25 years at least.

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.

Newcastle Coal Exports Up 15 Per Cent From A Week Ago

Coal exports from the port at Newcastle, Australia, the world's largest coal export terminal, jumped 15 percent from a week ago to 2.13 million tonnes; however this is short of the weekly target of 2.28 million tonnes and could force the port’s operator to cut export quotas for the second quarter.

Quotas for the rest of Q1 have already been cut by 1.7 million tonnes in an attempt to reduce logjams at the terminal. Ship queues fell to 47, of which 14 were due to mines having insufficient coal. Queues are expected to be 44 by the end of this month.

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.

Orissa Mining Looking To Diversify

Indian state-owned mining company, Orissa Mining Corporation (OMC), is to diversify into power and the coal mining sector, some two decades after becoming a mining-only company.

OMC will set up 2000 MW thermal power plant near Rengali in join venture with Orissa Hydro Power Corporation (OHPC) with an investment of Rs 80 billion. The two partners will each have a 50% stake in the new company, which will be known as Orissa Thermal Power Corporation Ltd (OTPCL). OTPCL has applied for the necessary documents for a coal block for the project. OMC is also looking at setting up an independent power plant consisting of two 660MW units though the company admit that such a plan is still at an early stage.

OMC has three coal blocks, one independently and two jointly with other enterprises. It has entered into agreements with the Assam Mineral Development Corporation (AMDC), Meghalaya Mineral Development Corporation (MMDC) and Tamilnadu Electricity Board (TNEB) to develop the Mandakini-B coal block in Angul with a reserve of 1200 million tons. Mandakini-B is expected to produce 15 million ton per annum (MTPA) of coal for power Generation.


The company is also planning to float another JV with Andhra Pradesh Mineral Development Corporation (APMDC) on 50:50 sharing basis to exploit a coal block at Nuagaon Telisahi in Anugul with a reserve of 733 million tons. The Mineral Exploration Corporation Ltd (MECL) is currently exploring the coal block jointly with OMC and the geological report is expected by the end of April, 2010.

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.

Xstrata To Commence Coal Mining At Cape Breton

Xstrata Coal Donkin Management have announced it will move ahead with an underground mining operation in Donkin, Nova Scotia but on a smaller scale than expected. It will be the first coal mine to open on Cape Breton for eight years.

It had been expected that the project would mine for thermal coal for use in power generation plants, but Donkin will now be used to mine for coking coal. The change came after Nova Scotia Power announced that it would not use coal from the Donkin project as the unwashed coal contained too much mercury and sulphur to be usable under existing environmental regulations.

Xstrata Coal chief development officer Jeff Gerard told a public meeting that about 200 onsite jobs will be created for Cape Breton and another 1,000 spinoff jobs. Most of the onsite jobs would be underground.

About 2.75 million tonnes of washed, export-grade coking coal will be produced each year for export to markets in Europe, South America, India and China.

“The resource size of this mine is capable of supporting that size of operation for well over 25 years,” he said. “So it’s a long-term proposition.”

Xstrata expects to commence mining next year.

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

Vale Production Report Q2 2009

Vale S.A. (Vale) had a better operational performance in the second quarter of 2009, showing significant percentage increases in the production of iron ore (+23.1%), pellets (+47.4%), manganese ore (+387.9%), platinum (+18.6%), palladium (28.6%), kaolin (+40.5%), and thermal coal (+125.5%) relative to the low levels of 1Q09.

Over the last few months, a recovery in global industrial production has been taking place, a process in which Asia is at the forefront. However, it is worthwhile highlighting that the global economy is recovering from a very low level of activity, after a powerful demand shock.

Given the signals issued by some leading indicators of industrial production and the conclusion of the de-stocking process of the steel industry in some regions - such as Europe where it was running at very low levels of capacity utilization - it is likely that the gradual recovery of the global demand for minerals and metals will continue over the next six months which will lead to us to increase operational activities although at a more moderated pace than last year.

The whole press release is available @ www.vale.com/investors

Gujarat NRE To Complete Bey Takeover By End Of Year

Gujarat NRE Coke, a leading coking coal producer, which has offered to buy 90 per cent equity in Australian coal exploration firm Rey Resources is looking to complete the hostile takeover by the end of this year.

The deal estimated to be at Rs 53.21 crore will add thermal coal to the portfolio of the Indian firm.

"We are looking to close the deal in next five months or so. This will add thermal coal to our portfolio apart from increasing the liquidity in our Australian company," Gujarat NRE Coke CMD Arun Kumar Jagatramka said in an interview.

Gujarat NRE Minerals, the subsidiary of the Indian firm, had made a bid to acquire Rey Resources last month, which the target company had termed as an "unsolicited" move and decided to oppose it.

The domestic producer of met coke — primarily consumed by steel firms, is looking to buy the assets of the firm in an off-market "all share no cash" deal, for which the bidders' statement would be circulated to the shareholders of Rey Resources by next month.

Gujarat NRE Minerals (GNM) already holds about 16.64 per cent stake in the Australian entity. It has offered one GNM share against every five shares of the target firm. The Indian firm is eyeing the rich coal reserves of the Australian firm.

Source: Business Standard

China Coal Prices Showing Little Movement

1. Thermal coal price

Last week in Datong, Shanxi, the price of thermal coal with 6,000 calories per kilogram dropped by CNY 15 per tonne; in Yanzhou the price of mixed coal declined by CNY 25 per tonne while thermal coal price remained stable in other areas.

At Qinhuangdao port, China's largest coal port, the coal price continued to drop. Last week, the exit price of high grade mixed coal from Shanxi, that from Datong and mixed coal from Shanxi dropped by CNY 2.50 per tonne, CNY 2.50 per tonne and CNY 5 per tonne respectively. At China's Guangzhou port, mixed coal with 6,000 calorie per kilogram from Shanxi edged down by CNY 20 per tonne ending the flat state in April. The price of imported coal remained stable.

2. International coal price

On July 2nd the spot coal price from BJ in Australia edged up by USD 0.45 per tonne from last week. On July 6th, ARA port in Europe and Richards Bay Port in South Africa witnessed thermal coal price rising by USD 6.83 per tonne and USD 2.13 per tonne.

3. Anthracite price

The price of anthracite with small lumps remained the same as last week on July 6th and that with medium lumps and the price of burgy went down by CNY 50 per tonne and CNY 35 per tonne respectively. In Quanyang, anthracite with medium lumps and small slumps dropped by CNY 30 per tonne and CNY 20 per tonne respectively.

4. Coking coal price

Last week the price of coking coal in China remained basically the same as last week.

5. Coal price

On July 6th in Guizhou province, coke price continued to rise, and third grade metallurgical coke stayed at CNY 1,300 per tonne up by CNY 100 per tonne from last week, and up by CNY 200 per tonne from the week before last week. In other areas, coke price had remained stable after previous edging-ups.

Source: Steel Guru