China, Indonesia lead growth in coal exports for power stations: Report

Rio Tinto Group said China's steaming coal exports will rise by more than three-quarters in the next decade as producers take advantage of increasing global energy demand, Bllomberg news agency was quoted as saying.

Australia, the world's largest exporter of steaming coal, used for power generation, will see shipments increase by more than one-third while Indonesian exports will double.

``World electricity generation will continue to grow, increasing the demand for coal, which is the lowest-cost and most stable primary energy source,'' said Brian Horwood, managing director of Rio's Pacific Coal subsiduary, in notes for a speech to the Outlook 2001 conference hosted by Abare, the Australian government's commodity forecaster.

Prices of steaming coal are rising after a four-year slump as demand outpaces supply. A 29 percent decline in the long-term contract price since 1996 has halted construction of new mines, at the same time as electricity use in Asia has continued to increase.

Chinese exports will rise 83 percent to 80 million metric tons, Indonesian exports by 52 percent also to 80 million tons Australian exports by 36 percent to 120 million metric tons, Horwood said.

``Competitive factors will make Australia the main supplier to meet this growth in demand due to it political stability, high efficiency and improved reliability of supply,'' said Horwood. Pacific Coal owns Rio Tinto's coal mines in Queensland state.

Largest volume

China will provide the largest increase in volume terms. Still, China's exports will be tempered by rising domestic demand in the longer term while rivals Indonesia, Colombia and South Africa face significant sovereign risk for foreign investors, Horwood said.

Rio predicts more realistic pricing levels will be maintained over the next few years after the real price of steaming coal fell by 45 percent between 1995 and 2000, said Horwood.

Coal & Allied Industries Ltd., which owns mines in New South Wales state, and is 71 percent owned by Rio Tinto, has called for an increase of as much as 30 percent in next year's long-term contract price for sales to Japanese utilities, from the April 1 start of the next Japanese financial year.

Other companies negotiating coal prices with Japanese utilities include M.I.M. Holdings Ltd., Anglo Coal Australia Pty. and Glencore International AG. Their customers are Tokyo Electric Power Co., Chubu Electric Power Co. and other Japanese electricity utilities.

Prices agreed between Australia and Japan, the biggest importer of the fuel, set a global benchmark. The two sides are negotiating prices now. Japanese steelmakers have already agreed an increase of 7.5 percent in the benchmark price of coking coal, used to make steel.

Steaming coal prices for immediate delivery have surged to more than $30 a ton, from about $20 a year ago, as rising Asian power consumption, and a lack of new mines, erased a glut of the fuel. (*)