Regional LNG: Korea Electric may buy coal mine, import LNG

Korea Electric Power Corp., the country's dominant power producer, may buy an overseas coal mine to help cut a fuel bill that rose to $4.1 billion last year, Chief Executive Han Joon Ho said as reported by Bloomberg.

The generator is looking for a controlling stake in a mine in Australia, South Africa, Canada or Southeast Asia, Han said. Korea Electric also may cut fuel costs by buying liquefied natural gas directly from suppliers, cutting out Korea Gas Corp.

``We have bitter memories of being burnt by skyrocketing Chinese coal prices,'' Han said in an interview in Seoul. ``We are looking for the right time to act.''

The state-run utility faces lower earnings after it agreed last month to pay record prices this year for thermal coal from China. Asian prices have soared since China, the world's biggest exporter after Australia, started limiting overseas shipments in January to avoid a domestic shortage.

Korea East-West Power Co. and four other Korea Electric power generation units expect their fuel bill this year to exceed last year's total of 4.69 trillion won.

South Africa and Australian coal prices are at or near record highs. Last week, the globalCOAL RB Index of coal delivered within three months from South Africa's Richards Bay terminal was down 4 cents at $70.91 a metric ton from the record the week earlier. The globalCOAL NEWC Index, for coal from Australia's Newcastle port, gained 25 cents, or 0.4 percent, to $63.63 a ton, a record.

Korea Electric currently buys all its LNG from Korea Gas, the world's biggest LNG buyer. The electricity generator is also investigating possible investments in LNG production ventures overseas to supply its power stations in Korea.

Prices for individual cargoes of LNG in Northeast Asia track movements in crude oil, which rose to record levels last month. On the New York Mercantile Exchange, crude oil closed at a record $42.33 a barrel on June 1.(*)