International Coal Markets

International Coal Markets

BHP Billiton prepares for Illawarra upgradeAnglo-Australian resources firm BHP Billiton is preparing for a 14-day shutdown at its West Cliff coal processing plant in the Illawarra region of New South Wales (NSW) at the end of this month to tie in a processing plant upgrade.

The West Cliff upgrade will increase run-of-mine feed capac-ity from 5.8mn t/yr to 7.5mn t/yr, which will deliver about 1.2mn t/yr of additional clean coal.

The plant will take some time to ramp up to full capacity after the shutdown that will start in late November.

BHP’s Illawarra mines produced a record 2.2mn t in the June-September quarter, mostly coking coal, compared with 1.8mn t a year earlier. BHP shipped 1.67mn t of coking coal and 159,000t of thermal coal from the mines in the most recent quarter.

But the company has warned production in the current quarter is likely to fall short of the previous period because of the disrup-tion at West Cliff.

BHP’s Illawarra Coal subsidiary operates three underground coal mines — Appin, West Cliff and Dendrobium — and two coal preparation plants at West Cliff and Dendrobium. The company ships coal through the Port Kembla coal terminal at Wollongong, which is operated by Illawarra Coal on behalf of a consortium of partners including Illawarra Coal, Xstrata Coal, Peabody Energy, Tahmoor Coal and Centennial Coal. The termi-nal is leased from the NSW government.

Port Kembla’s operator has begun a A$700mn ($714mn) rec-lamation programme as the first stage of its outer harbour expan-sion project that will add more than 24mn t/yr of export capacity.

Port Kembla has 17mn t/yr of export capacity but has only shipped around 14mn t/yr in the past three years because of rail capacity constraints. It is expanding export capacity to 22mn t/yr by 2013 and plans to reach 30mn t/yr from the inner harbour by 2016. The outer harbour project includes a large container terminal and three bulk export berths each with at least 8mn t/yr of capacity.

But rail congestion remains the key constraint on expansion of coal exports through Port Kembla.

Coal Market Prices, News and Analysis

Argus Coal Daily International

Copyright © 2011 Argus Media Ltd of 6

International coal prices $/tHeat Basis Sulphur Period Port Price Change

6,000 kcal NAR up to 1% in 90 days cif ARA 114.60 -0.23

6,000 kcal NAR up to 1% in 90 days fob Richards Bay 105.08 -0.68

6,000 kcal NAR up to 1% in 90 days fob Yuzhny 118.00 nc

6,000 kcal NAR up to 1% in 90 days fob Baltic ports 116.00 nc

6,000 kcal NAR up to 1% in 90 days fob Vostochny 121.00 nc

6,700 kcal ADB up to 1% in 90 days cif Japan 133.20 nc

6,700 kcal ADB up to 1% in 90 days cif South Korea 125.50 nc

5,800 kcal NAR up to 1% in 90 days fob Qinhuangdao 141.39 nc

5,500 kcal NAR up to 1% in 90 days fob Qinhuangdao China domestic 133.49 nc

5,500 kcal NAR up to 1% in 90 days cfr South China 112.02 -0.20

6,000 kcal NAR up to 1% in 90 days fob Newcastle 115.00 nc

6,500 kcal GAR up to 1% in 90 days fob Indonesia 116.30 nc

5,800 kcal GAR up to 0.8% in 90 days fob Indonesia 96.44 nc


4,200 kcal GAR up to 0.4% in 90 days fob barge Indonesia 48.00 nc


11,300 Btu GAR up to 1% in 90 days fob Puerto Bolivar 102.00 nc

12,000 Btu GAR up to 1% in 90 days fob Hampton Roads 111.75 nc

6,000 kcal NAR up to 1% in 90 days fob Hampton Roads 106.50 nc

11,500 Btu GAR up to 2.9% in 90 days fob New Orleans 81.45 nc

6,000 kcal NAR up to 1% in 90 days fob New Orleans 95.00 nc

Calendar contracts fall in thin tradeTaipower awards 20 Panamax tenderKowepo buys material in spot and term tendersWorkers plan strike at Drummond in ColombiaGerman imports rise, prices fall

Inside today’s Argus Coal Daily International

11R — 220 Tuesday 15 November 2011

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Argus cif ARA spot coal assessment $/t

International coking coal prices $/tSpecification Delivery period Price Change

fob Australia in 90 days 248.55 nc

cfr Japan in 90 days 266.75 nc

cfr North China in 90 days 260.90 nc

North China domestic in 90 days 300.16 nc

North China domestic (Yuan/t) in 90 days 1,900 nc

cif east coast India in 90 days 267.18 nc

fob Hampton Roads (low/mid-vol) in 90 days 247.70 nc

fob Hampton Roads (high-vol) in 90 days 168.45 nc

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Forward Coal PricesCalendar contracts fall in thin tradeCalendar coal contracts on the European over-the-counter market fell by around 10-35¢/t today, as selling focused on the back of the curve.

Contracts opened flat compared with yesterday before shed-ding around 90¢/t by midday, as sluggish eurozone data damp-ened the market. But firming crude prices helped swaps recover some of the losses before the close. Ice December Brent was up by 30¢/bl to $112.19/bl at 17:20 GMT, after hitting an intra-day low of $111.62/bl at midday.

Only a handful of deals were done at the prompt on API 2. December settled at $114.25/t, up by 25¢/t on the previous close. Further out, the calendar 2012 contract fell by around 10¢/t and was valued at $117/t. Despite the fall in liquidity, some larger trades were seen on the quarterly contracts. A 25,000t first quarter 2012 parcel sold at $114.50/t before the contract settled higher at $114.80/t, down by 20¢/t on the day. A similar-sized parcel was bought on the second-quarter 2012 contract at $115.30/t – the swap later settled at $115.60/t, down by 15¢/t.

Prices fell in the European physical market. A German trading firm/utility bought a 50,000t January cargo from a European utility at $114.50/t des Rotterdam with exchange of futures for physical. This is 25-50¢/t lower than where two similar cargoes traded yesterday.

In the South African market, a Panamax for loading in December traded off-screen at a discount of $2.95/t to the API 4 index. Late in the session a 50,000t December cargo traded bi-laterally at $104.75/t fob Richards Bay.

South China prices dip as buying interest fadesPrices of NAR 5,500 kcal/kg delivered into south China fell by 20¢/t to $112.02/t cfr today as buying interest faded and buyers retreated to the sidelines to seek respite from yester-day’s notional hike in prices.

South Africa’s Richards Bay cargoes were heard to be offered at $121/t cfr with bids below $120/t cfr. A Japanese trader said South Africa producers could be under some pressure to reduce inventory, hence the lower offers. Notional offers of NAR 5,500 kcal/kg from Australia were heard at around $113/t cfr, but the best bid from China was at $112/t cfr.

The majority of cargoes scheduled for the fourth quarter de-livery were heard to have found buyers and current talks centered on January cargoes.

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Dec-11Q1-2012

Q2-2012Q3-2012

Q4-20122012

20132014

Rotterdam forward curve

Rotterdam swaps forward curve $/t

Forward prices $/tTiming Buy Sell Averagecif ARA (Rotterdam) API 2December 114.00 114.50 114.25Q1 2012 114.55 115.05 114.80Q2 2012 115.35 115.85 115.60Q3 2012 117.20 117.70 117.45Q4 2012 119.90 120.40 120.152012 116.75 117.25 117.002013 122.75 123.25 123.002014 127.25 127.75 127.50fob Richards Bay South Africa API 4December 107.10 107.60 107.35Q1 2012 109.05 109.55 109.30Q2 2012 110.85 111.35 111.10Q3 2012 112.70 113.20 112.95Q4 2012 114.40 114.90 114.652012 111.75 112.25 112.002013 117.50 118.00 117.752014 121.75 122.25 122.00API2/API4 differentialPrompt 6.65 7.15 6.90South Africa to Europe, implied freight rate, $/tQ1 2012 5.45 5.55 5.50Q2 2012 4.45 4.55 4.50Q3 2012 4.45 4.55 4.50Q4 2012 5.45 5.55 5.502012 4.95 5.05 5.002013 5.20 5.30 5.252014 5.45 5.55 5.50cfr south ChinaDecember 112.15 112.65 112.40Q1 2012 112.00 112.50 112.25Q2 2012 112.60 113.10 112.85Q3 2012 113.15 113.65 113.40Q4 2012 113.75 114.25 114.002012 112.90 113.40 113.152013 113.90 114.40 114.152014 114.90 115.40 115.15

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ISSN 1744-8115Copyright noticeCopyright © 2011 Argus Media Ltd. All rights reserved.By reading this publication you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of the publisher.

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Shipping Costs

UK Spark SpreadsElectricity prices are first month over-the-counter UK market prices from Argus European Electricity report. Coal prices are for over-the-counter cif Rotterdam within 90 days taken from the Argus Coal Daily International report. These prices are also reported in Argus Coal Daily. Natural gas prices are first month over-the-counter prices for UK NBP gas from the Argus European Natural Gas. The fuel prices are for 1pc sulphur cif northwest Europe bulk cargoes from the Argus European Products report. Thermal efficiency of coal is 38pc, of natural gas 49.13pc and fuel oil 38pc. Prices are converted into US dollars for comparative purposes. All dollar prices in Argus Coal Daily International are US dollars unless specified.

German Spark SpreadsElectricity prices are first month over-the-counter German market prices from Argus Euro-pean Electricity report. Coal prices are for over-the-counter cif Rotterdam within 90 days taken from Argus Coal Daily International report. These prices are also reported in Argus Coal Daily. Natural gas prices are German BEB first month taken from Argus European Natural Gas. The fuel prices are for 1pc sulphur fob ARA barges from the Argus European Products report. Thermal efficiency of coal is 38pc, of natural gas 49.13pc and fuel oil 38pc. Prices are converted into US dollars for comparative purposes. All dollar prices in Argus Coal Daily International are US dollars unless specified.

The abbreviation ‘t’ in the pricing tables represents metric tonnes except for US prices when it represents short tons.

Generating Costs

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Coal Gas Fuel oil

Germany spark spreads $/MWh

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Coal Gas Fuel oil

UK spark spreads $/MWh

Asia-Pacific freight analysis (Panamax 60,000t size) $/tFreight Delay Delivery Delivered Landed

Origin Destination rate (days) cost 1 cost 2 cost 3

Australia Japan 18.20 12 20.99 135.99 133.20

Australia South Korea 18.70 12 21.49 136.49 133.70

China Japan 7.16 0 7.16 148.55 148.55

China South Korea 4.87 0 4.87 146.26 146.26

Indonesia (4200 kcal) India 11.00 0 11.00 59.00 59.00

Indonesia (6500 kcal) Japan 9.00 0 9.00 125.30 125.30

Indonesia (6500 kcal) South Korea 9.20 0 9.20 125.50 125.50





Indonesia (3400 kcal) India 11.00 0 11.00 46.88 46.88

(1) Delivery cost = Argus freight rate plus demurrage delays at load port plus bunker costsfor the specific voyage(2) Delivered cost = Delivery cost plus cost of coal (3) Landed cost = Argus freight rate plus cost of coal

Germany spark spreads Country Price Spark Spread Conversion

Power €/MWh Germany 57.10 - -

$/MWh equivalent 77.24 - -

Coal $/t Rotterdam 114.60 - -

$/MWh equivalent 16.42 34.02 38%

Gas €/MWh BEB 24.80 - -

$/MWh equivalent 33.55 8.96 49.13%

Fuel oil $/t Rotterdam 671.00 - -

$/MWh equivalent 56.05 -70.25 38%

Spot freight to Rotterdam $/tCape

Port Country Rate Change

Richards Bay South Africa 12.25 +0.05

Puerto Bolivar Colombia 15.35 +0.10

Hay Point Australia 19.65 -0.05

Banjarmasin Indonesia 14.05 -0.30

Rizhao China 16.00 -0.30

Panamax

Port Country Rate Change

Richards Bay South Africa 14.15 nc

Puerto Bolivar Colombia 18.15 nc

Dalrymple Australia 23.40 -0.20

Banjarmasin Indonesia 18.30 -0.10

Rizhao China 18.55 -0.10

Gdansk Poland 7.85 nc

Murmansk Russia 10.30 +0.05

UK spark spreads Country Price Spark Spread Conversion

Power £/MWh UK 50.00 - -

$/MWh equivalent 79.10 - -

Coal $/t Rotterdam 114.60 - -

$/MWh equivalent 16.42 35.88 38%

Gas p/th NBP 62.05 - -

$/MWh equivalent 33.49 10.92 49.13%

Fuel oil $/t Rotterdam 680.25 - -

$/MWh equivalent 56.82 -70.42 38%




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Australia - Japan

Australia to Japan, Panamax $/t

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Richards Bay - Rotterdam, cape size

Richards Bay-Rotterdam, Capesize $/t

UK spark spreads for varying degrees of power station efficiencyBase load Commodity Spark spreads at varying conversion rates (£/MWh)

Fuel type Fuel (£/MWh) Electricity, month-ahead base load (£/MWh) 0.34 0.38 0.4913 0.55

Month-ahead gas, NBP 21.17 50.00 -12.27 -5.72 6.91 11.51

Carbon credits 3.53 50.00 -17.38* -10.28* 3.37* 8.35*

Coal, cif ARA 10.38 50.00 19.46 22.67 28.86 31.12

Carbon credits 7.71 50.00 10.84* 14.96* 22.90* 25.79*

Peak load

Fuel type Fuel (£/MWh) Electricity, month-ahead peak load (£/MWh) 0.34 0.38 0.4913 0.55

Month-ahead gas, NBP 21.17 57.50 -4.77 1.78 14.41 19.01

Carbon credits 3.53 57.50 -9.88* -2.78* 10.87* 15.85*

Coal, cif ARA 10.38 57.50 26.96 30.17 36.36 38.62

Carbon credits 7.71 57.50 18.34* 22.46* 30.40* 33.29*

German spark spreads for varying degrees of power station efficiencyBase load Commodity Spark spreads at varying conversion rates (€/MWh)

Fuel type Fuel (€/MWh) Electricity, month-ahead base load (€/MWh) 0.34 0.38 0.4913 0.55

Month-ahead gas, BEB 24.80 57.10 -15.84 -8.16 6.62 12.01

Carbon credits 4.13 57.10 -21.81* -13.50* 2.49* 8.32*

Coal, cif ARA 12.14 57.10 21.39 25.15 32.39 35.03

Carbon credits 9.02 57.10 11.31* 16.14* 25.41* 28.79*

Peak load

Fuel type Fuel (€/MWh) Electricity, month-ahead peak load (€/MWh) 0.34 0.38 0.4913 0.55

Month-ahead gas, BEB 24.80 72.00 -0.94 6.74 21.52 26.91

Carbon credits 4.13 72.00 -6.91* 1.40* 17.39* 23.22*

Coal, cif ARA 12.14 72.00 36.29 40.05 47.29 49.93

Carbon credits 9.02 72.00 26.21* 31.04* 40.31* 43.69*

Spark spreads compare the cost of generating power. A positive spread indicates it is economical to generate power. A positive number for “coal spread minus gas spread” indicates it is more profitable to burn coal than gas. The model assumes that coal has a CO2e emissions factor of 0.34t/MWh of energy equivalent, and natural gas has one of 0.1874t/MWh of energy equivalent. Power station efficiencies are then applied - 38pc for coal and 49.13pc for gas. In other words CO2e emissions from coal are assumed to be 0.94t/MWh of electricity and from natural gas 0.3815t/MWh of electricity. All energy prices are for month-ahead delivery and are taken from the Argus European Electricity, Argus European Natural Gas, Argus Coal Daily International. Electricity prices are baseload. The EU ETS Allowance (EUA) price used is for 2011. The model does not take account of local taxes or transport costs. * Clean Spark Spread

UK and Irish markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 German and Alpine markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5French market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Dutch and Belgian markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Spanish and Italian markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Czech market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Polish market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Hungarian and Romanian markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Nordic market & Weather data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Spark spreads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Generation economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-15Market news . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Reported OTC trades are sent as a separate csv file

Market headlines

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Germany/France month-ahead base load €/MWh

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UK month-ahead base load £/MWh

UK: Curve falls with gas Germany: Year ahead retreats but spot holds firmUK regulator updates grid tender proposalSpanish wind production reaches new record Swiss reservoir levels continue slow decline GDF Suez predicts stable prices until 2011 Dutch utility forecasts fall in sales UK utility proposes biomass plant Russian production down in February

Daily Electricity Market Prices, News and Analysis

Argus European Electricity

Copyright © 2009 Argus Media Ltd

Page � of �6

Argus European OTC assessments

€/MWh

UK* Germany Netherlands France Spain Nord Pool Poland Czech Hungary

Day ahead Base load 41.61 44.30 44.00 43.75 34.95 33.12 33.76 41.90 42.30

Peak load 48.53 51.75 49.50 50.00 -- 36.19 51.25 51.75

Week ahead Base load 39.64 39.00 39.25 39.50 38.75 34.35 32.91 37.40 37.00

Peak load 47.23 47.75 49.75 49.00 - 38.55 - 47.00 -

Month ahead Base load 39.98 36.00 36.75 36.75 35.50 33.90 33.33 32.60 35.15

Peak load 47.18 45.50 46.70 46.50 - 38.60 38.36 45.00 -

Quarter ahead Base load 40.37 34.70 35.65 33.40 35.30 31.25 34.02 31.65 34.50

Peak load 48.91 45.30 46.40 43.95 - 35.45 - 45.00 -

Year ahead Base load 46.48 45.50 46.80 47.60 40.20 30.25 38.36 43.45 46.70

Peak load 57.51 74.00 62.75 70.00 --

- 65.50 -

* UK assessments are for EFA months. UK year ahead is annual April/October.

European exchange summaryDay +1 (€/MWh)Base load Peak load Off-peak

French Powernext44.43 50.40 38.46

Dutch APX43.81 48.92 33.58

Belgian Belpex 43.85 50.40 37.31

German EEX Phelix40.48 46.51 31.11

Austrian Exaa43.70 51.54 35.85

Polish Polpx33.68 -

-Czech OTE

42.40 52.30 -

Spanish Omel38.35 -

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Portuguese Omel38.23 -

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Nord Pool33.12 -

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Romanian Opcom33.02 -

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Italian PUN index83.78 -

-

Month-ahead base load differentials to Germany €/MWh UK

3.98

France

0.75

Netherlands

0.75

Nordic

-2.10

Spain

-0.50

Poland

-2.67

Czech

-3.40

Argus indexes

Day ahead Month ahead Season ahead Total volume (GWh)

UK indexes £/MWh 36.62 35.88 36.89 3,494.31

German indexes €/MWh 43.58 36.38 - 14,707.27

France indexes €/MWh 43.66 36.94 - 991.02

Dutch indexes €/MWh 43.40 37.38 - 328.32

Czech indexes €/MWh 41.68 32.74 - 581.74

Contents:

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09O — 0045Thursday 05 March 2009

Argus European ElectricityArgus European Electricity provides daily prices and market analysis for the deregulated power markets of the UK, Germany, France, Spain, the Netherlands, Austria, Switzerland, the Nordic region and central Europe. Prices are reported for all standard contracts traded on the spot market and forward curve, as well as spreads between the power, gas and coal markets.

To receive a copy of the report, please email: [email protected]

Weekly average ICI* prices

Argus/Coalindo

Copyright © 2008 Argus Media Ltd

Indonesian Coal Index Report

Specifications

FOB Kalimantan, per tonne

Grade Timing Sulphur AshTM

BasisSize

6,500 kcal in 90 days up to 1% up to 12% up to 12% GAR Panamax

5,800 kcal in 90 days up to 0.8% up to 10% up to 18% GAR Panamax

5,000 kcal in 90 days up to 0.6% up to 8% up to 30% GAR Panamax

4,200 kcal in 90 days up to 0.4% up to 6% up to 40% GAR Tug and Barge

Additional information about the underlying assessments used to produce the ICI can be obtained from the publishers. Argus Media ..........................................+ 44 20 7780 4200PT Coalindo............................................+ 62 21 3001 2490*ICI is a trademark of Argus Media Limited and PT Coalindo.

** Argus and Coalindo methodologies appear on page 2.Reproduction, scanning into an electronic retrieval system or copying to a database is strictly prohibited without the written permission of

the publisher. Published weekly. Supplied under licence.

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Issue 046 Friday 14 November 2008

Indonesian Coal Indices incorporating assessments by Argus Media and PT Coalindo**

Grade

BasisPrice(US$/t)

Indonesian 6500 Kcal

GAR

111.15


GAR

91.31


GAR

68.81


GAR

40.04

Monthly ICI averages

AugSep

Oct

Indonesian 6500 Kcal149.18

149.22126.39

Indonesian 5800 Kcal127.19

126.38105.71


87.8187.71

75.60


48.6048.69

42.82

Submissions to the Coalindo Panel - 14 Nov 2008Indonesian 6500 Kcal Indonesian 5800 Kcal Indonesian 5000 Kcal Indonesian 4200 Kcal

137.00122.00

88.0056.00

137.00110.00

83.0055.00

130.00110.00

82.0051.00

129.57109.89

80.0048.00

125.00109.00

78.9448.00

119.00107.00

75.0048.00

118.00105.00

74.0047.92

115.48104.00

74.0047.00

112.00101.00

74.0046.00

108.00100.00

72.8445.00

103.0099.12

70.0044.00

103.0094.00

70.0044.00

100.0093.50

69.0043.68

100.0090.00

67.0043.50

95.0090.00

65.0043.25

90.0090.00

65.0040.00

87.00

88.0065.00

38.20

85.0064.00

38.00

80.0060.00

35.0032.00

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Argus/Coalindo Indonesian Coal Index Report

This report provides weekly and monthly average coal prices for three Indonesian grades traded in bulk on the international spot market. It also includes comparative graphs for other actively traded coal markets. The report is published by Argus in association with Coalindo.

To receive a copy of the report, please email: [email protected]




Taipower awards 20 Panamax tenderTaiwanese utility Taipower has awarded its tender seeking 20 Panamaxes or 1.5mn t of at least GAR 5,000kcal/kg coal to be delivered from December this year to April 2012.

The utility awarded 13 Panamaxes to global miner and trader Glencore — four at $129.97/t, two each at $131/t, $130.98/t and $130.49/t, and one shipment each at $131.49/t, $130.46/t and $130/t. All were awarded on a cfr and GAR 6,322kcal/kg basis.

Taipower awarded three Panamaxes to trader Vitol, all at $131.33/t, and two vessels to the Right Link affiliate of trader Noble Group at $131.50/t and $130.37/t. It also awarded one shipment each to trader Flame at $131.34/t and miner Berau Coal at $130.38/t, all on the same basis.

“The prices net back to roughly $80-81/t on a fob and GAR 5,000kcal/kg basis, lower than the previous tender, reflecting how much Indonesian prices have come off,” said a Singapore-based trader.

Taipower last month awarded seven Panamaxes of the same-specification coal for delivery from November to March 2012 to Glencore at about $135/t on a cfr and GAR 6,322kcal/kg basis. That translates back to roughly $85/t on a fob and GAR 5,000kcal/kg basis.

Taipower rarely awards an entire tender and has even been known to cancel whole tenders if offers are too high. “But we had 75 offers this time and some are more aggressive now. And we didn’t negotiate further this time since selected offers were below the ceiling price, in line with the government’s procure-ment regulation,” a utility official told Argus.

Taipower’s ceiling price tends to be a little lower than the market price, which is determined by market indexes.

Kowepo buys material in spot and term tendersSouth Korean utility Korea Western Power (Kowepo) has bought 4.45mn t of coal through term and spot tenders.

The utility bought 130,000t of at least NAR 5,200kcal/kg Indonesian coal to be delivered from January to March 2012 through a spot tender, according to an official at the utility. The official declined to reveal further details but said the price Kowepo paid was in line with market prices.

Kowepo also awarded 540,000 t/yr of at least NAR 5,600kcal/kg coal to mainly Australian suppliers and 900,000 t/yr of at least NAR 4,600kcal/kg to Indonesian suppliers. The shipments are to be delivered from January 2012 to December 2014.

Workers plan strike at Drummond in ColombiaWorkers for Colombia’s second-largest coal producer Drum-mond have voted to begin a strike at two mines, demanding improved health and safety conditions, said Tarcisio Mora, president of the country’s largest union Central Unitaria de Trabajadores (CUT).

About 450 employees voted to strike while another group with the same number of workers is expected to vote today to start a strike at “any time,” Mora said.

“Seventeen workers have died in the coal industry because of accidents at work in the past five years,” he said. Mora also estimated there are 400 Drummond workers with lung problems because of coal dust.

Estivenson Avila, a member of miners union Sintramienergeti-ca, which belongs to CUT, said Drummond has failed to improve labour conditions. Drummond was not immediately available for comment today.

“We are facing an imminent strike at Drummond. The com-pany does not want to negotiate because it believes the union would ‘co-manage’ the company,” Avila said.

Sintramienergetica will also ask workers at the Puerto Drummond terminal if they want to join the stoppage. Colom-bian unions, especially CUT and Union Sindical Obrera, have renewed protests against oil and mining companies, demanding better working conditions, higher salaries and the hiring more direct employees instead of contract workers. The unions have protested at the country’s largest private oil field and recently tried to block the entry of workers at the country’s 245,000 b/d Barrancabermeja refinery and the 80,000 b/d Cartagena refinery.

Miners went on a two-day strike earlier this month at Drum-mond’s Pribbenow and El Descanso mines after a worker died from electrocution, Avila said.

Drummond expects to produce 25mn t of coal this year, and a strike would block 68,000 t/d of output.

German imports rise, prices fallAverage prices for German coal imports fell in September, while the import volume rose against the previous month, federal statistics office Destatis said today.

Average coal prices fell to €120.91/t ($164.02/t), or 9pc down on the month of August, which had seen prices rise to a 34-month high. Coal import volumes gained 15pc on the month to almost 3.5mn t.

Prices were up by 18pc compared with September 2010, and import volumes were up by 15pc during the same period.

Firms must notify Destatis of their imports each month. The agency publishes the volumes, price — including transport and insurance — and the average calorific value, according to coun-try of origin.

Colombia was Germany’s main supplier in August, providing almost 900,000t. Russia, usually Germany’s number one coal supplier, came second at 659,905t. South Africa came third with supplies of 518,455t, considerably more than the country’s usual supplies — which exceeded 300,000t just once until September.

Coal Market News

Note to subscribers:Effective 28 November, Argus will enhance our coverage of Atlantic basin coal markets with daily market coverage of Americas export coal markets. Colombia’s Puerto Bolivar and US export markets will be assessed daily, at the close of business in Washington with a 4:00 Eastern Time timestamp. This replaces current weekly coverage of these markets.Argus data customers will continue to receive European and Asian market data as usual. Americas data will be available sometime soon after these markets close. The publication will be available after the close of business in Atlantic basin trading.

Questions about these daily market assessments can be addressed to [email protected] or questions about delivery, data services or product information to [email protected]




Coal Market News

Newcastle waiting times at longest since JanuaryWaiting times at the Australian coal port of Newcastle are at their longest since January ahead of a major maintenance shutdown next week.

Ships had to wait an average of 13.92 days in the week to 14 November, up from 12.71 days a week earlier. This is the longest average waiting time since the first week of this year.

Coal shipments from the port, which services the coal-rich Hunter valley region of New South Wales, dropped by 3pc in the most recent week to 2.53mn t from 2.61mn t a week earlier. Japanese firms have significantly reduced their shipments from the port in the past two weeks.

The vessel queue was steady in the latest week, with seven ships waiting off the port to load. There were four vessels in the port loading on 14 November, compared with five on 7 Novem-ber. The number of vessels with a notified time of arrival for Newcastle fell to 60 from 67, as the port readied itself for a 22-26 November maintenance shutdown at the port and associated rail infrastructure.

Coal stocks at the port’s Kooragang and Carrington terminals fell to 1.15mn t from 1.5mn t last week as the port continued to push out extra shipments and clear stockpiles.

Only seven shipments were destined for Japan in the week to 12 November and nine a week earlier, compared to the more typical 15 and 14 shipments in the two preceding weeks.

Indonesia cuts November benchmark priceIndonesia’s ministry of energy and mineral resources has reduced the November selling price of benchmark 6,322kcal/kg coal by 2.2 pc.

November prices fall by $2.59/t from October to $116.65/t fob, the ministry said. October prices were set at $119.24/t fob. The drop in prices reflects the current bearish market sentiment.

Polish firms confirm coal generation plansPolish utilities PGE and Enea confirmed plans to start the construction of coal generation capacity totalling up to 2,800MW, despite previous concerns that the projects could lead to overcapacity.

PGE said it will hire a contractor in the coming weeks to oversee the construction of two 900MW coal-fired units at the company’s plant in Opole in southwest Poland. The company plans to start construction next year and start up one of the units in 2016 and the other in 2017.

Enea aims to appoint a contractor for its planned 900-1,000MW unit in Kozienice in central Poland in the first half of next year. Enea had planned to select a contractor in 2011, but delayed the decision because of reports of steel quality problems at new generation units in Europe.

The company changed the plant’s steel specification and al-lowed contractors more time to analyse it, Enea president Maciej Owczarek said today. He added that the delay will not affect the overall timeline of the planned construction, with start-up still scheduled for 2016.

Australia’s Jatenergy to mine first coal in IndonesiaAustralia-listed coal and biofuels feedstock company Jatener-gy will receive its first output this week from the Jongkang II mine in Indonesia’s Kalimantan that it bought into in August.

Jateenergy expects to start selling coal with an indicative calo-rific value of 6,400-6,674kcal/kg to Asian customers this year.

Its joint-venture partner Indonesian miner Karya Putru Ber-sama has sold about 40,000 t of coal from JongKang II over an unspecified period.

The Australia-listed firm is paying the costs of the mining operations in return for 30pc of the mining margin and marketing rights to all the output.

Jatenergy earlier this year also signed deals to buy eight coal exploration permits and permit applications in Queensland’s Bowen and Galilee basins.

Pacific Coal to double Colombia output by 2015Canada-based Pacific Coal Resources plans to more than double output from its two Colombian opencast mines to 3.6mn t by 2015, from 1.7mn t in 2011, chief executive Luis Carvajales said.

The firm is on track to produce 1.25mn-1.3mn t from its Caypa mine in La Guajira state and as much as 450,000t from its La Divisa mine in Cesar state.

La Divisa, acquired in March for $130mn from a US capital equity fund, is expected to increase production to 800,000t next year. Caypa will maintain production at current levels until 2017-18, when the life of the mine concludes.

“The life of the Caypa mine was due to end in 2013, but we have managed to extract some extra material that was not economically viable when coal prices were at $50-60/t, but it is mineable now with prices above $90/t,” Carvajales said. As a result, Caypa will have the potential to produce 4mn t.

Caypa has about 8mn t in surface mine reserves, but it also has significant underground resources of up to 53mn t. “We are also looking at underground mining at Caypa with initial produc-tion starting in 2013 and running until 2033,” Carvajales said.

Coal produced at Caypa has a heat content of about 6,000 kcal/kg and is sold into international markets. Its buyers are mainly Lissan Coal in Northern Ireland and Fergusson Coal in Scotland. Caypa coal is transported along trucks to the port of Carbosan in Santa Marta, Magdalena state, which has a contract with Pacific Coal to handle up to 1.8mnt of coal by late 2013.

Pacific Coal hopes to export through the port of Puerto Brisa in the longer term. But construction of a new 30mn t/yr terminal at Puerto Brisa has been halted after the country’s constitutional court said the port must carry out further consultations.

The terminal is expected to help reduce freight costs from Caypa by 30-50pc.

Pacific Coal also has metallurgic coal production at the Cer-rejoncito and La Mona mines in Samaca Boyaca in the interior of the country. The company produces 500 t/month of metallurgic coal but plans to ramp up production to 6,000 t/month over the next 18 months.

International Coal Markets

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