BHP seeking to raise its thermal coal profile<\/p>\n
SYDNEY (Reuter): The Broken Hill Proprietary Co Ltd is looking
\nto raise its profile as a miner of thermal coal.<\/p>\n
BHP last week dropped \"Australia\" from the name of its coal
\nsubsidiary to reflect an expansion of activities to include the
\nmanagement of several thermal coal mines in Kalimantan,
\nIndonesia, a company spokesman said.<\/p>\n
BHP's managing director, John Prescott, said recently that
\nwhile weakening copper and steel markets were weighing on overall
\noperations, coal operations were among the better performers.<\/p>\n
The Indonesian properties, in which BHP has 80 percent stakes,
\nwill deliver around seven million tons of coal taking BHP's total
\ncoal-producing capacity to around 70 million tons a year, a BHP
\nspokesman said.<\/p>\n
BHP produces some Australian thermal coal and operates thermal
\ncoal mines in South Africa and the U.S., although it
\npredominantly mines coking coal from Australia.<\/p>\n
A larger share of the market for thermal coal would help
\ndiversify BHP away from coking coal, where demand and prices tend
\nto move in tandem with world steel markets, analysts said.<\/p>\n
BHP's coal mines in Australia -- nine in central Queensland
\nand five in New South Wales -- account for about 20 percent of
\nglobal trade in seaborne coking coal, the spokesman said.<\/p>\n
Markets have been mostly steady for coking coal. But thermal
\ncoal use is seen growing in step with increasing demand for power
\ngeneration, particularly in Asia.<\/p>\n
The Asia-Pacific Economic Cooperation group estimates energy
\nconsumption among its 18 member nations alone will grow by an
\naverage 2.2 percent a year to 2010, with much of the new energy
\ngenerated from coal-fired plants.<\/p>\n
\"We are not a big operator in that market (thermal) but we'd
\nlike a bigger share of it,\" the BHP spokesman said.<\/p>\n
Thermal coal sold in to the Japanese market currently fetches
\na benchmark price of US$40.30 a ton, although recent mid-year
\ntenders have seen smaller-sized shipments being delivered at as
\nmuch as $7.00 a ton below that price, industry sources said.
\nNegotiations between Australian coal producers and Japanese
\ncustomers are traditionally held on an annual basis to coincide
\nwith the Japan's March-to-April fiscal year.<\/p>\n
While BHP takes a leading role in negotiations with the
\nJapanese in coking coal, it is less influential during thermal
\ncoal contract discussions.<\/p>\n
In Australia, BHP is spending A$185 million to expand thermal
\ncoal production at its Mount Owen mine in New South Wales to 3.5
\nmillion tons from one million tons by the end of next year.<\/p>\n
At the South Walker Creek mine in Queensland's Bowen Basin, a
\ntwo-year trial of shipments of soft coking\/thermal coals are
\nunderway to customers at annual rate of 1 million tons a year,
\nthe spokesman said.<\/p>",
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