Korea Electric, Posco may buy RI coal mines
Korea Electric, Posco may buy RI coal mines
Bloomberg, Seoul
Korea Electric Power Corp., Posco and other South Korean companies may spend $610 million on overseas coal mines by 2010 to cut fuel costs and secure supplies of the raw material, state- run Korea Resources Corp. said.
The companies may invest in mines in Australia, Indonesia, Russia, China or Canada, said Jang Byung Doo, vice president of Korea Resources, which provides low-interest loans to companies that buy stakes in resource projects overseas. South Korea will rely on imports for 30 percent of the 91 million metric tons of coal it will consume by 2010, Jang said in an interview in Seoul.
Korea Electric, the country's dominant power producer, faces lower earnings after it agreed to pay record prices this year for thermal coal from China. Asian prices have soared since China, the world's biggest exporter after Australia, began limiting overseas shipments in January to avoid a domestic shortage.
"Given the higher coal prices, maybe now is not a good time to buy into mines," Jang said. "But we need overseas coal mines to secure stable supplies of the fuel over the long term."
South Korea, Asia's fourth-largest coal buyer, imported coal equivalent to 51.1 million tons of oil last year, according to BP Plc.
South Korean companies have visited overseas coal projects and may buy a mine in Australia or China by the end of this year, Jang said at a coal conference, without naming the companies.
The globalCOAL RB Index of coal delivered within three months from South Africa's Richards Bay rose 3.2 percent last week to US$60.19 a ton. Prices, which rose to a record in June, are about 70 percent higher than a year ago. The globalCOAL NEWC Index, for coal from Australia's Newcastle port stood at $55.30 a ton. Prices of Australian coal have more than doubled in a year.
Korea Southern Power Co., a unit of Korea Electric, is looking for new coal suppliers in Russia, South Africa and Canada after struggling to secure supplies early this year, the company's Chief Executive Kim Sang Kab said.
"We need to expand our sources of coal imports to ensure reliability," Kim said in an interview at the coal conference in Seoul. South Korean companies usually buy thermal coal from China, Indonesia and Australia, he said.
Korea Electric and its five power generating units may buy a stake in an overseas coal mine, Kim said, without giving details. Korea Electric Chief Executive Han Joon Ho in June said the state-run utility plans to buy a controlling stake in a mine in Australia, South Africa, Canada or Southeast Asia to help cut a fuel bill that rose to $4.1 billion last year.
Korea Southern Power and four other Korea Electric generation units expect their combined fuel bill this year to exceed last year's total.
Melbourne-based BHP Billiton, the world's biggest mining company, said last month it held initial talks with Posco, South Korea's largest steelmaker, and India's Orissa state about developing an iron ore mine, steel plant and port in Orissa. Posco said it may reach a non-binding agreement on the plan by the end of this year.
Posco said today it agreed to buy a stake in an Australian coal mine for A$19 million ($13.3 million), helping secure supplies amid soaring prices for the fuel. Posco agreed to buy 15 percent of CAML Resources Group, which owns 60 percent of the Foxleigh coking coal mine in Queensland state.