Australian coking coal mines facing above average cyclone season

Tue,Oct18, 2011

Reuters quoted meteorologists said Australia faces an above average number of cyclones over the coming storm season, threatening new devastation after massive floods swamped homes as well as destroying crops and crippling mining earlier this year.

Australia's Bureau of Meteorology said in its 2011-12 tropical cyclone season forecast that the northwest offshore oil and gas field and coastal iron ore operations face a 65% chance of being hit by more than seven cyclones.

BOM said Northeast Australia where coal mining was crippled last year due to heavy flooding partly generated by cyclones, also faces a 65% chance of more than the average of three to four cyclones this season.

BOM said "Historically, these conditions have favored an above average number of cyclones in the Australian region."

Australia's cyclone season is between November and April.

Treasurer Mr Wayne Swan said natural disasters including floods and cyclones cut economic activity by 0.75 percentage points in 2010-11, wiping AUD 1.75 billion from revenue across 2010-11 and 2011-12.

Australia's third-largest city Brisbane was inundated with floodwaters and flooding across an area as big as France and Germany forced major miners to declare force majeure and damaged large swaths of croplands, including the key sugar crop.

One of the most powerful La Nina's in recent years fuelled the devastating 2010-11 cyclones and floods and the bureau of meteorology said another less powerful, La Nina would likely develop in 2011-12.

The bureau said "Before a tropical cyclone forms it is difficult to predict its exact strength and path, including whether it will make landfall."

It said "Along the east and west coasts fewer than half of the cyclones affect the coast, with most staying out to sea. Along the north coast more than half of the cyclones impact the coast. Tropical cyclones which remain out to sea can still cause storm surges, gales and areas of intense rain over land."

(Sourced from Reuters)

Demand for coking coal and manganese to accelerate - BHP Billiton

Saturday, 01 Oct 2011

Dow Jones reported that BHP Billiton Ltd, the leading producer of exported coking coal and manganese, forecast an acceleration in demand for raw steelmaking ingredients as industrial development continues in China, India and other emerging economies.

The Anglo Australian mining company said volume estimates for BHP coking coal and manganese businesses fall short of demand forecasts. It said it expects crude steel production in China, the world biggest consumer of steel to grow to about 1.1 billion tonnes by 2025.

BHP's global market share is about 26% in coking coal and 21% in manganese ore traded by sea. It has forecast average 9% growth in its production of iron ore, coking coal and manganese through the 2020 financial year.

Every tonne of crude steel requires about 600 kilograms of coking coal and roughly 30 kilograms of manganese ore. Growth in coking coal demand will be driven mainly by China and India as these populous nations continue to develop and urbanize.

Domestic supplies of quality hard coking coal in China haven't kept pace with demand while India is highly reliant on imports. China and eventually India will also drive demand for manganese.

(Sourced from Dow Jones)

Rio Tinto eyes India's thermal coal market

Sept11, 2011

By Vishwanath Kulkarni

Perth: Rio Tinto Ltd, the Anglo-Australian mining firm, is eyeing a share of the rapidly growing Indian thermal coal market.

“India's coal imports are projected to touch about 200 million tonnes over next few years. We want to be part of that supply,” said Dr Nik Senapati, Managing Director, Rio Tinto India.

Rio Tinto has been selling other mineral resources such as coking coal, alumina, borates and rough diamonds to Indian companies.

“Last year, we sold some small quantity of thermal coal to India through a trader. Now we want to get into Indian thermal coal market directly,” Dr Senapati told a group of visiting Indian journalists.

The company is in talks with the Indian buyers in sectors such as cement and power to supply the thermal coal. However, Mr Senapati did not comment on how much the company expects to sell in India.
Cost Strategy

Rio Tinto produces high grade thermal coal from its deposits in Eastern Australia. In a bid to make it competitive with those from Indonesia, Rio Tinto proposes to ship the commodity in large (cape size) vessels to India to reduce costs, Dr Senapati said. India currently imports a bulk of its thermal coal from Indonesia, while it relies heavily on Australian coking coal to produce steel.

Last year, Rio Tinto supplied three million tonnes of coking coal to Indian steel companies such as JSW Steel and Tata Steel.

Rio Tinto has seen its business from India grow to more than a billion dollars in the past five years. The domestic thermal coal output in India, constrained by environmental regulations, is insufficient to meet the rising demand.

India's coal import stood at 70 million tonnes in 2010-11. In the current fiscal, the shortfall in coal demand-supply has been pegged at 142 million tonnes, which will be met through imports.

Keywords: thermal coal market, Rio Tinto, Dr Nik Senapati, imports

Sourced TheHinduBusinessline

BHPB shortening coal contracts - Report

Tuesday, 30 Aug 2011

According to the The Australian Financial Review, BHP Billiton Ltd has moved half its coking coal customers from quarterly to monthly contracts in the space of six months as its looks to reduce pricing terms, as it has done in the iron ore market.

The news gives more evidence that BHP chief executive officer Marius Kloppers is determined to move to increasingly shorter contracts.

Mr Kloppers is pushing harder in this direction than rival giants Anglo American and Rio Tinto, which use quarterly contracts.

As the world's largest coking coal exporter, BHP has more leverage on contracts. Contracts are based on an index price which means less difficult negotiations with customers.

(sourced Businessspectator)

CME Group launches Argus Coking Coal Swap Futures

Wed,August18, 2011

Argus media reported that, leading exchange CME Group will list an Australian coking coal swap futures contract for trading on the Nymex floor and for clearing through CME Clearport from 29 August. The new contract will be settled against the fob Australia assessment in the Argus Coal Daily International market report.

The launch of the futures contract and clearing service comes amid strong growth in the coking coal spot market and follows a move away from annual pricing towards quarterly and even monthly contracts. Argus launched spot coking coal prices in May last year, with daily price assessments now covering the Chinese import and domestic markets, India, Australia, Japan and the US. Australia accounts for about two-thirds of world coking coal exports.

“We are pleased that CME Group has introduced this new instrument, which will help expand risk management and trading opportunities for coking coal in the Asia-Pacific region. We wish the exchange every success with their new contract,” Argus Media chairman and chief executive Adrian Binks said. For more details Argus media

JSPL second time unlucky for Rocklands

Thursday, 21 Jul 2011

Jindal Steel and Power Ltd has once again failed to acquire Australian coking coal miner Rocklands Richfield, despite a revised offer price and extended deadlines. It managed to buy 12.56% stake, raising its holdings to 27.29%.

Mr Sushil Maroo finance director of JSPL said that “Our aim was to get over 50% stake in the company and clearly that hasn’t happened.”

Mr Maroo was non committal about JSPL’s Rocklands acquisition plans.

He said that “It’s not necessary that every effort gets translated into an acquisition. We are not keen on paying more to acquire the company at this stage and hence, are not pursuing it any further.”

In 2009 when JSPL tried to acquire Rocklands for the first time, it was locked in a three way battle with Essar Steel of India and Meijin Steel of China. Jindal was then ready to pay USD 0.56 per share. Essar bowed out early and Jindal managed to nudge the Chinese company, but the talks with Rocklands fell abruptly and no explanation was given.

(sourced from BS)

Baosteel inks 3-year coking coal deal with Rio Tinto

Monday, Feb 28, 2011 10:36am GMT by Reuters

SHANGHAI - China's Baoshan Iron & Steel (600019.SS: Quote) said on Monday it had signed a three-year coking coal supply contract with major Australian miner Rio Tinto (RIO.L: Quote) to kick off new long-term cooperation for another key raw material.

Rio Tinto will supply coking coal to the Chinese steel firm starting this year, making Baosteel its first long-term Chinese coal buyer.

Baosteel didn't disclose the supply volume on its website report.

Rio Tinto is the world's third biggest miner by market value and produces both coking coal and thermal coal.

Most of the state's coal industry was shut in December and January as flood waters inundated pits, damaged rail lines and shut ports, and most experts predicted it could take until the end of the first quarter for the industry to return to normal.

Coal production in Australia's flood-hit Queensland state could drop by between 25 percent and 50 percent this quarter, leading to tighter supply for Asian steelmakers.

Australia is the world's largest exporter of coking coal, and Queensland state accounts for the majority of Australian coking coal production.

Baosteel, China's top listed steel mill, said on Friday it has exchanged ideas with Australia's major miner Rio Tinto on how to improve iron ore pricing.

Baosteel used to lead other major domestic steel mills in the annual negotiation with global miners including Vale (VALE.N: Quote)(VALE5.SA: Quote) and BHP Billiton (BHP.AX: Quote) (BLT.L: Quote), but miners pushed buyers to accept an index-based quarterly pricing mechanism to take advantage of the rising spot market.(Reporting by Ruby Lian and Tom Miles; Editing by Jacqueline Wong)

Tags: Australian thermal coal, Vale, BHP Billiton, rising spot market,