U.S miner seeks to boost Asian coal sales

TANJUNG BENOA, Indonesia Thu Dec 3, 2009 12:05am EST

TANJUNG BENOA, Indonesia Dec 3 (Reuters) - U.S. coal miner, Global Coal Sales Group, expects to sell up to 4 million tonnes a year of coal to Asia within the next 3-4 years helped by growing demand in the region for high quality coal, its president said.

Global Coal Sales said in September it expected to send several trial cargoes of coal to Asia by the end of the year and hopes that will lead to more.

"Japan and South Korea are our primary target. They are looking to diversify supply from Australia. They are looking for bituminous coal and they is plenty in the U.S.," Donald J. Drabant, the firm's president, told Reuters on the sideline of the McCloskey Asia Pacific Coal Outlook conference.

"We should be able to export between 3-4 million tonnes in the longer term. It probably takes 3-4 years to get to that point," Drabant said late on Wednesday.

Last year's economic downturn hit both steel and electricity demand in the United States and miners were forced to cut back on production as coal prices slumped. But now there are signs that coal demand is picking up.

Global Coal Sales Group is a joint venture between Ohio utility FirstEnergy Corp (FE.N) and Boich Companies formed last year.

The firm bought control of the Bull Mountain mine in Montana--later renamed Signal Peak--which was struggling to produce a few hundred thousand tonnes a year.

When they announced the project in 2008, officials said production at the mine could rise to 14 million tonnes a year by about 2011.

Drabant said China's demand would be a key factor for U.S. coal trying to enter the Asian market.

"China's demand will drive coal prices in Asia. The main challenge is what happens in China and how much they will import," he said.

China's appetite for imported coal had helped Australian thermal coal prices, a benchmark for Asia, to rebound to about $80 a tonne from a near two-year low of around $58 in March.

But some producers said uncertainty over Beijing's policy intentions and its domestic coal prices may risk the sustainability of China's demand.

((For related stories [ID:nN18545873] [ID:nJAK315741]))

(Editing by Ed Davies) ((fitri.wulandari@reuters.com; Reuters Messaging: fitri.wulandari.reuters.com@reuters.net; +62 21 384 6364 ext 904)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

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