Colombia's top coal firms send 15 pct to Asia in '10

Wed Mar 2, 2011 5:25pm EST

Related Topics

 * More coal to Asia due to low European demand, prices
 * Most shipments did not go through Panama canal-Cerrejon
 * Drummond sees exports up to 25 mln tonnes this year
 By Jack Kimball
 CARTAGENA, Colombia, March 2 (Reuters) - Colombia's largest
coal exporters, Cerrejon and Drummond, shipped 15 percent of
production to energy-hungry Asian nations last year, the
companies told a coal conference on Wednesday.
 Colombia -- among the world's top producers of high-quality
thermal coal and the No. 5 coal exporter -- saw a dramatic
increase in exports to China in 2010 due to a demand slump in
its principal market, Europe, and strong Asian appetite for the
material.
 "Last year there was an extraordinary development in that
for the first time more than 15 percent of our coal went to
Asia," said Howard Gatiss, head of CMC Coal Marketing Company,
the sales arm for Cerrejon, Colombia's largest coal exporter.
 "The European market was depressed, European prices were
low and there was a real demand pull from a number of countries
in the Pacific which was not able to be met by Australia,
Indonesia or even South Africa," he told a coal conference.
 Cerrejon -- a joint venture between BHP Billiton (BLT.L),
Anglo American (AAL.L) and Xstrata XTA.L -- exported 31.5
million tonnes in 2010. Its mines have a capacity to produce
roughly 32 million tonnes annually.
 Analysts do not believe the destination make-up of
Colombian coal exports will shift dramatically in the coming
years but Asian demand for Colombian material will likely
continue and be determined mainly by freight rates.
 Privately-held U.S. miner Drummond also said that it
shipped 15 percent of its around 22 million tonnes of exports
to Asia in 2010.
 "In 2009, we didn't export to Asia, but in 2010 we started
exporting to Asia, principally China," Drummond Colombia
President Augusto Jimenez told the conference.
 Jimenez also said he expected Drummond -- which is eyeing
selling part or all of its Colombia operations -- to export 25
million tonnes in 2011.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Graphic on Cerrejon's exports:
  link.reuters.com/kec96p
 Factbox on Cerrejon: [ID:nN05192802]
 Graphic on Drummond coal production:
  link.reuters.com/sep76p
 Factbox on Drummond in Colombia [ID:nN16264711]
 Graphic on Colombia exports to China:
  r.reuters.com/zud44q 
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Colombian coal shipments to China depend on the ups and
downs of freight rates, and whether China takes its material is
the most important influence on European prices in a market
increasingly prone to violent price swings, traders say.
 "There was a significant volume of coal that went east ...
mainly on small capesize vessels and mainly all the way around,
only a couple of vessels went through the Panama Canal," Gatiss
said in the coastal city of Cartagena.
 "It's not clear what that means for the longer-term trade.
It is clear that the massive part, perhaps almost all the
demand growth of thermal coal in the years to come is going to
be in the Pacific."
 Although still way behind Europe and the United States as a
market, China's imports of Colombian coal soared 26 million
percent to 3.7 million tonnes last year compared with 2009.
 The overall trend for coal prices this year is upward but a
series of price shocks is likely as the market reacts to supply
disruptions and the sudden appearance and disappearance of
Chinese spot buying, analysts say. [ID:nSGE71900I]
 "It doesn't seem likely that this will be a solid,
long-term, core part of the portfolio, then again, I would have
said this time last year that I wouldn't have expected 15
percent of our production going to Asia," Gatiss said.
 (Editing by Alden Bentley)


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