UPDATE 2-S.Korea STX gets coal supply requests from China, India

Thu Mar 31, 2011 1:57am EDT

Related Topics

* Chinese, Indian utilities made long-term supply requests-STX

* STX to supply 65,000 T/yr to S.Korea utility EWP

* Indonesia coal mine to produce 200,000 T/mth from June

* STX to invest in other Indonesian mines to boost capacity (Recasts lead, adds details and quotes)

By Cho Mee-young and Rebekah Kebede

SEOUL/PERTH, March 31 (Reuters) - South Korea's STX Corp , aiming to boost its coal trading by investing in overseas mines, said on Thursday that it has received long-term supply requests from Chinese and Indian utilities which expect rising demand after Japan's quake.

STX also said in a statement that it had bought a 40 percent stake in an Indonesian coal mine located in Kintap, Kalimantan from PT Indonesia Cemerlang for $30 million, earning mine operation and sales rights for all coal output.

Japan's worst quake on record and subsequent tsunami on March 11 shut several power plants and ports, and forced at least two major Japanese utilities to declare force majeure on coal deliveries.

The quake reduced short-term coal demand and weighed on regional coal prices, but is expected to boost demand in the long term as it replaces nuclear power with Japan grappling with the worst nuclear crisis since Chernobyl in 1986.

"Chinese and Indian utilities had been set as our main target markets for coal supplies. What happened is that we actually have received long-term supply requests from them even before we made offers," said a source at STX who declined to be named as he was not authorised to talk to the media.

TIGHTER COAL MARKET SEEN

Analysts said Japan's nuclear crisis would tighten the coal market globally in 2011, as governments reconsider the safety of nuclear power.

Pressure mounted on Japan on Thursday to expand the evacuation zone around its stricken nuclear power plant while officials said radiation may be flowing continuously into the nearby sea, where contamination was now 4,000 times the legal limit. [ID:nLDE72T0IJ]

"In the case of thermal coal, we expect that utilisation rates at (Japan's) coal fired plants may be increased modestly," Deutsche Bank said in a note earlier this week.

"We would suggest that an increase of another 0.5 to 1.0 million tonnes of thermal coal per month could be possible as a run rate by the second half of the year."

Separately, the STX statement said the firm had already been chosen to supply 65,000 tonnes annually to Korea East West Power Co (EWP).

STX said it aims to boost its total annual coal capacity to over 5 million tonnes by investing in neighbouring mines to southern Kalimantan.

"We are planning to supply coal from the mine to domestic and overseas markets to maximise profits," STX said, referring to the latest coal mine deal.

The Indonesian mine was currently producing 100,000 tonnes per month, and monthly output will rise to 200,000 tonnes by June.

The statement said the deal would help STX Energy, which consumes about 4.5 million tonnes of coal per year and also is a unit of STX Group along with STX, ensure stable coal supplies. (Additional reporting by Yerim Kim in SEOUL; Editing by Manolo Serapio Jr.)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.