BHP in line to gain from Australian state's rising coal exports

SYDNEY Sun Jan 19, 2014 10:15pm EST

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SYDNEY Jan 20 (Reuters) - BHP Billiton could show stronger-than-expected quarterly production of Australian coal this week on the back of a trend of rising shipments from a key mining state.

Data released on Monday show coal exports up sharply in the last financial year in New South Wales state, where BHP's extensive coal operations include its Mt Arthur thermal mine, the largest production site in the state's Hunter Valley.

China buys just under a fifth of the state's coal exports and is the second biggest customer behind Japan, according to the data.

BHP reports December quarter production on Wednesday, with analysts expecting overall flat coal output for the period.

Glencore Xstrata and Rio Tinto also mine coal in the state.

Japan's top power companies boosted their use of thermal coal by 15 percent last month to 5.31 million tonnes.

New South Wales coal exports to China rose by nearly a third to 31 million tonnes in the year to June 30, according to Coal Services Pty Ltd, which compiles statistics for the state's coal mining sector.

For the rest of Asia, exports to Japan rose 12 percent, to South Korea nearly 20 percent and to Taiwan nearly 7 percent.

Lower pricing and higher operating costs over the past two years have left coal as the weakest of the "four pillars" of BHP's core business behind iron ore, petroleum and copper.

"Finally, there is some good news, with demand for New South Wales coal rising significantly in China, contrary to some of the rhetoric we have been hearing that demand for coal is diminishing," Stephen Galilee, chief executive of the New South Wales Minerals Council, said.

"The data also shows demand for coal is growing steadily across all our main export markets."

Any uptick in demand has yet to trigger much price recovery, although thermal coal is up from September's four-year trough of around $75 a tonne.

Australia's Newcastle weekly spot index fell to $82.05 per tonne last week from $83.54 on Jan. 9, data from trading platform globalCOAL showed.

Another Australian miner, Wesfarmers Ltd on Monday said its price for hard, semi-hard coking coal in neighbouring Queensland state would drop by 5 percent in the March quarter versus the previous quarter, in line with other settlements.

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