By Jackie Cowhig
LONDON (Reuters) - Global miner Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz)(RIO.AX: Quote, Profile, Research, Stock Buzz) expects long-term coal supply contract prices to remain strong in 2009-2011 because lack of infrastructure will restrain supply growth for another few years, energy division chief executive officer Preston Chiaro said on Tuesday.
"The extremely high prices we've seen recently for both thermal coal and coking coal have been driven by the supply/demand imbalance. Coal supply/demand tightness won't ease for many years due to limited infrastructure and strong demand," he told the Reuters Global Mining Summit.
Chinese demand for coking coal and steam coal will also help keep prices high, he said. "Can infrastructure expand faster than Chinese demand can grow? That's the $65,000 question and nobody can answer it yet."
China's production and demand has been growing at around 12-13 pct a year. China's coal production last year was around 2.7 billion tonnes, about half of the world's coal output, he said, but its demand is keeping pace.
Rio has latent coal production capacity in Australia in New South Wales and Queensland which the company cannot bring on because of a lack of rail and port space, he said.
ABBOTTS POINT DEAL
Rio on Monday signed a 10-year take-or-pay contract for 16 million tonnes a year export capacity at Abbotts Point port in Queensland, he said.
Output from Rio's Blair Atholl mine and Claremont projected mine will be exported from Abbotts Point. Continued...
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