Illinois coal a potential U.S. export star - exec

PORTSMOUTH, Virginia, Nov 12 (Reuters) - Illinois Basin coal, long a stepchild because of high sulfur content, is a growing U.S. export commodity, an executive said Wednesday.

Wayne Atamanchuk, a marketing executive for the Canadian National Railway (CNI.N), said up to 2.5 million tons of Illinois coal will ship via the Mississippi River this year.

Installation of scrubbers on European power plants to remove polluting sulfur dioxide emissions is enabling this expansion in shipments, he said.

"We're hopeful market conditions continue to support export of Illinois Basin Coal," Atamanchuk said.

Sixty percent of it is going by rail to Canadian National's IC Rail Marine Terminal at Mississippi River Mile 161 above New Orleans, where it is loaded on ships.

The 1.5 million tons flowing through IC Rail Marine is up from zero last year, said Bruce Conti, president of IC Rail Marine Terminal. It has been primarily an import terminal.

The rest of the 2.5 million tons is going by barge to other trans-loading terminals further down the river to be put on ships, Conti said.

Scrubber installation on U.S. coal-fired power plants could open up other markets for Illinois Basin coal, experts have said.

U.S. coal became a hot commodity in the world market this year when South African coal began flowing to India instead of Europe and output issues plagued other exporting countries.

Exports are less than 10 percent of the 1.1 billion ton U.S. market, in which most of the coal is sold domestically.

But rising exports have led U.S. coal prices much higher, attracting coal previously not a big factor in the world export market. (Reporting by Bruce Nichols; Editing by Marguerita Choy)