RPT-Consol Energy plans to export more coal to Europe

(Repeats to include CEO's first name, third paragraph)

By Steve James

NEW YORK, Oct 25 (Reuters) - Consol Energy (CNX.N), which already exports about 10 percent of its coal production, plans to increase shipments to Europe where it can get better prices, the company's chief executive said on Thursday.

While domestic U.S. customers such as power utilities will remain a priority, Consol sees a growing demand abroad for both its high-Btu, or heat-generating, steam coal and metallurgical, or coking, coal that is used in steel-making.

"We estimate that more than half of European power plants are scrubbed," said Brett Harvey, referring to the devices used at power plants to remove pollutants from the exhaust created from burning coal. "This creates a natural secondary market for our Appalachian coal.

"The prices that we currently are realizing from Europe are, for the most part, at a premium to domestic coal prices."

Consol said it expects steam coal exports this year to increase by more than 40 percent from 2006 and 2007 volumes to rise by approximately 25 percent for 2008.

In a conference call with Wall Street analysts to discuss Consol's third-quarter financial results, Harvey said the company would export around 4 million tons of steam coal and approximately 2-1/2 million tons of coking coal this year. Consol produces approximately 70 million tons per year.

"The export market is sustainable for the next three years for sure," he said. "The question is, will the dollar stay weak and trigger long-term contracts?

"If that is the case, you'll see us make capital commitments to that market."

In a move that drove up Consol's share price on the day it reported a third-quarter net loss, Harvey said he was seeing coal prices that, according to Wall Street analysts, are higher than current estimates.

He said mid-sulphur content Northern Appalachian coal from Pennsylvania was selling for $53 to $55 per ton for export, with high-sulphur coal at $49 to $53. In Central Appalachia, which comprises Virginia, West Virginia and Kentucky, coal was selling for $50 to $53 per ton for export and metallurgical coal is selling for $95 to $102 for export.

On top of those prices, $3 is added for movement through Consol's facilities, Harvey said.

He said although the company exported no Central Appalachian coal in the last five years, it had moved some coal overseas from Amvest Corp, which it recently acquired.

"There will be more of that, if the world is looking for heat (high-Btu coal)" he said. "The Atlantic market may trigger long-term contracts for the first time in 20 years.

"We may talk about longer-term (export) deals, but the domestic market is our natural market."