March 2, 2011 / 10:28 PM / in 7 years

Colombia's top coal firms send 15 pct to Asia in '10

 * More coal to Asia due to low European demand, prices
 * Most shipments did not go through Panama canal-Cerrejon
 * Drummond sees exports up to 25 mln tonnes this year
 By Jack Kimball
 CARTAGENA, Colombia, March 2 (Reuters) - Colombia's largest coal exporters, Cerrejon and Drummond, shipped 15 percent of production to energy-hungry Asian nations last year, the companies told a coal conference on Wednesday.
 Colombia -- among the world's top producers of high-quality thermal coal and the No. 5 coal exporter -- saw a dramatic increase in exports to China in 2010 due to a demand slump in its principal market, Europe, and strong Asian appetite for the material.
 "Last year there was an extraordinary development in that for the first time more than 15 percent of our coal went to Asia," said Howard Gatiss, head of CMC Coal Marketing Company, the sales arm for Cerrejon, Colombia's largest coal exporter.
 "The European market was depressed, European prices were low and there was a real demand pull from a number of countries in the Pacific which was not able to be met by Australia, Indonesia or even South Africa," he told a coal conference.
 Cerrejon -- a joint venture between BHP Billiton (BLT.L), Anglo American (AAL.L) and Xstrata XTA.L -- exported 31.5 million tonnes in 2010. Its mines have a capacity to produce roughly 32 million tonnes annually.
 Analysts do not believe the destination make-up of Colombian coal exports will shift dramatically in the coming years but Asian demand for Colombian material will likely continue and be determined mainly by freight rates.
 Privately-held U.S. miner Drummond also said that it shipped 15 percent of its around 22 million tonnes of exports to Asia in 2010.
 "In 2009, we didn't export to Asia, but in 2010 we started exporting to Asia, principally China," Drummond Colombia President Augusto Jimenez told the conference.
 Jimenez also said he expected Drummond -- which is eyeing selling part or all of its Colombia operations -- to export 25 million tonnes in 2011.
 Graphic on Cerrejon's exports:
 Factbox on Cerrejon: [ID:nN05192802]
 Graphic on Drummond coal production:
 Factbox on Drummond in Colombia [ID:nN16264711]
 Graphic on Colombia exports to China: 
 Colombian coal shipments to China depend on the ups and downs of freight rates, and whether China takes its material is the most important influence on European prices in a market increasingly prone to violent price swings, traders say.
 "There was a significant volume of coal that went east ... mainly on small capesize vessels and mainly all the way around, only a couple of vessels went through the Panama Canal," Gatiss said in the coastal city of Cartagena.
 "It's not clear what that means for the longer-term trade. It is clear that the massive part, perhaps almost all the demand growth of thermal coal in the years to come is going to be in the Pacific."
 Although still way behind Europe and the United States as a market, China's imports of Colombian coal soared 26 million percent to 3.7 million tonnes last year compared with 2009.
 The overall trend for coal prices this year is upward but a series of price shocks is likely as the market reacts to supply disruptions and the sudden appearance and disappearance of Chinese spot buying, analysts say. [ID:nSGE71900I]
 "It doesn't seem likely that this will be a solid, long-term, core part of the portfolio, then again, I would have said this time last year that I wouldn't have expected 15 percent of our production going to Asia," Gatiss said.  (Editing by Alden Bentley)   

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