SEOUL (Reuters) - Five South Korean utilities jointly bought a total of 1.5 million tonnes of coal from the United States to arrive from the third quarter, a spokesman at one of the utilities said on Tuesday.
The purchase comes as South Korea, the world’s fourth-largest coal importer, encourages energy companies and utilities to seek U.S. energy resources under pro-fossil fuel Trump administration in an effort to diversify supply sources.
Korea Midland Power Co Ltd (KOMIPO) signed the deal to buy the U.S.-origin coal products on behalf of the five utilities, its spokesman said. The other four utilities are Korea Southern Power Co Ltd (KOSPO), Korea East West Power Co (EWP), Korea Western Power Co Ltd (WP) and Korea South East Co Ltd (KOEN).
Korean utilities typically buy coal from Australia and Indonesia.
But U.S. coal has become less expensive compared with Indonesian coal as a recent supply disruption in Indonesia pushed up the country’s coal prices, said a source from KOMIPO who declined to be identified.
The U.S. coal purchase would help the utilities increase sources of coal and ensure stable supplies, the source said. However he declined to give further details including price as he was not authorized to speak publicly on trade matters.
South Korea, Asia’s fourth-largest economy, heavily relies on fossil fuel imports to meet its energy demand. It is the world’s second-largest liquefied natural gas importer and the world’s fifth-largest crude importer.
Coal power provides nearly 40 percent of the country’s electricity. Last year, South Korea imported around 86.5 million tonnes of steam coal for power generation, according to customs office data.
Of the total, about 1.06 million tonnes of coal came from the United States, accounting for 1.2 percent of the country’s total imports.
Reporting By Jane Chung in Seoul; Additional reporting by Henning Gloystein in Singapore; Editing by Amrutha Gayathri