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Asian demand prompts US coal miners rush to port

Steel News - Published on Fri, 14 Jan 2011

It is reported that coal miners are scrambling for toe holds in North America\'s clogged export facilities on the West Coast to take advantage of Asia\'s burgeoning coal demand.

Coal from Wyoming and Montana, which traditionally stays within US borders, is now profitable to export, thanks to rapidly industrializing nations such as China, where coal is the most common power plant fuel.

Arch Coal Inc, the second largest US coal producer by volume, said that it\'s paying USD 25 million for a 38% stake in a commodities exporting terminal on the Columbia River in Washington state, the latest in a string of deals involving natural resources companies seeking to serve growing markets in Asia.

Demand for US coal has come even more to the fore as flooding in Australia has disrupted supplies from the world\'s No 2 thermal coal exporter after Indonesia.

The Arch deal gives the company, which produces thermal coal from the Powder River Basin area of Wyoming and Montana, access to volume and storage capacity at a terminal majority owned by Brisbane, Australia based Ambre Energy.

Wyoming\'s Cloud Peak Energy, another producer of thermal coal from the Powder River Basin, is also on the hunt for additional export opportunities.

In 2010, Cloud Peak shipped around 3 million tonnes from a port near Vancouver, and it estimates roughly the same figure this year. But that port is at full capacity now, even though there\'s plenty of thermal coal used in power generation from the Powder River Basin that could still go to Asia.

Peabody Energy Corporation, the largest US coal producer, has also been looking to boost the flow of coal from the West Coast. It has carried out engineering work and considered about a dozen sites in the US and Canada for a facility that could ship 20 million to 30 million tonnes a year.

Currently, US coal port capacity on the West Coast is much smaller. The terminal in which Arch acquired a stake will be able to ship only around 5 million tonnes of thermal coal after some upgrades. That\'s a drop in the bucket compared with global thermal coal demand of roughly 800 million tonnes.

Thermal coal from massive surface mines in Wyoming and Montana has historically only found a domestic market because it\'s essentially been landlocked. But Asian demand is spurring rising prices and export opportunities, leading to a backlash from some environmental groups. They say the sale of US coal overseas undercuts domestic efforts to reduce greenhouse gas emissions.

(Sourced from www.marketwatch.com)

Posted By : admin on Fri, 14 Jan 2011
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