January 26, 2008
China's power shortage stokes Canadian coal producers
By CP
CALGARY -- China's hunger for energy resources presents a great opportunity for Canadian coal producers, the executive director of the Coal Association of Canada says.
But Canada isn't a big enough producer to put a dent in the emerging superpower's fuel shortage, Allen Wright said yesterday.
"I think it's a good thing for our industry,' Wright said.
But we're not going to be the player that actually turns the situation around if they've got a shortage."
The coldest, snowiest winter in decades has caused power shortages and left millions of Chinese without heating and running water.
Yesterday, the country's Transport Ministry ordered ports to temporarily stop loading coal for exports as China struggles to meet domestic power needs.
State-owned shipper Cosco Holdings Co. Ltd. was hauling about 760,000 tonnes of coal in an emergency shipment.
China's coal markets have been tight in recent years. It exported 16% less coal in 2007 than it did a year earlier, while imports rose 34%.
Vancouver-based coal producer Hillsborough Resources Ltd. (TSX:HLB) signed a deal last week to sell 130,000 tonnes of thermal coal to an Asian generating facility for about $11.8 million.
"I think it's a positive from the point of view that they've found a market for it. I hope they can do more," Wright said in a research note.
There is also massive global demand for metallurgical or coking coal, the type used in steel production.
"Take a look at the demand for steel and that will give you a pretty good indication of what the demand for coking coal is," he said.
Virtually all the coal Fording Canadian Coal Trust (TSX:FDG.UN) is sold to the global steel industry, said Catherine Hart, the company's senior investor relations analyst.
Fording's customers buy coal through long-term contracts, she explained.
Light, sweet crude for March delivery rose $1.30 to settle at $90.71 on the New York Mercantile Exchange after rising as high as $91.38.
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