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Coal Trader International Tuesday, March 10, 2009

China’s February coal prices dropped DAILY SNAPSHOT

Chinese thermal and metallurgical coal prices dropped
last month, China’s National Development and Reform Daily Physical Coal Trading, Mar 9
Commission (NDRC) reported March 6.
($/mt) (`/mt)
Market prices of coal (on a free carrier basis, including
17% VAT) averaged at Yuan 670/mt ($97.9/mt) in CIF ARA coal 61.00 48.18
Richards Bay coal 59.00 46.60
February, down 1.39% month-on-month, according to a
Newcastle coal 62.00 48.97
NDRC release.
Thermal coal at Qinhuangdao Port averaged at Yuan Freight, RB to ARA* 9.00 7.11
516/mt ($75.4/mt) in February, down 9.93% from January. Virtual Freight 2.00 1.58
Metallurgical coal averaged at Yuan 912/mt ($133.2/mt) in Freight Differential 7.00 5.53
February, down 1.14% from January, while thermal coal
prices assessed inland averaged Yuan 488/mt ($72.3/mt), ARA coal, carbon-adjusted 93.75 74.05
down 1.75% from the previous month. * Weekly freight rate courtesy of SSY

Cyclone disrupts operations at Spreads (Forward month), Mar 9

Queensland coal ports ($/MWh) (/MWh)

Tropical cyclone Hamish swept along the coast of Dark Spread (35% efficient coal plant)
central Queensland in eastern Australia, at the weekend UK 24.73 £17.49
Germany 18.82 `14.86
and during March 9, causing disruption to shipping and
leading to the temporary closure of some coal export Clean Spread (35% efficient coal plant)
facilities. UK 10.98 £7.76
Abbot Point, Queensland’s most northerly export coal Germany 5.06 `4.00
terminal, halted its coal loading operations at about 6pm
Heat Rate (Minimum efficiency to pay fuel cost)
local time on March 7. A vessel set sail approximately
4,000 mt light of cargo to allow the terminal to complete (Btu/kWh) (%)
its cyclone preparations. The port remains open but its Gas, UK 11213 30.45 %
next vessel arrival is not due to arrive until March 12. “No Gas, Germany 9981 34.20 %
damage to any port infrastructure has been reported and
the port did not experience extreme rain or cyclonic Queensland Rail which operates four coal haulage
winds,” said the Ports Corp. of Queensland, Abbot Point’s networks in central Queensland said its Blackwater,
owner, in a March 9 statement. Goonyella and Newlands coal rail systems had to be closed
Hay Point Coal Terminal, operated by BHP Billiton over the weekend. “The Blackwater system was closed
Mitsubishi Alliance, closed on the morning of March 7. All from Sunday night [March 8] until this morning [March 9]
coal vessels were ordered by port authorities to leave their with services cancelled and trains secured until the
berths and anchorages for safer waters. Hay Point was cyclone passed. The Goonyella and Newlands coal rail
undamaged by the cyclone and reopened on the evening systems were shutdown from Saturday night [March 7]
of March 8 with vessel loading restarting at the same time. and they reopened on Sunday night [March 8] after the
“Vessels are gradually making their way back to their cyclone warning was cancelled for these areas,” said
anchorages and this may slightly delay full Queensland Rail in a March 9 statement.
recommencement of ship loading operations,” said PCQ in Hamish was downgraded to a category 4 cyclone from
its statement. a category 5 cyclone on March 8 as it weakened slightly
Dalrymple Bay Coal Terminal, adjacent to Hay Point, after passing Mackay on the central Queensland coast. A
was also affected by the cyclone. Operations manager, category 4 cyclone has wind speeds of between 225
Greg Smith, said by email March 9: “The Harbour Master km/hour and 279 km/hour while a category 5 cyclone has
closed the port on Saturday evening [March 7] and wind speeds of more than 280 km/hour, according to the
reopened it on Sunday evening [March 8], so there was Australian Bureau of Meteorology.
only a disruption of one day to terminal operations.” (continued on page 3)

The McGraw Hill Companies

 COAL TRADER INTERNATIONAL TUESDAY, MARCH 10, 2009

Platts Coal Industry Markers Daily Coal Price Trends Physical

Max Max High/Low
kcal/kg sulfur ash CIM Change Spread ($/mt)
CIF ARA 6,000 NAR 1.0% 16% 58.06 -4.78 0.96 250
Europe CIF ARA Newcastle
Richards Bay FOB 6,000 NAR 1.0% 16% 56.96 -2.74 1.41
Richards Bay CIF Japan
Newcastle FOB 6,300 GAR 0.8% 13% 62.48 -3.90 15.00
Kalimantan FOB (K1) 5,900 GAR 1.0% 15% 63.33 -0.67 8.00 210
Kalimantan FOB (K2) 5,000 GAR 0.8% 8% 52.33 0.76 11.50
CIM participants: Andalan Tiga Berjaya, Asia Pasific Coalindo, Banpu, Berau, 170
BHP Billiton, Bintang Batubara, Bloomfield, Britmar Asia, Bulk, Bunge, Cargill,
Coal & Oil, Electrabel, Ensham, EnBW, Essent, Global Business Power, Hokuriku,
Hoping, Korea South-East, London Commodity Brokers, National Power Corp.,
Nuon, RBS Sempra, RWE 130

Discards: CIF ARA, 1; Richards Bay, 2; Newcastle, 2; Kalimantan One, 4;

Kalimantan Two, 3. 90
Note: Prices in $/mt for 90-day forward delivery.

Platts Weekly 90-day Forward Benchmark Coal Price Assessments 50

Mar-08 Jun-08 Aug-08 Nov-08 Mar-09
06-Mar-09 06-Mar-09
($/mt) (`/mt)
Atlantic PLATTS FORWARD CURVE
CIF ARA (6,000 kcal/kg) 57.75 46.02
Platts Forward Curve
FOB Richards Bay (6,000 kcal/kg) 57.00 45.42
FOB Bolivar (6,300 kcal/kg) 57.50 45.82 PFC – CIF ARA ($/mt)
FOB Bolivar (6,450 kcal/kg) 58.00 46.22 82
Poland Baltic (6,300 kcal/kg) 51.50 41.04
Russian Baltic (6,400 kcal/kg) 51.00 40.64
Pacific 75

FOB Newcastle (6,300 kcal/kg) 63.00 50.20

FOB Gladstone (6,500 kcal/kg) 66.00 52.59
FOB Qinhuangdao (6,200 kcal/kg) 87.00 69.32 68
FOB Kalimantan (5,900 kcal/kg) 60.00 47.81
FOB Kalimantan (5,000 kcal/kg) 50.00 39.84
Russia Pacific (6,300 kcal/kg) 73.00 58.17 61
CIF Japan (basket price) 80.00 63.75
CIF Korea West (6,080 kcal/kg) 71.00 56.57

(For complete specifications,including sulfur & ash, consult methodology at www.platts.com) 54

Mar-09 Apr-09 Q2-09 Q3-09 Q4-09 Q1-010 2010 2011

globalCOAL Daily Forward Curves Physical

PFC – FOB Richards Bay & FOB Newcastle ($/mt)
Richards Bay 1 and Newcastle standard contracts (Physical) 74
Best Bid Best Offer Best Bid Best Offer FOB Richards Bay
Phys RB1™ (FOB RBCT Low Vol) Phys Newc™ FOB Newcastle

68
Apr-09 NQ NQ 61.00 64.00
May-09 NQ NQ 60.50 NQ
Jun-09 NQ NQ 62.00 63.00
62
Jul-09 NQ NQ NQ NQ
Aug-09 NQ NQ NQ NQ
Source: globalCOAL
56
Assessment notes: All coal prices in US$/mt unless otherwise noted. All coals 1%
sulfur maximum. Platts assessment and CIM bases: ARA, CIF, 6,000 kcal/kg NAR;
Richards Bay, FOB, 6,000 kcal/kg NAR; Bolivar, FOB, 6,300 kcal/kg and 6,450 kcal/kg
GAR; Newcastle, FOB, 6,300 kcal/kg GAR; Kalimantan, FOB, 5,900 kcal/kg and 5,000 50
kcal/kg GAR; Qinhuangdao, FOB, 6,200 kcal/kg GAR; CIF Japan, 6,080 kcal/kg NAR; Mar-09 Apr-09 Q2-09 Q3-09 Q4-09 Q1-010 2010 2011
CIF Korea West, 6,080 kcal/kg NAR. TFS bases: API#4®is Richard Bay, FOB, 6,000
kcal/kg NAR; API#2®is ARA CIF, 6,000 kcal/kg NAR. TFS API#2®and TFS API#4®are
registered trademarks of Tradition Financial Services. However, TFS no longer derives Graphs are created using Platts Forward Curve – Coal data.
the indices from a basket of published prices; publishers The McCloskey Group, Argus The forward curve in coal will provide eight assessments comprising two prompt
Media, and (for API#4®) South African Coal Report have taken over index derivation months, four prompt quarters and two calendar years.
and have dropped the “TFS” from the original name TFS APIs. While Platts believes
index specifications remain unchanged, readers are advised to contact those PFC–Coal is also available in computer-readable Platts Dispatch format. To see a
organizations directly for information on index methodologies. globalCOAL basis: sample and find information on how to subscribe go to www.risk.platts.com. For
Richards Bay 1™ (RB1) is an FOB standard physical coal contract for a minimum of questions about subscribing, please contact support@platts.com. For questions
6,000 kcal/kg NAR coal. Phys Newc™ is an FOB standard physical contract for a about the content of PFC–Coal, please contact James O’Connell at +44-20-7176-
minimum of 6,000 kcal/kg NAR coal. Platts pricing methodologies at www.platts.com. 6661, Gareth Carpenter at +44-20-7176-6656, or e-mail coal@platts.com.

2 Copyright © 2009, The McGraw Hill Companies

 COAL TRADER INTERNATIONAL
May DES AR trades $62.50/mt in thin
market, swaps rise on oil, stockpiles
European delivered physical coal spot prices jumped back
over $60/mt in Monday trading, as a European utility-trader
bought a prompt-loading cargo for $62.50/mt.
The Exchange for Physical deal was for a May-delivery
DES Amsterdam-Rotterdam 50,000 mt shipment of generic
origin coal, executed by London Commodity Brokers.
Otherwise, there was very little fixed price interest in the
physical market, with no trades concluded on the
globalCOAL screen. Offscreen, a June DES AR cargo was bid
at a $1.30/mt premium to CIF ARA index, API2, and offered
at a $2.75/mt premium.
In the Richards Bay FOB market, an April panamax was
bid at $58/mt.
Trading sources said stronger markets for Brent crude oil
and German power as well as slightly lower coal stockpile
levels in northwest European discharging ports were
supporting physical and financial coal prices.
Platts assessed the prompt month April CIF ARA price at
$61/mt, up $2.50/mt, Richards Bay FOB at $59/mt, up $2/mt
and Newcastle FOB at $62/mt, up $1/mt.
Trading of coal swaps was volatile for most of the session
with API2 (CIF ARA) contracts eventually ending the day up
an average $0.75/mt across the curve in very light trade.
Paper traders said the financial coal derivatives market
had struggled for direction with Brent crude oil rallying at
the same time as the equities market softened.
The API2 year-ahead Cal-10 contract opened at $74/mt
and dipped to an intraday low of $73.85/mt before pushing
up to a daily high of $75/mt. The contract was last heard
done at $74.85/mt, up $0.60/mt day-on-day.
Rio to sell Jacobs Ranch mine in
Powder River to Arch for $761 million
Rio Tinto said March 9 it had agreed to sell Arch Coal its
biggest coal mine by output in the Powder River Basin for
$761 million as the company steps up asset sales to raise
cash for debt reduction.
Jacobs Ranch is located 55 miles south of Gillette,
Wyoming, in the southern Powder River Basin, and based
on 2008 output is the largest of Rio’s Wyoming, Colorado
and Montana-based US coal mines that are grouped under
Rio Tinto Energy America.
Jacobs Ranch produces steam coal from the Wyodak
Seams, using dragline and truck-and-shovel methods, Rio
said. Two coal products are produced from Jacobs Ranch
with varying sulfur content. The mine shipped 42.1 million
]
Coal Trader International
Copyright © 2009 The McGraw-Hill Companies, Inc. Coal Trader International is published every business day. No reproduction permitted without express written authorization
Prices indexes and assessments are based on material collected from actual market participants. Platts makes no warranties, express or implied, as to the accuracy,
adequacy or completeness of the information and assumes no liability in connection with any party's use of it. Contact our editors at: coal@platts.com. For subscriptions,
customer support: support@platts.com, or phone: +1-212-904-3070 (N. America), +44-20-7176-6111 (Europe), +65-6530-6430 (Asia), +54-11-4804-1890 (Latin America)
The McGraw Hill Companies
3 Copyright © 2009, The McGraw Hill Companies
TUESDAY, MARCH 10, 2009
short tons of coal in 2008 with an estimated average as
delivered heat value of approximately 8,800 Btu, ash content
of 5.4% and sulfur content of 0.45% (1 lbs SO2/mmBtu), it
said. Jacobs Ranch had approximately 381 million st of
proven and probable reserves as of December 31, 2008.
RTEA is being sold as part of Rio’s $15 billion divestment
program in part because it doesn't have the same kind of
growth as commodities with exposure to China, Preston
Chiaro, Rio’s chief executive for energy and minerals, told
Platts in an interview last year.
Chiaro said then that Rio had offered the coal mine assets
to trade buyers and was also proposing to list the business as
Cloud Peak Energy in an IPO to “create some competitive
tension between the two.”
Rio affirmed in the March 9 statement that, “The process
of divesting RTEA, which will remain one of the largest coal
producers in the US following this transaction, will
continue.” A Rio spokesman in the US added: “The IPO
process as well as divesture of RTEA assets is ongoing.”
RTEA produced a record 130.755 million mt of thermal
coal production in 2008, 5% higher than the same period a
year earlier, because of expansions, Rio said in an operations
review released in January. The Cordero Rojo mine is RTEA’s
second biggest with annual output in 2008 of 36.3 million
mt, followed by the Antelope colliery with 32.5 million mt.
Arch said the transaction allowed significant operational
synergies with the nearby Black Thunder mine.
Shenhua plans $29 billion investment
in Shaanxi integrated projects
China Shenhua Group has signed a Yuan 200 billion ($29
billion) cooperation agreement with the provincial
government of Shaanxi to invest in coal mines, related
chemicals and power plants, and railroads in Yulin district
over the next 10 years.
Shenhua will develop mines with production totaling
125 million mt/year and coal-fired power generation
projects totaling 6,600 MW, according to a release by the
Shaanxi provincial government on Mar 7. The company
will also develop coal chemicals projects consuming 46
million mt/year of coal as well as over 200 km of rail lines,
it said.
Shenhua will develop the ambitious project over four
stages and has earmarked Yuan 15 billion ($2.2 billion) for
initial projects in 2009, the release said.
Shenhua mined 281.25 million mt and sold 311.2 million
mt of coal in 2008. Shenhua’s coal mining projects are
mainly located in northern Shaanxi Province, southern Inner
Mongolia and eastern Ningxia Hui Autonomous Region.
(continued on page 4)
ISSN 1746-8914
Volume 9 / Number 48 / Tuesday, March 10, 2009
 COAL TRADER INTERNATIONAL
SAIL imports to reach 10.5 million mt
in 2008/2009: report
Steel Authority of India Ltd’s coking coal imports in the
2008 to 2009 fiscal year are likely to exceed the previous year
by 8.2% to 10.5 million mt despite a slowdown since
October, said a local report from India.
An estimated 9.97 million mt has already been imported
so far between April 2008 to February 2009 with deliveries to
Visakhapatnam (4.27 million mt), Haldia (4.32 million mt)
and Paradip (1.38 million mt), it said.
EBRD to invest up to $30 million in
Mongolian coking coal miner
The European Bank for Reconstruction and Development
is taking an equity stake in privately-held Mongolian coking
coal miner Energy Resources LLC through an investment of
up to $30 million.
The funds will support the production of “high-quality”
coking coal from the Ukhaa Hudag deposit in southern
Mongolia, about 200 km north of the border with China,
according to a EBRD statement dated March 6.
Energy Resources is a Mongolian consortium, comprising
three domestic groups. The mine project has a future
expected production life of over 100 years, it said.
Shandong discovers 3 billion mt
metallurgical coal field
A large coal field with total metallurgical coal reserves of
over 3 billion mt has been discovered in Cao County of
Shandong Province’s Heze Prefecture, according to a release
by the official website of the provincial government of
Shandong on March 9.
With an 8 meter-thick coal seam, the coal field’s reserves
may exceed 3 billion mt as further exploration work is still
underway, it said.
Prior to this, Shandong discovered the Juye coalfield in
Heze Prefecture with a 6.6 meter-thick coal seam and total
metallurgical coal reserves of around 5.6 billion mt of mainly
coking coal.
Murchison looks to diversify from iron
ore into coking coal
Iron ore miner Murchison Metals is weighing up
acquisition opportunities in the Australian hard coking coal
sector as it seeks to expand its product and customer base.
Murchison’s board of directors has signed off on a fresh
strategy to focus on the production of three commodities used
in steelmaking; iron ore, hard coking coal and manganese.
Murchison has a 50% stake in the Jack Hills iron ore
project and a 50% interest in the proposed Oakajee Port
and Rail project, both located in the Mid-West region of
4 Copyright © 2009, The McGraw Hill Companies
TUESDAY, MARCH 10, 2009
Western Australia. Its joint venture partner in both projects
is Mitsubishi Corp.
“We are quite positive about the prospects for steel and
steel raw materials supply in the longer-term and iron ore
and coking coal form a key part of that. We think there are
some opportunities out there,” Murchison Metals managing
director Trevor Matthews told Platts.
He said the company was interested in coking coal
mines with low production costs in the region of
A$100/mt to A$120/mt ($64/mt to $76/mt). Murchison has
not set a firm target in terms of production volume from
any prospective coking coal mine.
“More important is the resource base, it has to be a
reasonable size and produce quality, hard coking coal and
access to infrastructure is a key point. It doesn’t have to be a
developed project, it could be a new project. We have had a
look at a few coking coal opportunities but haven’t yet
bedded anything down,” said Matthews.
Eastern Australia has been the company’s first port of call
in its search to date.
Straits Asia seeks to double
production within three years
Straits Asia Resources is to double production from its
two existing coal mines Sebuku and Jembayan in East
Kalimantan, Indonesia to 19 million mt/year by 2012
following the completion of capacity upgrades at the
mines, the company said.
The Singapore Stock Exchange-listed company produced
8.6 million mt in 2008 and has set a production target of
9.5 million mt for this year. Richard Ong Chat, Straits Asia
Resources chief executive, told journalists at a press
conference that he wanted the company’s coal production
to reach about 20 million mt in the next three years.
“We already have completed capacity upgrades to take us
to 19 million mt/year from our two existing mines,” said a
spokesman for the company who confirmed his chief
executive’s remarks.
Straits Asia Resources has started upgrading the capacity
of its Jembayan mine in Indonesia’s East Kalimantan
Province to 11 million mt/year from 5 million mt/year
currently. It has also been reclassifying some resources at its
Sebuku mine on Sebuku Island off southern Kalimantan
which produces around 3 million mt/year into the reserves
category, as a prelude to increasing production.
The company’s Sebuku, Prangat and Jembayan coal
brands are low in sulfur at 0.7%, 0.6% and 0.2% respectively
and are attractive to buyers from Japan and Korea and other
traditional export destinations.
The spokesman said the company was unperturbed by
Indonesian government moves to divert some domestic coal
production to the country’s power generating industry, as
this was likely to apply only to lower quality rather than
export grade Indonesian coal.
The company last month announced a 336% increase in
net profit to $124.4 million for the financial year ended
December 31, 2008, based on higher production and revenue.