Chubu Electric to buy Russian coal to diversify supply

Wednesday, 25 Nov 2009

Bloomberg reported that Chubu Electric Power Co Japan third biggest utility signed agreements to buy coal from Russia to reduce reliance on Australian imports and offset declines in Chinese shipments.

Two officials at the utility with direct knowledge of the deals said declining to be named because the information isn’t public that the Nagoya City based company has purchased at least 200,000 tonnes from Siberian Coal Energy Co for delivery in year ending March 31st under term and spot contracts.

Australia accounted for 68% of Japan power station coal imports last year. Chubu Electric, Electric Power Development Co and Tohoku Electric Power Co the country’s biggest importers of the fuel are looking to Russia for supplies as China reduces exports to meet domestic demand.

Mr Atsuo Sagawa senior coal market analyst at the Tokyo based Institute of Energy Economics Japan said “Utilities are keen to diversify their import sources. Russia hasn’t been a major player in Japan power-station coal import market because of the lack of ports on the Russian Pacific coast.”

According to one of the officials Siberian Coal, known as SUEK built the Vanino bulk carrier terminal at Muchka Bay in the Khabarovsk region in late 2008 to increase cargo handling capacity in the Russian Far East and to boost exports to Asia. Xstrata Plc of Switzerland is a major supplier of coal from Australian mines to Japanese utilities including Chubu Electric

Ms Anna Belova Deputy Chief Executive Officer of SUEK said in September the Vanino terminal handles 700,000 tonnes of coal for export each month. The port annual capacity is 12 million tonnes and can be doubled. Mr Atsuo Sawaki spokesman for Chubu Electric declined to comment on the agreements with SUEK, saying the company doesn’t disclose fuel-supply deals. Mr Alexei Naumenko spokesman for Moscow based SUEK declined to confirm the accords.

Spokesman Mr Sota Nozu said from Sendai city in northern Japan that Chubu purchases followed Tohoku Electric signing of a purchase agreement with SUEK last year. Tohoku Electric, the second biggest coal user in Japan started receiving fuel loaded at the Vanino terminal in June this year after signing an accord in 2008

Data from the trade ministry show that Japan imports of power station coal from Russia increased 37% last year compared with 2004 while Chinese exports of the fuel to Japan dropped 53 percent during the same period.

(Sourced from Bloomberg)

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