South Korea seeks SA coal for power

SEOUL - At least two South Korean power generators said they aimed to buy coal from South Africa despite the distance and costly freight as utilities face delays from regular suppliers.

SEOUL - At least two South Korean power generators said they aimed to buy coal from South Africa despite the distance and costly freight as utilities face delays from regular suppliers.

Coal is taking longer to arrive from China, Australia, Indonesia and Russia due to growing domestic demand in those countries.

An official at Korea South-East Power Company said the power generator was likely to receive South African volumes when rewarding its recent tender that closed last week.

Korea Southern Power Company was also considering buying South African volumes as the loading of supplies was being delayed in Australia, another trading source said.

"South Korean ships usually have to wait in the ports in Australia for more than 20 days on average to be loaded," said a Southern Power official.

Since the duration was longer than the travel time needed for African deliveries to arrive in South Korea, utilities were encouraged to turn to South African coal despite higher freight, the official said.

Southern Power, which has enough vessels to travel long distances, was in the forefront in seeking South African cargoes, another trading source said.

The source said that since the Asian market was growing strong, South Africa was likely to be lenient in negotiating the shipping costs with Japan and South Korea. Bidding prices were not confirmed by the two utilities but an industry trading source said South African coal costs on average $53 a ton. Benchmark Australian spot thermal coal prices are at $53,25.

South Korea's five state utilities, owned by Korea Electric Power Corporation, burned about 52-million tons of coal last year.

Prices of Indonesian, Australian and Russian coal had risen and would probably continue to climb, producers and traders said. - Reuters

X