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Yancoal seeks 18% coal price hike from Verve: report

Australian-listed coal miner Yancoal Australia is seeking an 18% increase in prices for its Premier thermal coal to A$45/mt ($42.40/mt) in contract negotiations with Western Australian power utility Verve Energy, according to reports in local media Tuesday.

Western Australia's energy minister Mike Nahan confirmed Verve Energy had started negotiations for coal supply contracts with Yancoal Australia, and was quoted as saying the coal producer was looking for "an uplift" in coal prices, according to a report in the West Australian newspaper.

The price increase reportedly sought by Yancoal Australia for thermal coal supplied from the company's Premier mine in the Collie Basin coal field of Western Australia would raise prices paid by Verve Energy to around A$45/mt from $38/mt currently.

State-owned Western Australian power utility Verve Energy declined to comment on the reports.

"Verve Energy has no comment to make due to commercial confidence," said Verve Energy spokeswoman Vaninka Vittiglia in an emailed response.

Yancoal Australia's media spokesman Michael Charlton was contacted by Platts but did not provide any response.

Platts also contacted Minister Nahan's press spokesman for comment but none was received.

Australian-listed Yancoal Australia which is 78% owned by Chinese coal producer Yanzhou Coal Mining Co. acquired the Premier thermal coal mine from Australian conglomerate Wesfarmers for A$296.8 million in late 2011.

Approximately 80% of the Premier mine's production of 3.5 million mt/year of sub-bituminous quality thermal coal is sold to Verve Energy for supply to two coal-fired power stations operated by the utility in the Collie coalfield, according to information on Yancoal's website.

The Premier mine produces thermal coal with a calorific value of around 4,700 kcal/kg GAR that has total moisture of 26%, ash of 6.5% on an as-received basis and sulfur of 0.6%, according to company information.

Verve Energy is the customer for half of the 8 million mt/year of thermal coal produced in Western Australia, according to market sources.

Indian-owned coal producer Griffin Coal has a production rate of around 4.5 million mt/year, and is the largest coal producer in Western Australia.

Griffin Coal mostly supplies the Bluewaters power station in the Collie coalfield and the coal-fired plant was recently purchased by a Japanese consortium that includes power utility Kansai Electric.

Source: Platts