BRITISH COLUMBIA - NIPPON STEEL CORP. (NSC) and POSCO have signed letters of intent with FORDING CANADIAN COAL TRUST and TECK COMINCO LTD. to enter into 10-year sales contracts to buy metallurgical coal from the Elkview and other Elk Valley mines in southeast British Columbia. The contract covers 4.85 million tonnes/year of coal from 2005, increasing to 6.25 million tonnes/year for the 2007 coal year onwards.
As well, for US$25 million, NSC and POSCO will each acquire a 2.5% equity interest in a new entity that will own and operate the Elkview mine, currently owned by ELK VALLEY COAL PARTNERSHIP, a general partnership between Teck Cominco and Fording. The money from the investment will be used to increase the annual production capacity of the mine from 6 million to 7 million tonnes of coal. More information can be obtained from Ron Millos, CFO of Fording Canadian Coal Trust, at (403) 264-1063 or www.teckcominco.com.
POSCO has also agreed to purchase 3 million tonnes over six years, of low-volatile pulverized coal-injection ("PCI") coal and hard coking coal from WESTERN CANADIAN COAL CORP. (WCCC)'s Burnt River and Perry Creek properties in northeast British Columbia properties, for POSCO's Kwangyang and Pohang steel plants in South Korea. The first trial shipment is scheduled for early January 2005. Coal prices under the contracts will be negotiated annually.
WCCC has secured additional trial shipments of PCI coal with three major steel mills from Japan and also Baosteel from China. Overall, approximately 240,000 tonnes of Burnt River PCI trial shipments have been committed to the Asian steel mills. The company continues discussions with a major European steel producer about a long-term contract for the supply of metallurgical coal from Burnt River PCI and Perry Creek. Trial shipments are expected to commence in late January 2005.
See the December 2004 issue of Canadian Mining Journal for an in-depth article about Western Canadian Coal. Further information can be obtained from WCCC president and CEO Gary Livingstone at (604) 608-2692 or www.westerncoal.com.