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Hot Market in a Coal Climate

Hot Market in a Coal Climate

12 May 2004-- Solid Energy, a former export award winner, has signed a recent deal to sell SAIL (Steel Authority of India Ltd) up to 1.5 million metric tonnes of hard coking coal over the next five years. This is worth in excess of $120 million.

As part of Solid Energy’s market expansion strategies in India it also secured a new contract with Tata Steel, a subsidiary of India’s largest private company, to supply 300,000 tonnes of coal, valued at $24 million over three years.

India has become a key market for Solid Energy and SAIL would be happy to take more of its coal, says Malcolm Roberts, Solid Energy’s marketing manager.

“We regard India as a long-term market and are a small but unique and high quality supplier to it. We hope to increase the volumes we sell into India and, at this stage, we are looking for new mines so we can do so. Though there is still plenty of coal at Stockton there is a limit to amount we can transport through the rail network to Lyttelton and this is currently a constraint.”

Coal from the Stockton Opencast Mine, just north of Westport, is particularly good quality in that it ignites quickly and is low in ash by-products. India has a large natural resource of coal but it’s high in ash by-products and low to ignite. The two coals, when mixed together, complement each other providing a perfect mix to fire India’s burgeoning steel industry.

Stockton’s coal is transported by train to Lyttleton, shipped from Lyttleton to Paradep Port on the north-west coast of India then SAIL takes it by train to its many steel mills. A ship with 45,000 metric tonnes of coal leaves Lyttleton, for India, every two months.

Malcolm Roberts says that orchestrating the deal was not an easy task and it could not have done it without support from and New Zealand Trade and Enterprise (NZTE) and Ministry of Foreign Affairs and Trade (MFAT).

Roberts explains that, “There were technical difficulties with the high sulphur content of our coal but we worked closely and intensely with SAIL engineers on their materials controls to overcome this issue.”

“Solid Energy was particularly fortunate in having the ongoing help of Ravi Ravindran, NZTE’s trade development manager, who well understands the Indian steel industry and knows many of the players in it, Caroline McDonald, the New Zealand High Commissioner in Delhi whose regular visits to, and contact with, the Indian Ministry of Steel was immensely useful in keeping the impetus of official communications going and, last but not least, the Honourable Jim Sutton, the Minister for Trade Negotiations, whose visit to Mr Tripathy the Indian Minister of State for Steel, in February, smoothed the way for the deal.”

The SAIL and Tata contracts represent 20% of Solid Energy’s diversified export programme. Solid Energy also exports coal to China, Japan, South Africa and Australia.


Editor’s Notes:

Solid Energy

Solid Energy New Zealand Ltd, a former export award winner, is a state-owned enterprise, which operates as a commercial company but with only one shareholder, the New Zealand Government.

Solid Energy extracts, processes, markets and distributes around 4 million tonnes of coal a year from its 7 underground and opencast mine around Huntly in the Waikato, Greymouth, Westport and Reefton on the West Coast and Ohai in Southland. More than half of annual output is sold for export to major international customers who value the special low ash qualities of Solid Energy coals particularly in steel production as well as the manufacture of carbon fibre, activated carbon and silicon metal.

New Zealand Trade and Enterprise

New Zealand Trade an Enterprise (NZTE) is the Government’s national trade and economic development agency.

NZTE’s Trade Commissioners offshore represent the agency internationally, and offer overseas customers access to quality New Zealand business partners and opportunities. NZTE has an overseas network of 38 offices, strategically placed to cover more than 50 markets.

Trade Commissioners and their staff work with New Zealand exporters to research business opportunities, identify partners, and arrange in-market visits and promote New Zealand’s key advantages at international trade events. They act as New Zealand exporters’ eyes and ears in the market, spotting trends and reporting back market intelligence.


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