Rio Tinto Ltd has lifted force majeure on coal shipments from its Hail Creek coking coal mine in Australia, the head of the company's Australian coal unit said on Tuesday.
Rio declared force majeure in February after heavy rains brought production to a halt. Hail Creek yields about 4.5 million tonnes of coking coal each year.
Rio Tinto Australian coal division managing director Hubie van Dalsen would not comment on how much coal production was lost but said Rio had used all of its port and rail allocations.
It had also sold coal on the spot market via unused allocations of some of its competitors, he said.
Longer term, van Dalsen said expansion plans were progressing.
"We have a number of significant organic development opportunities and we remain open minded for any acquisition opportunities that may come our way," van Dalsen told Reuters in an interview.
Rio in December earmarked $991 million to extend its Kestrel coking coal mine to lift output to an average of 5.7 million tonnes a year until 2031. Separately, a $950 million investment at its Clermont coal mine was expected reach full capacity in 2013 and produce up to 12.2 million tonnes of high-grade thermal coal annually.
Van Dalsen said the group also has expansion prospects at its Mount Pleasant mine in New South Wales state, as well as at Hail Creek.
ROBUST COAL PRICES
Long-term coal supply contract prices are expected to remain strong in the "foreseeable future", thanks to powerful Asian economic growth as well as a lack of infrastructure capacity, van Dalsen predicted.
"The fundamentals are showing that gross domestic production will grow very strongly in China and in India, which will no doubt lead to an ever increasing demand of raw materials, including steel and energy," he said.
"There is little doubt that coal prices will remain very strong in the foreseeable future."
Van Dalsen said it was too early to say if contract prices for thermal and coking coal will contract to last year's levels when increased infrastructure capacity and new mines are brought into production in 2011-2012.
"Precisely how prices will move will really depend on whether the supply side can catch up with demand," he said.
Prices for thermal coal, used for power generation and in the making of cement, have tumbled 17 percent to about $125 a tonne since striking a record high $150 a tonne, spot in February.
But spot prices for coking coal, used for steel making, have trotted to more than $330 a tonne (CIF), industry sources said. Contract prices for coking coal last year were agreed around $98 a tonne.
Industry sources have said Rio is asking $135.00 a tonne free-on-board for thermal coal 2008/2009 to Japan, up from $55.65 last year.
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