Anglo American: Met Coal Pricing More Focused On Supplies Than Demand

By Alex MacDonald

Globally diversified miner Anglo American PLC (AAL.LN) said Thursday that current coking coal price negotiations are largely focused on supply issues rather than demand with particular attention paid to BHP Billiton Ltd. (BHP) and export rates through Australia's Dalrymple Coal Terminal.

"The focus has been on BHP for supply," Rod Elliott, head of Anglo American's metallurgical coal marketing department, told analysts at a seminar. Seamus French, chief executive of Anglo's metallurgical coal division, agreed, noting that BHP is only using a fraction of its export capacity at the Dalrymple Coal export terminal. Other mining companies also aren't using their full export capacity at the terminal, he said.

Dalrymple, which has an export capacity of about 72 million metric tons a year, is currently operating at a utilization capacity of about 40 million to 46 million tons of annual coal exports, Mr. French said. This compares with 56 million tons of annual exports prior to the floods that hit Queensland, Australia in 2011, he added.

Mr. French said that exports from the terminal continue to lag because although coal production and associated infrastructure has experienced a recovery from the rains, "They didn't get rid of [all] the rain...There is some rain overhang."

Mr. Elliot said analysts are forecasting a hard coking coal price of about $225 a ton in the fourth quarter. He said that U.S. miners are filling the supply gap left by Australian miners but he expects Australian miners will boost production in the future.

-Write to Alex MacDonald at alex.macdonald@dowjones.com