Centennial Coal Still Getting Significant Chinese Inquiries

Centennial Coal Co. Ltd. (CEY.AU) Managing Director Bob Cameron said Wednesday the miner is continuing to receive inquiries from Chinese coal buyers and expects Australian coal sales to China to continue.

Centennial and other Australian coal miners have this year begun exporting coal to China in the face of weaker demand from traditional Asian customers, but questions have been raised over whether the trend will persist as freight rates rise.

"We continue to receive significant inquiries from Chinese companies, particularly power companies, of course, and we have been doing business with them and they are now becoming a very important part of our mix," Cameron said.

"Our view is that China will remain a net importer of coal and this is to the benefit of ourselves and Indonesia."

Cameron also said the company is confident it has sufficient port capacity despite a court ruling that Xstrata PLC (XTA.LN) should be given access to its share of capacity at the Newcastle Coal Infrastructure Group, or NCIG, development.

Centennial is appealing the court ruling and Cameron said it is not clear whether Xstrata will have access just to the first stage of the NCIG development or the second stage as well.

He said Centennial is talking to Xstrata and the New South Wales state government about the implications of the court ruling.

The court ruling does not come into effect until Xstrata begins production from its Mangoola mine, so Centennial can use the new NCIG infrastructure for the next few years and Cameron said the miner also has the ability to move more material through Port Kembla rather than Newcastle at little extra cost.

Cameron said Centennial is also actively looking at an expansion of Port Kembla.

"We, as a board, have resolved to - and are doing - studies on a potential expansion of Port Kembla," he said.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; [e-mail]