Coal miner sees contract prices double

By Steve James

NEW YORK (Reuters) - High copper and gold prices are the talk of the mining industry right now, but coal is also getting attention as new contract prices for steelmaking coal are expected to more than double.

Some producers and coal industry experts see prices rising to $225-$250 per ton for long-term contracts -- up from around $90 this year -- in large part because of floods and transportation problems in Australia.

"Coal is the hottest story in the mining sector today, which is why we're happy to be the second largest producer of seaborne metallurgical coal," Donald Lindsay, chief executive of Teck Cominco (TCKb.TO: Quote, Profile, Research, Stock Buzz), told the Reuters Global Mining Summit in New York this week.

"We're currently receiving $91 (per ton) and people thought the price would go to $120-$130," he said.

"(But) spot coal shipments have now been done at $350 per ton and analyst reports say long-term contract coal could go to $225-$250," Lindsay said.

And the head of global miner Rio Tinto's (RIO.L: Quote, Profile, Research, Stock Buzz)(RIO.AX: Quote, Profile, Research, Stock Buzz) energy division said he expects long-term coal supply contract prices to remain strong in 2009-2011.

"The extremely high prices we've seen recently for both thermal coal and coking coal have been driven by the supply/demand imbalance," Preston Chiaro told the Reuters Summit in London. "Coal supply/demand tightness won't ease for many years due to limited infrastructure and strong demand."

Chinese demand for coking, or metallurgical, coal, used in steelmaking, and steam coal used for power generation, will also help keep prices high, he said.  Continued...