KOMIPO also signed an agreement with a company in Australia for investing in mine development project.
Korea Midland Power (KOMIPO, President: Choi Pyeong-rak) concluded on September 11 contracts with Centennial Coal and Whiteland Coal in Australia for long-term purchase of bituminous coal. And KOMIPO signed on September 13 a heads of agreement (HOA) with Bandanna Energy in Australia for developing a bituminous coal mine.
Centennial Coal is operating 6 coal mines in New South Wales State that have coal reserves of about 500 million tons, and they can produce 15 million tons a year.
Centennial Coal is transporting coal through Port Kembla, which has no ships on demurrage among export ports in Australia.
Whitehaven Coal is also operating 6 coal mines in New South Wales State and is participating in 7 mine development projects. In 2013, the company can supply 9 million tons of coal, and the supply capacity is expected to increase to 24 million tons in 2017.
As most coals produced by these companies are low-sulfur coals (sulfur ratio is less than 0.4%), they are suitable for generating electric power in eco-friendly way.
Since it plans to construct a new plant at Boryeong Thermal Power Site (2,000MW) and another new plant at Seocheon Thermal Power Plant (1,000MW) after 2016, annual consumption volume of bituminous coal at KOMIPO then is expected to increase by 11 million tons from 14 million tons now to 25 million tons (44.0%).
In addition to purchase contracts with Centennial Coal and Whiteland Coal, KOMIPO sealed a HOA with Bandanna Energy for investment in stakes in a bituminous coal mine development project and off-take.
Located in Queensland State, Bandanna Energy’s G Project has bituminous coal reserves of 600 million tons, and it is expected to produce 11 million tons of coal annually starting in 2015. It is a high quality and eco-friendly coal featuring high calories of over 5,600Kcal/kg, low sulfur and low ash.
As demand for bituminous coal for power generation in Korea is predicted to increase from 80 million tons in 2012 to 150 million tons in 2020, stable import of quality bituminous coal emerges as a major challenge to power generation companies.
In preparation for increasing demand for such coal, power generation companies have to properly distribute ratios between volume of coal supplied through traders, direct purchase from producers or off-take by acquiring stakes in coal mine development projects.
A manager at KOMIPO said, “With long-term purchase contracts, the company secured 780,000 tons of bituminous coal a year that features high calories, low sulfur and low ash directly from suppliers and development projects. And these arrangements are meaningful as they are designed to prepare for stable supply of power by new power generation facilities.”