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Gold/Mining/Energy : Mining News of Note

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To: LoneClone who wrote (38356)	6/10/2009 11:42:53 AM
From: LoneClone	Read Replies (1) of 194001

BHP Billiton cuts coal contract prices by 58% By Peter Smith in Sydney Published: June 10 2009 08:26 \| Last updated: June 10 2009 08:26 ft.com BHP Billiton, the world’s biggest mining group, has cut annual contract prices for metallurgical coal by about 58 per cent from last year’s levels, in line with the benchmark set when Japan’s Nippon Steel negotiated cuts of up to 60 per cent in March. BHP holds the number one spot in the global seaborne metallurgical coal market with leading customers from Japan, India and western Europe. The Anglo-Australian mining group said on Wednesday a “significant portion of contracts had been concluded after it agreed prices with key global customers” at a price of around $129 a tonne. “Based on settlements to date, US$ FOB [freight on board] prices for prime metallurgical coal products are expected to decrease by approximately 58 per cent from 2008 levels,” BHP said in a statement. Metallurgical coal and iron ore are the key ingredients for making steel. The first term-contract that set the industry benchmark was agreed in March when Nippon Steel and BMA, a joint venture between BHP and Mitsubishi Corp, agreed a coal price of $128-$129 a tonne. That dramatic drop marked an end to six years of climbing prices, which culminated in a record price of $300 a tonne for coal. Market conditions have changed since the commodities boom ended last year and as the global economy struggles to recover from the recession. Metallurgical coal demand has been particularly bad due to the weakness in the steel market. BHP this year announced production cuts of up to 15 per cent in metallurgical coal and 30 per cent reductions in manganese. It also scaled back its nickel and pellet operations.

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