Pike River: Plenty of demand for high-quality coal

Photo / Greg Bowker

Pike River's hard coking coal was targeted for use in blast furnaces to make steel, primarily in Asia where demand is soaring.

It's worth about US$200 ($263) a tonne on fixed contracts, about double the thermal coal burned in power stations or for heating.

Pike's coal has high fluidity, low ash content and moderate sulphur content, and is prized by coke-makers who blend a variety of coals to a recipe appropriate to the steel being produced.

Highly fluid coals are in demand because they can be used in quantities as low as 10 per cent to bind large quantities of cheaper filler coals.

Pike River's two Indian share-holders have contracts for 60 per cent of its coal for the life of the mine at market rates set annually.

State-owned Solid Energy also exports coking coal from its Stockton mine on the West Coast.

This year, China is again driving demand. Three years ago it was self-sufficient in coking coal - last year it imported 39 million tonnes to meet soaring demand in steelmaking.

India is a growing market, expected to import about 20 million tonnes this year. Pike had identified other potential markets including Japan and Brazil.

Coking coal prices reflect the global economy and sentiment around commodities. During the 2008 boom prices peaked at US$300 a tonne then dipped to US$128 tonne a year later as the economy soured.