Platts reported A new US high-vol A coking coal mine project in West Virginia, close to Arch Coal’s flagship Leer mine, has found backing from Japan’s Itochu Corp., as the trader joins AMCI and South Korean steelmaker Posco with plans to support coal demand in Asia.
The group under developer North Central Resources LLC (NCR) wants to ramp up shipments to global markets in 2023, with Japan, South Korea, and India currently among the largest US met coal export destinations
Itochu’s entry into the $450 million underground mine project may be welcomed by buyers, as US miners fought for survival last year as lower demand and a decline in spot export prices elevated costs. The new 4 million st/year Longview mine “will be contributing a stable supply of high quality metallurgical coal to global customers, particularly in Japan and Asia,” Itochu said in a December 25 statement.
Sources close to the mine project expect the finished product to be a high-vol A coking coal with high CSR, and final specifications such as ash and sulfur dependent on future coal processing and marketing.
Longview “will produce high-quality coking coal with world-class cost competitiveness,” Itochu said. At the same time, the new mine potentially adds high-vol coking coal supplies into a competitive market. As US coking coal exports fell in 2019 by over 10%, and demand in the US also weakened, the global steel market is relying more on cyclone-prone coking coal supplies from Australia.
As the biggest seaborne coking coal exporter, Australia is increasingly feeding growth in China and other Asian markets, over static demand in Europe and South America.
This could set the stage for more volatility in coking coal prices in the future, as the US is unable to easily add tons after a structural, coal industry contraction. At the same time, global markets are increasingly seeking higher quality coals and blending qualities to reduce overall costs.
AMCI holds a 42.38% stake in NCR, with Posco’s interest at 22.05% and investor JAZ at 10.58%, Itochu said.
