It seems that there is just going to be no early letup in the fierce competition for those traditional and all-important export markets for our minerals, most of which are now in over supply, worldwide. This is becoming especially severe from the Third World and developing nations. This time it is Venezuela — and coal.
At a cost of over $500 million(US), it seems that that country’s state-owned oil company is going to develop a big new open pit coal mine with a capacity of 6.5 million tons annually. This entire output will be exported, mainly to customers in Europe. In fact another Venezuelan company is being set up primarily to market its growing coal output overseas.
Venezuela fully expects the international coal market to remain highly competitive through the next decade. Nevertheless it thinks that the high quality of coal from this particular deposit can compete with just about anything anywhere. Indeed it should be able to, for a feasibility study of this particular Zulia project carried out by BP Coal in 1985, estimated production costs of about $21 a ton, including freight.
There are apparently vast tonnages of this high-quality steam coal, which has a low sulphur and ash content, which can probably be exported unwashed. This makes pretty tough competition for our Canadian producers, most of which are struggling for their very existence these days.
Oh yes, it is reported that the Venezuelans are designing this project so that its ultimate production capacity could be doubled should future demand justify.
Financing? Well let’s hope they don’t contact Ottawa’s free- spending Canadian International Development Agency (cida) or its Export Development Corporation, both of which seem all too prone to put our money into ventures such as this.
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