Fording to get more for less

Calgary-based Fording Coal, the country’s largest coal producer, says it will charge more for its coal this year but sell less of it.

The company expects prices will be about 10% higher than the average price it received in 2001, owing to an improved steel market and revised contracts with Japanese steel mills.

However, sales have hovered at the 15-million-tonne level in the past two years and are likely to dip slightly below that mark this year.

Fording, spun off last year from Canadian Pacific, had hoped sales would be up 5% this year to 15.7 million tonnes.

The company expects its realized average price in Canadian dollars for 2002 will rise 10% to about $64 per tonne (assuming a Canadian/U.S. dollar exchange rate of US65 for the remainder of the year).

Demand has increased for hard coking (metallurgical) coal, which is mainly used to manufacture steel, and this should result in higher prices. The price for thermal coal, mostly used in coal-fired power plants, is expected to decline.

“While an average price increase of about US$4 will make a significant contribution to Fording’s financial results for 2002, our sales tonnage performance in the first half of the year has been below expectations,” says Fording President James Gardiner. “Recently, both steel prices and production have been improving, and solid fundamentals in hard-coking coal markets will give us the opportunity to increase our sales volumes and customer uptake going forward.”

Meanwhile, the Calgary municipal corporation Enmax Energy has withdrawn its option to help develop the proposed Brooks Power Project with Fording. Situated 180 km southeast of Calgary in Brooks, Alta., the proposed project would include two 2,500-MW capacity generating units. The first unit is scheduled to go on-stream in 2005, with the second following in 2006.