A deal between Edmonton, Alta.-based Luscar and six Japanese steel mills for the export of hard coking coal is described as disappointing by the coal producer’s president.
Gordon Ulrich says the contract, to take effect in April, is “disappointing given the apparent recovery of the Asian economies and growth in steel production in the region.” He adds that the contract price, which fell 5% from last year’s agreement, will be a “continued squeeze on the company’s cash flow.”
No dollar figure was attached to the deal, which involves coal from the company’s Line Creek and Luscar operations, in British Columbia and Alberta, respectively.
The value of Luscar’s coal under Japanese mill contracts has been dropping in recent years. The price of coal from Line Creek was valued at about $50 per tonne in 1998. Today, the same coal sells for less than $40 per tonne.
According to the latest deal, tonnage shipped from the Line Creek mine to the mills will be cut by 320,000 tonnes. Tonnage shipped from the Luscar mine will remain unchanged from the previous contract.
Meanwhile, North American sales of metallurgical coal from Line Creek will continue under existing contracts, says Luscar.
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