November 21, 2008

Venezuela to cut coal exports in 2008

Reuters reported that coal exports from Venezuela in 2008 could fall because of government moves to take greater control of the industry. Venezuela has replaced marketing and mine management and staff, canceled export contracts and taken other steps to tighten control since mid 2007 as the OPEC nation moves to nationalize strategic sectors of the economy.

US analysts and traders said that the cut in Venezuela's premium grade coal exports would come as the world runs short of coal, prices skyrocket and buyers scramble for supply. A US based veteran coal industry analyst said that "It is creating uncertainty and increasing the risk for buyers, so I think people are reluctant to depend on Venezuelan coal.”

The analyst said that Venezuelan exports were expected to grow about 700,000 tonnes this year but expansion plans will falter as government measures discourage private investors and drive out skilled managers and staff. In addition, as much as half of the 1.2 million tonnes of coal shipped through Venezuelan ports from eastern Colombia is at risk because of government takeover moves and tensions between Venezuela and Colombia.

The expert said that surging demand and soaring prices provided motivation for the Venezuelan government's moves. Venezuelan coal, a premium grade, was going for USD 60 a tonne last year but prices of coal shipped to Europe this year have doubled that.

Venezuela exported 8.2 million tonnes of coal last year, including the coal from eastern Colombia, the analyst said. Annual world seaborne coal trade totals about 850 million tonnes out of more than 5 billion tonnes produced.