The Canadian Press quoted Mr Don Lindsay CEO of Canada's largest metallurgical coal producer Teck Resources Limited as saying that fear about the European debt crisis will make steelmakers wary of building their inventories in the near future but the outlook for coal sales looks good in the longer term.

Mr Lindsay said that several factors have put Canada and Vancouver based Teck Resources Limited in a good position to supply China's need for steelmaking and coking coal. He added that "We see the steel industry in China as continuing to grow, although not at the same rate as in the past."

He said that at the same time, China's own domestic supplies of coal are becoming more difficult to mine, its labor costs are rising faster than Canada's and other coal exporting countries aren't as well positioned as suppliers at this time. He added that "Canada actually looks like a good, reliable supplier and we're 85% of the Canadian market, so I feel pretty good about the medium to long term."

Mr Lindsay told the Scotia Capital mining conference that "In the short term, there's a lot of fear out there about what's going on in Western Europe. So if you were an iron ore purchaser or a coal purchaser at any steel plant, you know that you wouldn't be rewarded for rushing to buy as much coal as you could right now. You'd wait to see what happens."

But there's a danger in that for China, which has been caught short in recent years when imported supplies of coal from Australia were interrupted by major flooding.

Mr Lindsay said that "It happened last year. In three weeks, the price of coal went from USD 225 to USD 380 because of the rains in Queensland. Now, I'm no weather forecaster, but it could happen again."

Meanwhile, Teck has been ramping up production from its five coal mines in British Columbia and one in Alberta.

Mr Lindsay said that "As we've moved through the year in 2011, we saw that Q2 was better than Q1 and Q3 was better than Q2 from a production point of view and Q4 is following the same trend in coal."

(Sourced from www.thecanadianpress.com)