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Viking Mines signs second coal MoU with Mongolian power authorities Viking Mines signs second coal MoU with Mongolian power authorities(0)

Viking Mines (ASX:VKA) has signed a second future coal supply agreement with a Mongolian Government power authority for its Berkh Uul Bituminous Coal Project in northern Mongolia.

This further validates the rationale for Viking to takeover Auminco Mines and Berkh Uul’s potential to deliver high quality thermal coal.

The non-binding Memorandum of Understanding was signed with Erdenet Power Plant State Owned Stock Company (EPP), a major supplier of electricity to the Erdenet copper mine.

“The fact that Berkh Uul Project continues to be recognised by the Mongolian Government as a potential key supplier of coal to the EPP is a further significant milestone in the development of the project,” managing director Peter McMickan.

“Auminco’s ongoing discussions with domestic end-users continue to confirm a local industrial demand in northern Mongolia for unwashed Berkh Uul coal, due to its low ash, low sulphur and relatively high calorific value.

“This second MoU provides more evidence of the potential customer base for Berkh Uul’s coal.”

Erdenet Power Plant

The Erdenet Power Plant is a 36 megawatt power plant that consumes about 250,000 tonnes of coal per annum.

The MoU relates to the intent by EPP to enter into future purchase agreements for Berkh Uul coal.

It also establishes a basis for technical evaluation of the quality and quantity of coal, which includes testing of a bulk sample.

This follows an earlier agreement with Darkhan Thermal Power Plant, the major supplier of electricity to Mongolia’s second largest city, the commercial and industrial centre of Darkhan, and the northern region of Mongolia.

Berkh Uul

Berkh Uul is 100% owned by Auminco Mines. It is located 400 kilometres north of Ulaanbaatar in Northern Mongolia, and within 40 kilometres of rail access into Russian off-take markets.

It is currently held under an exploration permit that covers 4,550 hectares and is valid until 2015. A Mining Lease application is imminent.

RungePincockMinarco has completed an Independent Geological Report in March 2014 that was based on 45 diamond drill holes and estimated a JORC (2012) Indicated Resource of 21.4 million tonnes, and Inferred Resource of 16.9 million tonnes, for a total of 38.3 million tonnes of near surface and high quality bituminous coal.

Evaluation of raw unwashed coal quality shows: moisture content of 19.8%, ash 15.5%, sulphur 0.37%, and calorific value of 5,323 kcal/kg.

This work also identified the presence of multiple, shallow dipping sub-parallel coal seams on the eastern limb of a gently folded syncline, with individual seams of 0.6 – 4.5 metres over a 3 kilometre strike length that extends to a depth of 200 metres.

Viking has received acceptances for 97.08% of Auminco under its takeover offer of 60.6 Viking Shares and 20.2 Viking Options for every 100 Auminco Shares held.

Analysis

While not binding, this second MoU from Mongolian power authorities confirm a local industrial demand in northern Mongolia for unwashed Berkh Uul coal, due to its low ash, low sulphur and relatively high calorific value.

Auminco’s ongoing discussions with domestic end-users continue to bear fruit. It is further evidence of the potential customer base for Berkh Uul’s coal.

It is clearly being recognised by the Mongolian Government as a potential key supplier of coal to the EPP which should underpin the development of the Project.

Importantly, this sould fast track the development of Berkh Uul over the next 12 – 18 months.

We believe that Viking Ashanti can develop a small scale operation that could generate a conceptual free cash flow of up to US$3-5 million.

Our projected valuation for Viking Ashanti is $0.085 to $0.165 per share. This compares to its current share price of $0.04 per share.

Aspire Mining and Noble Group to develop Nuurstei Coking Coal Project Aspire Mining and Noble Group to develop Nuurstei Coking Coal Project(0)

Aspire Mining (ASX:AKM) continues to develop its alliance with Noble Group with an agreement to acquire a 50% interest in the Ekhgoviin Chuluu Joint Venture (ECJV) that holds a 60% interest in the Nuurstei Coking Coal Project in northern Mongolia.

The project will be acquired from Xanadu Mines (ASX:XAM) at a highly favourable price.  Noble holds the remaining 50% interest in ECJV.

It will issue Xanadu 10 million Aspire shares upon the ECJV entering into an agreement to undertake feasibility studies in the Nuurstei Project area.  Or, upon the Mineral Resource Authority of Mongolia granting a mining license over all or part of the Nuurstei Project area.

Nuurstei contains a low volatile bitumous coal with moderate to high ash levels and low sulphur.

There may be operational and marketing synergies with its Ovoot Coking Coal Project.

“Aspire is very pleased to become involved in developing the Nuurstei Project in partnership with the Noble Group as we investigate the possibility of a start to production from the Nuurstei Project pre-rail,” managing director David Paull said.

“There are many potential synergies with the Ovoot Coking Coal Project, not the least of which potentially being an important initial customer for Northern Railways LLC.”

Transaction Details

- 10 million shares in Aspire to Xanadu on the feasibility studies being undertaken in the Nuurstei Project area or upon the Mineral Resource Authority of Mongolia granting a mining license.

- Aspire has also agreed to issue a further 5 million shares in the event that 30 million tonnes of JORC compliant resources are identified in the Nuurstei Project area.

- Aspire will assume Xanadu’s obligation to pay for an additional interest in the Nuurstei Project and will pay the minority vendors in the Nuurstei Project US$200,000 on the grant of a Mining License over the project area.

The ECJV will then hold a 90% interest in the Nuurstei Project. The minority interest of 10% will be free carried through to production.

Noble will retain their 50% interest in the ECJV, along with marketing rights over all Nuurstei Project production.

Both companies have also agreed to work together to identify additional near term Mongolian coking coal production opportunities with terms to be agreed on a case by case basis.

The transaction fits within the company’s strategy to explore and develop Mongolian metallurgical coal projects.

Nuurstei Coking Coal Project

Nuurstei is located just 10 kilometres from the Khuvsgul provincial capital of Moron.

It was acquired by the ECJV in mid-2011 and immediately had drilling success. Subsequent test work has shown that the Nuurstei Project contains a low volatile bitumous coal with moderate to high ash levels and low sulphur.

Washed coal has high indicative coking properties however further testwork is required.

It is relatively close to a public sealed road that is currently being constructed that connects Moron to Erdenet.

The project is also located within a relatively short trucking distance to the proposed Northern Rail Line being developed by Aspire’s subsidiary, Northern Railways LLC.

Preliminary indications are that Nuurstei Project coking coal could also be a useful blending partner for Aspire’s wholly owned Ovoot Project coking coal, and there would be a number of other operational and marketing synergies between the two operations.

Analysis

The acquisition of Xanadu Mines’ 50% interest in the Ekhgoviin Chuluu Joint Venture provides Aspire Mining with another coal project in Mongolia.

The price appears very reasonable with no upfront cash outlay and staged issuance of shares.

As well it enhances the existing alliance with Noble Group which includes a number of transactions relating to project financing, supply chain logistics, port and rail capacity access.

That alliance partner Noble Group holds the remaining 50% in ECJV, which has a 60% interest in the Nuurstei Coking Coal Project, is also encouraging given that both companies are working together on the Ovoot Project.

Also notable are the potential operational marketing synergies between Nuurstei and Ovoot given that the former located within a relatively short trucking distance to the proposed Northern Rail Line.

Aspire Agrees to Buy Mongolia Coal Project Venture With Noble Aspire Agrees to Buy Mongolia Coal Project Venture With Noble(0)

Aspire Mining Ltd. (AKM), the Australian firm developing coking coal assets in northern Mongolia, said it agreed to buy 50 percent of a venture with Noble Group Ltd. (NOBL) to expand its footprint in the Asian nation.

Aspire will issue 10 million shares to Xanadu Mines Ltd., which currently holds the stake in the 50-50 venture with Noble, the Perth-based company said today in a statement. Aspire will give Xanadu a further 5 million shares should the coking coal deposit the venture controls be able to certify that it holds 30 million metric tons of resource.

Noble and Aspire are expanding their partnership in Mongolia, which already involves the Hong Kong-based commodity trader providing project financing, port and rail access for the Australian miner. Noble, which owns 7.7 percent of Xanadu Mines (XAM), is seeking to boost its supply of metallurgical coal from Mongolia as the nation neighbors China, where about half of the world’s steel is produced.

“Noble and Aspire have also agreed to work together to identify additional near term Mongolian coking coal production opportunities with terms to be agreed on a case by case basis,” Aspire said in the statement.

Aspire rose 5.7 percent to 3.7 Australian cents in Sydney trading.

The venture with Noble owns 60 percent of the Nuurstei coking coal deposit that sits between two of Aspire’s projects in northern Mongolia. Coal from Nuurstei could blend with that of Aspire’s Ovoot project, providing marketing and operation synergies, the Australian company said.

A mine at Nuurstei would also help Aspire load the railway route it’s planning to build to connect its northern projects with the east of Mongolia, home of the bulk of the nation’s railroads. This would open up the potential to transport coal south to China or north to Russia.

Aspire said it will make an additional $200,000 payment to Xanadu once Nuurstei wins a mining license. Noble Group retains control of all coal sales from Nuurstei, Aspire said.

Rio Tinto Group’s SouthGobi Resources Ltd. (SGQ) owns 18.8 percent of Aspire, while Noble has a 15 percent stake.

To contact the reporter on this story: Yuriy Humber in Tokyo at yhumber@bloomberg.net

To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net Madelene Pearson, Iain Wilson

IEA: COAL MINING NEEDS $735 BILLION INVESTMENT THROUGH 2035 IEA: COAL MINING NEEDS $735 BILLION INVESTMENT THROUGH 2035(0)

The International Energy Agency’s latest forecast of energy trends for the next 20 years predicts a significant fall in the share of fossil fuels in the global energy mix.

Even with widespread deployment of CCS technology, fossil fuels’ proportion of global energy is set to fall from the current 82% to 65% in 2035 according to the IEA’s most likely scenario.

However, at $19.2 trillion, total investment in gas, oil and coal still accounts for around half of total supply-side investment to meet global energy demand.

Annual capital expenditure on oil, gas and coal extraction, transportation and on oil refining has more than doubled in real terms since 2000 and surpassed $950 billion in 2013.

Investment in coal supply is much less expensive per equivalent unit of output than oil or gas; cumulative requirements in mining amount to $735 billion, with a further $300 billion in transportation infrastructure (mainly railways).

The $1 trillion investment needed does not include the actual mining operation nor the costs of transporting the coal

The $1 trillion investment needed does not include the actual mining operation nor the costs of transporting the coal, which typically account for a large share of the delivered cost of coal.

China accounts for around 40% of total capital expenditure on coal over the next 20 years the new report predicts.

The epicentre of increased oil and gas investment activity has been North America, with the rapid expansion of shale gas and tight oil output, but investment in other parts of the world has also been on an upward trend.

Annual investment in upstream oil and gas is predicted to rise to more than $850 billion by 2035, with gas accounting for most of the increase. More than 80% of the cumulative $17.5 trillion in upstream oil and gas spending is required to compensate for decline at existing oil and gas fields.

Around one-quarter of the total goes to producing unconventional resources, e.g. oil sands, tight oil, shale gas.

Gradual depletion of the most accessible reserves forces companies to move to develop more challenging fields; although offset in part by technology learning, this puts pressure on upstream costs and underpins an oil price that rises to reach $128/barrel in real terms by 2035.

Importers of fossil fuels rely for secure supply on the adequacy of investment in resource-rich countries; the investment needed to supply India and China with imported oil and gas over the period to 2035 is more than $2 trillion, a level that helps to explain the push by their national oil companies to secure investment opportunities abroad.

Meeting long-term oil demand growth depends increasingly on the Middle East, once the current rise in non-OPEC supply starts to run out of steam in the 2020s. Yet there is a risk that Middle East investment fails to pick up in time to avert a shortfall in supply, because of an uncertain investment climate in some countries and the priority often given to spending in other areas.

The result would be tighter and more volatile oil markets, with an average price almost $15/barrel higher in 2025.

High transportation costs for gas, compared with other fuels, are a constraint on the prospect of more globalised gas markets. More than $700 billion invested in LNG over the period to 2035 accelerates the integration of regional gas markets and has the potential to reduce current price differentials.

However, the high cost of many liquefaction projects and cost inflation could dampen the hopes of LNG buyers for more affordable supply. Europe’s near-term perspective for expanding LNG purchases is constrained by the need to outbid Asian consumers for available gas.

Frik Els

Newera Resources begins coal magnetic survey at Ulaan Tolgoi in Mongolia Newera Resources begins coal magnetic survey at Ulaan Tolgoi in Mongolia(0)

Newera Resources has commenced a ground magnetic survey at the Ulaan Tolgoi project in the South Gobi basin in Southern Mongolia.

The ground magnetic survey will comprise 700 line kilometres covering the northern sector of the Ulaan Tolgoi licence area and is expected to be completed within two weeks.

Newera has noted that the recent discovery of a black coal bearing sub-basin immediately adjacent to the northern boundary of the Ulaan Tolgoi licence, and the testing has produced shallow, mineable intersections of high quality black coal.

Newera is utilising the services of the same geophysical survey contractors whom conducted the ground magnetics survey immediately to the north of Newera’s Ulaan Tolgoi Licence, and were also the group that outlined the nearby black coal bearing sub-basin.

The 43,000 hectare Ulaan Tolgoi project is located in the South Gobi province of Mongolia, 100 kilometres from the Chinese Border.

Minor coal outcrops and a number of water wells along the Nariin Sukhait thrust fault 300 kilometres to the west of Ulaan Tolgoi led to the discovery of the large MAK and Ovoot Tolgoi coking/thermal coal deposits.

Source – Proactive Investors

<a href=”http://www.coalguru.com/”>(www.coalguru.com)</a>

Newera begins coal magnetic survey at Ulaan Tolgoi, Mongolia Newera begins coal magnetic survey at Ulaan Tolgoi, Mongolia(0)

Newera Resources (ASX: NRU) has commenced a ground magnetic survey at the Ulaan Tolgoi project in the South Gobi basin in Southern Mongolia.

The ground magnetic survey will comprise 700 line kilometres covering the northern sector of the Ulaan Tolgoi licence area and is expected to be completed within two weeks.

Newera has noted that the recent discovery of a black coal bearing sub-basin immediately adjacent to the northern boundary of the Ulaan Tolgoi licence, and the testing has produced shallow, mineable intersections of high quality black coal.

Newera is utilising the services of the same geophysical survey contractors whom conducted the ground magnetics survey immediately to the north of Newera’s Ulaan Tolgoi Licence, and were also the group that outlined the nearby black coal bearing sub-basin.

The 43,000 hectare Ulaan Tolgoi project is located in the South Gobi province of Mongolia, 100 kilometres from the Chinese Border.

Minor coal outcrops and a number of water wells along the Nariin Sukhait thrust fault 300 kilometres to the west of Ulaan Tolgoi led to the discovery of the large MAK and Ovoot Tolgoi coking/thermal coal deposits.

China builds world’s largest enclosed coal logistics park China builds world’s largest enclosed coal logistics park(0)

A major coal stock piling ground in Inner Mongolia will soon become dust free, as construction of the world’s largest enclosed coal logistics park started on Thursday.

The park in Baotou City slated for completion by the end of this year will be enclosed by a pneumatic membrane and steel structure.

The park, where more than 300 firms kept their coal stock and covering 320 hectares, will be half covered by the inflatable structure.

Baotou city government have decided to shut down the open-air coal business to curb dust pollution.

Two investors — CITIC Logistics and Beijing Zhongke Construction Investment Co. Ltd. — have jointly invested more than 1 billion yuan (160 million U.S. dollars) in the building. The park will retain its former capacity of 30 million tonnes in annual coal throughput.

SouthGobi Resources Announces Results of Annual Meeting of Shareholders and Resignations of Directors SouthGobi Resources Announces Results of Annual Meeting of Shareholders and Resignations of Directors(0)

HONG KONG, CHINA — (Marketwired) — 05/06/14 — SouthGobi Resources Ltd. (TSX: SGQ)(HKSE: 1878) (the “Company” or “SouthGobi”) announced today the results of the Annual Meeting of shareholders held in Vancouver, Canada on May 6, 2014.

The majority of shareholders voted in favour of all resolutions at the meeting as set out in the Company’s Management Proxy Circular dated March 24, 2014 namely:

--  Election of Bold Baatar, Andre Deepwell, W. Gordon Lancaster, Pierre
    Lebel, Kay Priestly, Kelly Sanders and K. Ross Tromans as directors of
    the Company.

--  Appointment of PricewaterhouseCoopers LLP as auditors of the Company.

--  Fixing the number of directors to be elected at the Annual Meeting of
    Shareholders at seven.

The Stock Exchange of Hong Kong has granted SouthGobi a waiver from Listing Rule 13.39(4) which requires that any vote of shareholders at a general meeting must be taken by poll. Therefore this notice does not contain the specific information set out in Listing Rule 13.39(5).

RESIGNATIONS OF DIRECTORS

The board of directors (the “Board”) of the Company hereby announces that to pursue other interests, Mr. Lindsay Dove resigned as a non-executive director, chairman of the Mergers and Acquisitions Committee, a member of Compensation & Benefits Committee and a member of Health, Environment, Safety and Social Responsibility Committee; and Mr. Sean Hinton resigned as the Deputy Chairman, a non-executive director and a member of Nominating and Corporate Governance Committee with effect from the conclusion of the Annual Meeting of shareholder.

Mr. Dove and Mr. Hinton have each confirmed that they have no disagreement with the Board and there is no matter relating to their resignation that needs to be brought to the attention of the shareholders of the Company.

The Board takes this opportunity to express its sincere gratitude to Messrs. Dove and Hinton for their valuable contributions to the Company.

About SouthGobi

SouthGobi is listed on the Toronto and Hong Kong stock exchanges, in which Turquoise Hill Resources Ltd. (“Turquoise Hill”), also publicly listed in Toronto and New York, has a 56% shareholding. Turquoise Hill took management control of SouthGobi in September 2012 and made changes to the board and senior management. Rio Tinto has a majority shareholding in Turquoise Hill.

SouthGobi is focused on exploration and development of its metallurgical and thermal coal deposits in Mongolia’s South Gobi Region. It has a 100% shareholding in SouthGobi Sands LLC, Mongolian registered company that holds the mining and exploration licences in Mongolia and operates the flagship Ovoot Tolgoi coal mine. Ovoot Tolgoi produces and sells coal to customers in China.

Contacts:
SouthGobi Resources Ltd. - Investors Relations
Galina Rogova
Office: +852-2839-9208
Email: galina.rogova@southgobi.com

SouthGobi Resources Ltd. - Media Relations
Altanbagana Bayarsaikhan
Office: +976 70070710
Email: altanbagana.bayarsaikhan@southgobi.com
Website: www.southgobi.com

Source: SouthGobi Resources Limited

Viking Ashanti, Auminco sign coal MoU with Mongolian Govt power authority Viking Ashanti, Auminco sign coal MoU with Mongolian Govt power authority(0)

Viking Ashanti (ASX: VKA) and its 92.69% owned subsidiary Auminco Mines have clinched a future coal supply agreement with a Mongolian Government power authority for its Berkh Uul Bituminous Coal Project in northern Mongolia.

This is a significant endorsement of the rationale for the Auminco takeover and the capacity of the Berkh Uul project to deliver coal to the Authority.  Viking has reached 90% acceptance levels with the takeover of Auminco.

The non binding MOU was signed with Darkhan Thermal Power Plant for coal from Auminco’s Berkh Uul Bituminous Coal Project (“BU Project”) in northern Mongolia.

Viking Ashanti Managing Director, Peter McMickan, said the MOU signed with Darkhan Thermal Power Plant (DTPP) was an important step for Auminco’s Berkh Uul Bituminous Coal Project (“BU Project”) in northern Mongolia.

“The fact that Berkh Uul Project has been recognised by the Mongolian Government as being a potential key supplier of coal to the DTPP is a significant milestone in the development of the Project,” Mr McMickan said.

“Auminco’s discussions with nearby cement works and power stations had already confirmed a local industrial demand for unwashed Berkh Uul coal, due to its low ash, low sulphur and relatively high calorific value.

“This MOU provides further evidence of the potential customer base for Berkh Uul’s coal.”

Background to DTTP

DTPP is a Mongolian Government entity and is the major supplier of electricity to Mongolia’s second largest city, the commercial and industrial centre of Darkhan, and the northern region of Mongolia.

Currently the DTPP consists of a 47 Megawatt power plant that consumes approximately 400,000t of coal per year. An upgrade to add an additional 35 Megawatt capacity is due for completion in 2015.

The additional capacity will increase coal demand to approximately 600,000t per year.

Details

The non-binding MOU, signed with Auminco’s Mongolian subsidiary BRX LLC relates to the intent by DTPP to enter into future purchase agreements for BU Project coal.

It also establishes a basis for technical evaluation of the quality and quantity of coal prior to price negotiation, which includes testing of a 5,000 t bulk sample.

The BU Project is located 200km east of Darkhan City, within 40km of rail access to the existing Trans-Mongolian Railway, which provides a transport link to Darkhan to the south and Russia to the north.

Analysis

This milestone agreement although not yet binding can propel development timelines for Berkh Uul and de-risk the project.

This could see a fast track the development of Berkh Uul over the next 12 – 18 months to capture the demand for high quality thermal coal from industry (including cement works) and power stations that have developed in northern Mongolian and Siberian markets.

We believe that Viking Ashanti can develop a small scale operation that could generate a conceptual free cash flow of up to US$3-5 million.

Our projected valuation for Viking Ashanti is $0.085 to $0.165 per share. This is relative to current share price of $0.042 per share.  There is upside from this valuation as Viking adds a washing plant to Berkh Uul operations, the cost of which is expected to be less than $5 million.

ASIAN COAL MINERS PURSUING SELF-DEFEATING OUTPUT GAINS – RUSSELL ASIAN COAL MINERS PURSUING SELF-DEFEATING OUTPUT GAINS – RUSSELL(0)

Clyde Russell argues Asian coal producers are currently their own worst enemies, raising output in a bid to boost revenue in order to make up for lower prices.

Coal producers in Asia are currently their own worst enemies, raising output in a bid to boost revenue in order to compensate for lower prices.

Economic logic would suggest that when the product you make is in oversupply, eventually prices will fall to the point where output becomes loss-making and is shut down.

However, this logic isn’t applying to Asian coal markets, with miners ramping up output by more than demand is increasing.

The short-term impact has been that spot prices have tumbled, with benchmark Australian thermal coal at Newcastle Port dropping to $73.12 a tonne in the week to April 25. That is not far from a four-and-a-half-year low of $72.98 hit last month.

The price is also down 15 percent so far this year and has almost halved since the post-2008 recession peak of $136.30 a tonne, reached in January 2011.

The response to this collapse in pricing has resulted in some production leaving the market, most notably in China and the United States.

But the main coal exporters of Australia and Indonesia appear to be increasing output, with miners perhaps betting each other that they won’t be the first to go bankrupt.

BHP Billiton, the world’s biggest miner, raised output of thermal coal by 14 percent and coking coal by 28 percent in the quarter ended March 31 from the same period a year earlier.

While acknowledging that times are tough and prices are unlikely to improve any time soon, BHP’s view is that by pushing for volumes it can lower unit production costs and thereby maintain profitability.

This view seems to be shared by other miners, with the Australian government’s Bureau of Resources and Energy Economics forecasting in its March quarter report that the nation’s 2014 exports of thermal coal will rise 3.7 percent to 195 million tonnes, having expanded by 10 percent in 2013.

While that does represent a slowing in the rate of growth, the fact that they are expected to increase at all in the weakest price environment since the global recession shows that market forces appear not to be working in coal.

Australian miners are also hampered by “take or pay” contracts for rail and port, meaning they have to pay for the capacity to export whether they use it or not.

This means it’s often cheaper to continue mining and exporting at a loss than it is to simply shut down a mine.

This can be seen in the shipment figures from Newcastle, the world’s biggest coal export harbour, which have been robust in recent months.

April’s projected exports are 12.49 million tonnes, up from 11.86 million in March and close to the 12.97 million tonnes in January, which was the highest since April last year.

INDONESIANS MINING MORE

Indonesian producers are also planning on increasing output, having convinced the government to allow 2014 production to at least match that of 2013, reversing an earlier decision to cut it to 397 million tonnes from 421 million.

So far Indonesian output is running ahead of target, with 110 million tonnes mined in the first quarter, according to an April 14 report in Investor Daily.

The top six Indonesian producers want to increase output by an average 11.7 percent in 2014, according to a Reuters poll on March 7.

With the top two exporters planning on shipping more this year, is there any chance that demand growth will match increased supply?

Top buyer China expects coal imports to be more or less the same this year as the 267 million tonnes in 2013, when they grew 14 percent.

Chinese coal markets remain well-supplied even though domestic producers have seen profits slashed by the low prices.

Domestic output rose 0.9 percent to 535 million tonnes in the first two months of the year compared to the same period last year, according to an industry website.

While China isn’t expected to provide a boost for coal producers, there are some bright spots, chief among them India.

Coal imports by Indian power producers rose 31 percent to 66 million tonnes in the period from April last year to January this year, the country’s power minister said Feb. 20.

India’s coal imports rose 21 percent to 152 million tonnes in 2013 and could rise to 170 million tonnes this year, research firm OreTeam said Jan. 22.

Japan, Asia’s third-largest coal importer, boosted imports by 9 percent to 48.98 million tonnes in the first quarter from the same period in 2013.

The ongoing absence of nuclear generation and high prices for liquefied natural gas have boosted coal use in Japan, a situation that may persist for the rest of the year.

Number four importer South Korea has boosted purchases by 4.6 percent to 30.15 million tonnes in the first quarter over the same period in 2013, as it also battles nuclear shutdowns and high LNG costs.

Rising demand provides some optimism for Asian coal miners, but the reality is that this increased consumption can be more than easily met and is unlikely by itself to boost prices.

Also, if prices do increase, U.S. producers will be able to resume exports to Asia, thus providing a cap on any possible gain.

It seems the current tactic of trying to increase output in order to lower unit costs and boost revenue is somewhat self-defeating, especially since many miners are attempting the same thing at the same time.

Hoping you have deeper pockets than your neighbour doesn’t seem a particularly smart or sustainable business plan, but it appears that is the only game in town currently. (Editing by Muralikumar Anantharaman)

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