KEY POINTS:
Pike River Coal's first export coal shipment will go to Japan in April this year at a healthy price but future shipments may not be so shiny. Forty thousand tonnes of the first shipment will be sold at US$300 ($587) per tonne, according to the company's December 2008 quarter report.
That precedes annual pricing negotiations, about to begin between the world's largest coal producers and steel mill buyers for the Japanese fiscal year starting April 1.
The prospect of the price staying up around US$300 does not look good this week with Rio Tinto agreeing to drop the price to US$175 a tonne to India's JSW Steel.
The forecast in Pike River's prospectus, nearly two years ago, put its coal price at US$98 a tonne.
Forward sales of 70 per cent of coal output over the next three years, including 55 per cent to Indian customers for the life of the mine and 15 per cent to Japanese customers, has been locked in.
Pike River expects to sell all coal produced despite the international downturn, with the West Coast's premium hard coking coal well sought after.
The first exploratory drilling in the Paparoa Seams in nearly 20 years was completed in January 2009 with encouraging results. Previous estimates have suggested potential for up to 8 million tonnes of recoverable coal from the Paparoa Seams.
The milestone of boring a 108m ventilation shaft was also completed in early January,
several weeks ahead of schedule, which should assist Pike River to meet its production target of 160,000 tonnes in the ramp-up period to 30 June 2009.
The $12 million Ikamatua rail loadout facility has been commissioned and the $20 million coal preparation plant was completed this month.
Coal will be trucked 22km from stockpiles at the coal preparation plant site to a new rail loadout facility at Ikamatua and then railed to the Lyttelton export port.
- NZPA
