Coal prices up $1 a bag this winter

Press, 30 April 1981, Page 6

Coal prices up $1 a bag this winter

Christchurch coal users will have to pay more than $1 more for a 50kg bag this winter.

Wholesale prices of coal from the State Coal Mines will go up by at least 25 per cent from Friday, while coal from the Ohai mines will rise 35 per cent.

Christchurch consumers are not expected to have to pay the new’ prices immediately. Most yards are well stocked and the increase will be passed on only when merchants buy new supplies. State coal retails in the city for about $5.20 a 50kg bag, the more expensive Ohai coal costing about $5.85 a bag. Prices vary among Christchurch’s coal merchants.

The Minister of Energy (Mr Birch) said the increased prices were to take account of increased costs of production.

He also said that State Coal exports had been settled for the next 12 months to a ceiling of 250,000 tonnes. Mr Birch said that at the new prices State Coal could be expected to reach just below the break-even point on domestic coal sales. The increases reflected the rise in the average costs of production and, in the case of

Ohai coal, set a price that recognised the value of this coal to the consumer because of its greater heat content compared with other South Island coals. Mr Birch said that even with the higher price the Ohai mines still run at a “slight loss.” The increase had been made necessary by the effects of increased costs in coal mining over the last year, particularly the higher costs of plant, equipment and stores imported into New Zealand, and to achieve some recovery of shortfalls on previous increases in price. The Government’s policy on energy prices, as far as coal was concerned, was to relate the wholesale price to the costs of production. The new rates reflected this policy, he said. The rates for longer term coal contracts would be changed as they became due for renewal.

The cbal exports approved by the Government are destined for Korea, Japan, and Fiji.

Mr Birch said the ceiling of 250,000 tonnes was a modest rate of depletion, bearing in mind' that the recoverable coal reserve in the West Coast and Buller coal fields Were “substan-

tial.” at 180 million tonnes. “The prices we will receive for these" export quantities are substantially higher than wholesale prices on the domestic market,” he said. Some of the contracts have been completed and are being considered by the Government, which is required to ratify them before they become effective. Two contracts have yet to be concluded, but the negotiations on these are well advanced. Coal to Fiji will be exported from Westport, and when conditions on the river bar prevent full loading, cargoes will be completed at Nelson. The contract is for three years, most of the coal coming from the Denniston mines. The remaining exports will be loaded at Lyttelton in vessels carrying 35,000 to 50,000: tonnes. About 35,000 tonnes of this coal will come from the. Reefton coalfield, as previously- announced. About 15,000 tonnes is expected to be supplied from the Denniston mines, in addition to that which will go to Fiji, and the rest will come from the Stockton coalfield. ' Mr Birch said that the total value of these exports would-be between $l7 million and $lB million.