Saturday, November 19, 2005

Coal Prices

Me no understand doctor.

Domestic coal prices are about £140 a metric tonne and anthracite at about £165 - unless my coal merchant is robbing us blind. If you buy it in plastic bags on special offer you might get £150 a tonne.

According to the DTI, top quality steam coal in 2004 was a maximum of £37 a tonne.

Prices for internationally traded steam coal imported into North West Europe was around £20/tonne in 2002, but have risen strongly since then and reached an average of £37/tonne in 2004. Between 2003 and 2004, international imported steam coal prices increased by 49 per cent on £ sterling basis. Prices received by UK producers for sales to generators have been in the range £26/tonne to £28/tonne over the period 2002-04.

OK, so the generators are buying the stuff a million tonnes at a time. But that's still a hefty discount for quantity.

They dig excellent steam coal out of the ground at Tower Colliery, the last deep mine in Wales, about 90 miles from my place. £150-plus would be the domestic price.

A 3.5 ton tipper Transit costs about £300 for a week's hire - say £500 with the diesel, excess miles, VAT and a washdown for the vehicle afterwards. Given seventeen(ish) Gloucestershire folk needing a tonne each, what pithead price would you have to get to make a profit and undercut the £150 price ? One return trip a day, 3.5 dropoffs, 17.5 tonnes at £120 a tonne - that's £2100 worth of sales. Pay yourself £500 (this is a cash business), your costs are £1,000 plus the price of the coal, which would be £62 a tonne - still over 50% above the bulk price.

I rang Tower Colliery a few years back and asked if I could take a truck over there. No, they said - all their domestic sales were handled by a local reseller in Hirwaun. I rang them - £150 a tonne.

Either my on-the-fly cowboy no-tax-or-insurance business plan is useless - or somebody's making money out of UK coal.

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