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Tuesday, 26 February 1985
Page: 181

Senator RICHARDSON —Has the Minister for Resources and Energy seen a report in the Age of Friday, 22 February 1985 entitled 'Canada Dims Coal Hopes'? Has the recent offer by Canadian coal producers jeopardised Australia's bargaining position in our current round of negotiations with Japanese steel mills? Are Australian coal producers facing the possibilities of lower coal prices and even lower tonnage levels this year as a result of the Canadian offer?

Senator GARETH EVANS —I am indebted to Senator Richardson for the opportunity to demonstrate some more of my new-found learning in this portfolio. I saw a report in the Age last week claiming that Canadian coal producers had undermined price talks between Australian producers and Japanese steel mills by dumping coal into the Japanese market. I am advised that the Canadian coal in question, however, is some 1 to 1.5 million tonnes of non-coking metallurgical coal used in briquetting, blending and pulverised coal injection in blast-furnaces. An estimated four million tonnes of similar coal will be supplied by Australia to the Japanese steel mills in the Japanese fiscal year 1985. Demand for this type of coal, I am told, is increasing as Japanese crude steel production technology changes towards the increasing use of non-coking coals, marginal quality coking coals and pulverised coal injection. Japan is a growing market which one would expect the Canadians to seek to enter, particularly in the situation of current world oversupply.

While the Age article states that Australian exporters were aiming for a price increase in the Japanese fiscal year 1985, the situation is now that the Minister for Trade, Mr Dawkins, has approved the rollover at last year's price level sought by Australian producers in respect of non-coking coal for the forthcoming Japanese fiscal year commencing on 1 April. That state of affairs is in line with recent settlements on hard and soft coking coals for that Japanese fiscal year. The Canadian prices in this respect were generally in line with prices for comparable Australian coal last year.

The worrying trend that was referred to in the Age article is the impact that non-coking coal prices could have on coking coal prices in general. For example, hard coking coal currently sells at around $US52 a tonne and soft coking coal at around $US44.50 a tonne. Non-coking metallurgical coal is around $US39.50. To the extent that Japanese steel mills use more non-coking coal-as I have said, with technological advances this is the current trend-the average price of coals to the mills will be lower.

There will still, however-and this is the glimmer of light that I want to emphasise-be a need for high quality coking coals for blending purposes. Australian producers of non-coking coals can reasonably then expect an expanding market of non-coking coals in which they should retain a share provided they remain competitive.

Senator Chaney —I ask the Minister to table the paper from which he has quoted so that we can see whether Senator Webster's name has been crossed out.