Manila (Platts)--20Nov2012/403 am EST/903 GMT

A coal trading joint venture between German utility RWE, Korea Electric Power Co. and South Korea's five thermal utilities may start operation in the first half of 2013, a Korean utility source said Tuesday.

The Kepco-led Korean group own 50% of the JV. RWE holds the other 50%.

In January, the same source said Kepco was hoping to finalize the formation of the coal trading arm this year. However, he declined to say why the process is being delayed.

Asked when the coal trading arm will commence operation, the source said: "It's anybody's guess. But my guess is first half of next year."

Kepco previously said the coal trading JV is intended to better manage coal pricing and tonnage volatility for the five utilities.

The utilities are Korea South-East Power, Korea East-West Power, Korea Western Power, Korea Midland Power and Korea Southern Power.

Article continues below...

Request a free trial of: International Coal Report
	International Coal Report and its daily companion, Coal Trader International, deliver expert and respected price assessments for coal trading in the Atlantic and Pacific markets including price assessments for European CIF ARA, FOB Newcastle, Richards Bay and Indonesia.

The five will be shareholders in the venture alongside Kepco. Kepco selected RWE as its preferred foreign partner for the proposed trading company, Platts reported in December 2011.

The Korean utility source said the initial plan is for the trading company to procure and supply about 5 million mt of coal to the five utilities. He also said there is a plan to trade coal outside of Korea.

Kepco fully owns the Bylong project in New South Wales in Australia, which is expected to start thermal coal production in 2015 at a rate of 7.5 million mt/year. It also has a 20% stake in Indonesia's Bayan Resources and has an agreement in place to buy 7 million mt/year of thermal coal from the Bayan mines.

It also has a stake in Indonesian sub-bituminous coal producer Adaro Energy and an offtake agreement in place for 3 million mt/year of coal. It also has an offtake agreement for 2.5 million mt/year from the Moolarben mine in Australia and has a stake in the Cockatoo project in Australia and an offtake agreement for 2 million mt/year.

In 2008, Japanese power utility Chubu Electric formed a coal trading venture with EDF Trading called Chubu Energy Trading, which is currently based in Singapore.

--Cecilia Quiambao, Cecilia_quiambao@platts.com --Edited by Martin O'Rourke, martin_orourke@platts.com

Tweet