London (Platts)--3Aug2011/735 am EDT/1135 GMT

Portuguese utility EDP has awarded its tender for the purchase of 600,000 mt of thermal coal for 2012 delivery, with a company source confirming Tuesday that four Capesizes of Colombian coal would be supplied, one per quarter.

The source said the tender had been awarded to a trader (three Capes) and a Northwest European utility trader (one Cape) at a discount to the API2 (CIF ARA) index, adding that the price had been "below $120/mt" for "typical Colombian" coal.

In the tender, which closed Friday, EDP sought material with a calorific value no lower than 5,800 kcal/kg NAR, maximum moisture of 15%, ash content no higher than 14%, and maximum 1% sulfur. The material will be used to fuel coal-fired power plants in both Portugal and Spain.

Elsewhere, market sources suggested a bank had been involved in a trading capacity, with one utility source suggesting the price had been at a discount of around $2/mt to the API2 index.

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Following talk that EDP had also been in the market for South African material, the company source confirmed it was monitoring the Richards Bay coal price, but that it was difficult to make a purchase as South African coal was not currently pricing into southern Europe.

Platts assessed the 90-day CIF ARA and Richards Bay prices at $125.75/mt and $118.40/mt respectively August 1. With freight from South Africa to Europe currently reported at $10-11/mt, the arbitrage is still around $3/mt away from opening.

"It makes some sense to eventually buy [South African coal], but it will be difficult for now. We have comfortable stocks anyway at the moment," the source said.

EDP has a 1,200-MW domestic coal-fired plant at Sines, Portugal as well as plants at Gijon, Spain and the Abono and Soto de Ribera plants in the Asturias region in northern Spain. Last year, EDP said it expected overall 2011 consumption to be 2 million mt for Sines and 900,000 mt for the Spanish plants.

In November 2010, the generator bought 600,000 mt of steam coal for delivery over 2011, split equally between low-sulfur, minimum 5,800 kcal/kg Colombian coal and higher-sulfur 6,200 kcal/kg US material.

--Mark Selby, mark_selby@platts.com