Japan’s Chubu, Tepco alliance could boost seaborne thermal coal buying power

An alliance between two of Japan’s largest power companies, Chubu Electric and Tokyo Electric Power Co, could increase their buying power for thermal coal in the Asian seaborne market, traders said.

Tepco and Chubu Electric each buy around 10 million mt/year of thermal coal, and the joint venture is expected to cover their entire energy supply chain from fuel procurement to power generation, according to company data.

The two utilities said Tuesday they were in talks on an alliance and hoped to reach a final agreement and set up a 50-50 joint venture by March.

Traders said the tie-up was a significant move.

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The alliance and its implications are expected to be a hot topic of the Australian-Japan coal conference in October 15-16 in Brisbane, Australia. Participants are expected to include Australian coal producers BHP Billiton-Mitsui, Centennial Coal and Wesfarmers and Japanese coal buyers such as Nippon Steel, Kyushu Electric and Mitsui.

The conference is closed to press, according to the organizer, the Minerals Council of Australia.

Tepco said it was motivated to enter into an alliance with Chubu to transform its business, which suffered a massive setback with March 2011 disaster at its Fukushima-Daiichi nuclear power plant.

Chubu Electric, which already has a Singapore-based procurement joint venture with EDF Trading of France for thermal coal, said the Tepco alliance would allow it to realize its growth strategy and obtain “internationally competitive energy supplies.”
Source: Platts