Fording announces higher coal prices
19 Dezember 2003 - 11:30PM
PR Newswire (US)
Fording announces higher coal prices CALGARY, Dec. 19
/PRNewswire-FirstCall/ -- Fording Canadian Coal Trust (TSX: FDG.UN,
NYSE: FDG) today announced that the Elk Valley Coal Corporation
(EVCC) has made substantial progress in annual price and volume
negotiations with its export- coal customers for the coal year
commencing April 1, 2004. Sufficient settlements have been achieved
in all markets to indicate that EVCC's average price for coal sales
during the 2004 coal year (April 1, 2004 - March 31, 2005),
including normal levels of sales carried over from the 2003 coal
year, is expected to be approximately US$51 per tonne. This
represents an increase of nearly 20 percent from the average US
dollar price realized during the current coal year. Price increases
were attained for all of the EVCC's coal products. "Market
conditions at this time are very favourable for seaborne and North
American hard-coking coal," said Jim Gardiner, President of the
Trust and President and Chief Executive Officer of EVCC. "The tight
coal supply situation that currently exists in the face of strong
demand from our traditional coal customers and from new customers
in China has sharply increased the value of our coal while
accelerating the negotiation and settlement process." More than 80%
of EVCC's coal available for sale for the 2004 fiscal year has now
been priced and contracted. Average coal prices for the fiscal year
ending December 31, 2004 are expected to be US$48 per tonne, an
increase of 13% over the current year. Assuming a US/Canadian
dollar exchange rate of US77 cents and taking into account EVCC's
foreign currency hedge position in 2004, the Canadian dollar price
of coal is expected to increase 9% to $67 per tonne for the 2004
fiscal year. The distributable cash of the Trust, before the
establishment of any cash reserves, is highly sensitive to coal
prices. In addition to this, a significant portion of distribution
costs (rail and port charges) that are included in the cost of coal
sales will be determined with reference to changes in coal prices
when those price changes come into effect. Accordingly,
distribution costs are expected to increase around 13% when the new
coal prices come into effect. For the 2004 fiscal year,
distribution costs are anticipated to increase about 9% compared to
the current year. As previously disclosed, the cost of producing
coal at the mine sites is expected to decline over the next four
years due to operating efficiencies, synergies and declining strip
ratios. The sensitivity of distributable cash from the Trust for
the 2004 fiscal year, before the establishment of any cash
reserves, to a US$1 change in the average price of coal, and
including the expected attendant change in rail and port rates, is
anticipated to be approximately 25 cents per unit. This calculation
assumes a US/Canadian dollar exchange rate of US77 cents. Previous
disclosures by the Trust with respect to the sensitivity of
distributable cash to changes in coal prices did not include the
commensurate change in rail and port rates; the sensitivity of
distributable cash to changes in cost of sales, including rail and
port costs, was addressed separately. Fording Canadian Coal Trust
is an open-ended investment trust. Through investments in
metallurgical coal and industrial minerals mining and processing
operations, the Trust makes quarterly cash distributions to
unitholders. The Trust, through its wholly-owned subsidiary,
Fording Inc., holds a 65% ownership of the Elk Valley Coal
Corporation and is the world's largest producer of the industrial
mineral wollastonite. The Elk Valley Coal Corporation, comprised of
Canada's senior metallurgical coal mining properties, is the
world's second largest exporter of metallurgical coal, capable of
supplying approximately 25 million tonnes of high-quality coal
products annually to the international steel industry. DATASOURCE:
Fording Canadian Coal Trust CONTACT: Mark Gow, CA Director,
Investor Relations, Fording Canadian Coal Trust, 403-260-9834,
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