Ann: Coal Sales to China , page-22

There is a significant differance in the price of domestic coal to the international spot price and or forwards. In Australia, we pay far less for coal than people do overseas. Its similar to the middle east where you fill your car up for $5. The reason we don't see it so much is because Australian Goverments tax domestic use of energy and you pay environment levies, higher salary costs etc, etc. The reason we are taxed so heavily is a Menzies government initiative to ensure we don't live in a fools paradise. It was envoked when Bass Straight was in full swing for oil production. If you look at Kev's carbon trading scheme, the Chinese don't pay for carbon credits..... only local producers do and they only do if they sell it domestically.

In China, there is increasing demand for Coal. They can't all call BHP up to keep the furnases going. They are always looking for supply agreements once the appropriate back slapping and dinners have been completed.

AFA buys at the domestic price plus an additional margin for the local producer and sells it at the spot price. Whilst coal is abundant in Australia, I would expect the domestic price to always be far lower than the spot or forward rates. This has been the case since Australia began mining.