By Diana Kinch
Of DOW JONES NEWSWIRES
RIO DE JANEIRO -(Dow Jones)- Some new steel mills planned inBrazil won't emerge due to coal supply difficulties, industryconsultants said Tuesday.
Companies including Vale SA (VALE, VALE5.BR), ArcelorMittal (MT),Techint and Wuhan Iron and Steel Co. (600005.SH) plan to add atotal of 19.2 million metric tons of extra steelmaking capacityin Brazil by 2016, but some projects probably won't move aheaddue to increasingly scarce metallurgical--or coking--coal, abasic raw material, Luiz Sarcinelli, director of SageConsultoria, said at a coal conference in Rio de Janeiro.
"The situation's getting increasingly difficult. Coking coaldemand is growing most in countries that are deficient in thisraw material: China, India and Brazil, where steelmaking isgrowing most," Sarcinelli said.
Coking coal demand in Brazil is set to double in four to fiveyears, with the new projects adding an extra 23.6 million tons ofdemand, said Otacilio Pecanha of Negotiare Consultoria. At thesame time, coking coal prices will continue rising on China-leddemand, which has already prompted a sixfold increase over thelast decade to about $330 a ton recently, Pecanha said.
Prospects for some new Brazil steel projects look "doubtful" inthis scenario, he said. Projects related to miner Vale and theAcu port being developed by billionaire Eike Batista's EBX groupmay still receive the "push" needed to move forward, he said.
-By Diana Kinch, Dow Jones Newswires; 55 21 7544 4495 diana.kinch@dowjones.com
P.S. There are 10 new steel mills coming online this year in China.
P.S.S. This will be my last post as I do not want to be accused of pumping, dumping or frumping.