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Japanese Utility Companies Look to the United States as a Source for Coal

Japan Australia

Tohoku Electric Power Co, the third largest user of thermal coal in Japan, plans to increase its import volume of coal from the United States and Canada according to the Japan Times. Looking to improve its international bargaining power by decreasing reliance on Australia and taking advantage of lower coal prices, the company is hoping that this change in their procurement strategy help reduce operating costs and reduce their dependency on Australian coal. It is estimated that Australia supplies almost three-quarters of Japan’s demand for coal.

Following the Fukushima nuclear disaster in March 2011 and subsequent closure of Japanese nuclear power facilities, Japan has increasingly turned to coal powered electric plants to meet its energy demands. This in turn has led to a dramatic increase in coal imports, primarily from Australia. As a result, Tohoku Electric Power Co plans to double its Northern American coal imports to 5% of its total to decrease this dependency on Australia, in addition to taking advantage of lower coal prices.

Other Japanese utility companies, Kansai Electric Power Co. and Kyushu Electric Power Co., are also seeking to diversify their coal suppliers. Both companies in 2012 signed a 12-month agreement to import one million tons of US coal from Oxbow Carbon LLC. In 2013, the United States exported 1.69 million tons of coal to Japan compared to 634,000 tons in 2012, an increase of 166%.

Tim Su is a University of Sydney intern at the East-West Center in Washington.