Chilean trade agreement welcomed by NZ exporter

2 June 2005

Chilean trade agreement welcomed by New Zealand exporter

Coal producer, Solid Energy New Zealand Ltd, New Zealand’s largest exporter to Chile, has welcomed the free trade agreement linking the two countries. The Trans-Pacific Strategic Economic Partnership agreement, which includes Chile, Brunei, Singapore and New Zealand, was announced today by Trade Minister, Jim Sutton, at an APEC meeting in Korea.

Chile has agreed to immediately lift the tariff on New Zealand coal imports, making the product about 6% more competitive in this export market. Solid Energy’s thermal coal exports to Chile generated NZ$9.5 million in foreign exchange earnings in the year ending June 2004, representing a quarter of the value of all New Zealand exports to Chile (NZ$36.5 million).

Solid Energy’s Export Marketing Manager, Malcolm Roberts, says: “Chile is a natural market for Solid Energy; we have a significant advantage compared to our competitors in the region – Indonesia and Australia – due to the shorter shipping distances. Lifting the tariffs should help us to improve our very low margins in this growing export market and make New Zealand thermal coal more competitive, in what is an extremely competitive commodity market.”

At up to 200,000 tonnes per annum, coal exports to Chile represent around 6% of Solid Energy’s annual international sales. Solid Energy’s has been trading with its major customer in Chile, AES Gener, since 1996.

The company’s premium thermal coal, mined on the West Coast, is highly sought after by power generators and industrial users due to its high energy value and low ash. Chile, which has a population of almost 16 million, currently has an energy supply shortage, due to shortages of Argentinian natural gas. Coal is being used to fill the gap and provide energy security.

ENDS

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