EUROPEAN PRODUCERS ACT TO HALT BID TO LABEL COAL A HAZARDOUS CARGO

EUROPEAN PRODUCERS ACT TO HALT BID TO LABEL COAL A HAZARDOUS CARGO

Coal producers urged their governments Tuesday to block a controversial move to classify their fuel as a dangerous cargo.

The International Maritime Organization (IMO) will decide next April whether to include coal, along with other commodities such as wood chips and certain metals, on a list of "hazardous and noxious" substances. The buyers of the blacklisted products would be forced to pay an extra insurance premium, which will be put into a global liability and compensation fund for environmental accidents at sea."This would result in a very substantial additional burden on the buyers of coal," Roger Wicks, marketing director for Anglo American Coal Corp. of South Africa, told a coal conference in Helsinki.

The cost of coal could jump by as much as $6 a ton, if it is put on the blacklist, according to ENEL, the Italian electricity utility and one of Europe's leading coal importers. This compared with a European spot market price of $44 a ton and an average contract price of $36 to $38.

Coal producers say they are being victimized because of the sheer

size of the global trade in coal, 300 million tons a year and rising, compared with the relatively small trade in other commodities on the short list.

Chemical exporters have pushed for coal to be classified as a hazardous cargo so that it will "bankroll" the fund, said Ron Knapp, deputy director for the Mineral Council of Australia, a coal industry lobbying group.

"They want coal to cross-subsidize the other commodities," he said.

Pressure groups in Europe want coal on the list to ensure the viability of the fund, he said.

Labeling a cargo as hazardous can have a big impact on its export prospects by raising insurance costs, according to shipbrokers.

Shipments of steel scrap to South East Asian minimills were endangered after it was classified as a hazardous commodity under the Basel Convention, said David Cherrett, an analyst for Clarkson, a London-based shipping consultancy.

Coal producers aren't too worried about the threat because they are benefiting from a bull market, with both demand and prices rising, Mr. Wicks said.

The governments of Australia and South Africa, two leading coal exporters, are intensively lobbying against the proposal, but Washington is staying on the sidelines, he said.

Coal producers and shipowners here appeared confident that the proposal to put coal on the hazardous cargo list will fail and that the current bull run, which began in 1994, will last well into 1996.

Shipments of steam coal will be up 17 million tons in 1995 and rise by 13 million tons in 1996, said Nick Collins, a director of H. Clarkson, the London broker. Coking coal shipments, up 2 million tons in 1995, will be 2 million higher in 1996.