Japan's Kyushu Elec looks to use cheaper coking coal at power plants

TOKYO (Reuters) - Japan's Kyushu Electric Power Co Inc is looking to use coking coal, a key steel-making ingredient, at its coal-fired power plants as an alternative to thermal coal to take advantage of cheaper prices of coking coal, its president said.

Japanese utilities have been suffering from rising fuel procurement costs due to soaring prices of fossil fuels such as thermal coal as well as a weaker yen.

"As an option, we are considering to burn coking coal at our power plants since coking coal is cheaper than thermal coal," Kazuhiro Ikebe, president of Kyushu Electric, told a news conference on Friday.

Coking coal has been unusually trading at a steep discount to thermal coal, used mainly to generate power, which is booming because of disruptions to Russian energy supplies.

Newcastle thermal coal futures have eased about 10% so far this year, but they are still higher than Singapore coking coal futures, based on the free-on-board price in Australia.

Nippon Steel Corp, Japan's top steelmaker, also said last year it was using some coking coal as an alternative to thermal coal, though the volume was limited as only coking coal of a particular quality could be used for this purpose.

Kyushu Electric is also looking into diversifying its coal supply sources in areas outside of Australia such as Africa and South America, Ikebe said.

(Reporting by Yuka Obayashi; Editing by Mark Potter)