The subsidisation of German coal mining continues to be wound down with the latest coal aid package of 7.319 billion euros announced last week for the three year period 2005 to 1008. The amount covers the first phase of the new coal agreement from 2006 to 2012 over which time frame coal output will fall from around 26Mta to 16Mta.

But in September, RAG chairman, Werner Mueller, said Germany should rethink exploiting domestic reserves to become independent of high world market prices.

"Prices of coke imports have exploded. Germany has 1 billion tonnes of good coking coal. This raises the question of prospective new coal pits and cokeries to make us independent of the ever tigher world market again," he told Stern magazine.

Discussions are ongoing in Germany about opening a new coking coal mine in the Ruhr region. RAG mining subsidiary, Deutsche Steinkohle (DSK) indicated it would seek investors to fund the 800 euro development, pencilled for 2015. Mueller said if coke prices stayed around US$250-300 for 15 years, a new German mine and a coal cokery would be very profitable. Mining costs in Germany are around 150 euro per tonne.

RAG has begun pushing for a “raw materials conference” in spring next year at which chancellor Gerhard Schröder has reportedly agreed to participate, McCloskey Coal Report reported recently.

Müller said Germany’s assumption that secure supplies of energy and raw materials would be available on the world market at reasonable price was a misjudgement.

“Raw materials institutes and investment bankers like Goldmann Sachs expect world market coking coal and coke to remain scarce and expensive for a long time to come. We need a forward looking, long-term raw materials strategy to secure Germany’s industrial activities,” McCloskey quoted Müller saying.

By March 2006, when the Lohberg/Osterfeld and Warndt/Luisenthal coking coal mines are shut, Ost will be Germany’s only coking coal mine in operation. The two closures will reduce available coking coal by 4Mt.

The 2.3Mt Walsum mine closes on January 1, 2009 and the 1.5Mt Lippe mine on January 1, 2010.

In 2003, German domestic coal output totaled 27.9Mt and is expected to total 27.7Mt in 2004. In 2003 the German coal industry employed 45,600, expected to have dropped to 41,600 in 2004.

McCloskey also reported DSK was planning to access additional reserves in the running-down phase of the Lohberg/Osterfeld mine. Another mining level is being prepared underground to deliver an additional 600,000t of coking coal in 2005.