Speaking at the miner’s annual general meeting in Perth on Friday, Aquila executive chairman Tony Poli said the company would welcome a decision by Vale – which holds a major stake in Belvedere – to buy out the Belvedere coal asset.

Vale’s option period over Belvedere, near Moura in the southern Bowen Basin, begins in December 2009.

Poli talked up the project’s merits and said a buyout by the South American giant would be “very much in Vale’s favour”

The comments over Belvedere are in keeping with Aquila’s stated intention to divest non-core assets and direct the funds to the development of its other projects.

Poli highlighted the company’s strong pipeline of coal and iron ore projects, but said it was not in the company’s interests to develop all of its projects.

Given the lucrative divestment of its Mozambique coal tenements, he said there was clearly value in prioritising some of Aquila’s assets.

He said the company had already identified several projects that could be divested, noting there could also be a case to off-load the company’s Eagle Downs coal project, currently at feasibility study stage.

Spruiking the upside of the company’s Isaac Plains coal mine Poli said despite some near-term softness, Aquila expected demand for hard coking coal to be “quite robust” in the long term, as port constraints put pressure on supply.

Demand for thermal coal was expected to remain firm, he said.

However, he said full-year coal mine earnings before interest, taxes, depreciation and amortisation were likely to be impacted by the deferral of coal sales in response to steel production cutbacks.

Poli continued to talk up the China story, saying any slowdown was likely just a “pause” with fervent Chinese urbanisation driving demand for both coal and iron ore.

“We expect the demand to bounce back strongly, but maybe not to previous levels,” he said.

He said the market was going through a “period of consolidation” and added there was opportunity to be found amid the global economic downturn.

Poli said those companies with good management, good cash flow and good projects would do well.

“The strong will survive,” he declared.

Encouraged by the continued capital raising activity, particularly among large-cap companies, Poli forecast the market would “settle down” in the next six months.

Aquila stocks closed Friday down 1c to $3.85.