Jan. 25 (Bloomberg) -- European coal prices rose the most in almost three weeks as Anglo American Plc and other mining companies shut production in South Africa because of power cuts.

More than a quarter of Europe's energy coal is shipped from Richards Bay, South Africa. Anglo American, the second-biggest coal producer in the country, stopped five of its nine mines after state utility Eskom Holdings Ltd. said it couldn't guarantee electricity supply.

``It seems as if it's going to be pretty chronic,'' Walter de Wet, head of commodity research at Standard Bank Group Ltd. in Johannesburg, said in a telephone interview today. Cuts and rationing may occur ``for a couple of years. I would definitely not be bearish'' on coal, he said.

Eskom told miners that production may have to be curbed for two to six weeks, on the day that China, the world's biggest coal producer, ordered domestic shippers to halt exports next month and in March to ease shortages. In Australia, the world's biggest energy coal exporter, rains disrupted mining in Queensland and Macarthur Coal Ltd. said it may miss contracted deliveries.

Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year rose $6, or 5.7 percent, to $112.25 a metric ton as of 5:20 p.m. in London, according to ICAP Plc prices. It was the biggest gain since Jan. 7. Coal is trading about 5 percent below the record it reached Nov. 23.

Coal stockpiles at Richards Bay are about 2.1 million tons, the terminal's Managing Director Kuseni Dlamini said by telephone today. The terminal aims to have stockpiles of 3 to 4 million tons, he said. Eskom may burn more coal as it seeks to increase power production. That may reduce supplies of the fuel for export from South Africa, Standard Bank's de Wet said.

Coal Prices

The problems in South Africa may bolster coal prices globally, London-based investment bank Fairfax I.S. Plc said.

``If electric coal trains into Richards Bay coal terminal are cut for a significant period then coal-fired power stations around the world will need to find alternative supply,'' John Meyer, an analyst at Fairfax, said in a report. ``That could cause a major spike in coal prices.''

European generators faced increased competition for South African coal last year from Asian buyers as supply bottlenecks in Australia and reduced Chinese exports cut supplies in the Pacific region. Xstrata Plc, the world's biggest exporter of energy coal, and Rio Tinto Group were among the companies this week to say production had been cut in Australia because of the rain.

Declining shipping costs may make it more affordable for Asian customers to buy coal outside their region, including South Africa. That may oblige European utilities to ship more coal from countries such as the U.S.

Shipments Halted

U.S. coal supplies were curbed after Consol Energy Inc., the country's third-largest producer, halted shipments from the Port of Baltimore when a pier partly collapsed overnight on Jan. 3-4. The terminal may resume shipments by the end of this month, Consol spokesman Thomas Hoffman said yesterday.

The ICAP coal derivative contract has declined 2.2 percent this year, compared with a 5.3 percent drop in New York-traded crude oil and a 6.6 percent gain for U.K. natural gas. Generators such as E.ON AG, Germany's biggest, can switch between fuels to cut costs.

U.K. natural gas for the summer advanced 2.4 percent to 49.3 pence (98 cents) a therm, according to ICAP prices.

European Union emission permits for December 2008 gained 1.28 euros ($1.88), or 6.5 percent, to 21.04 euros a ton on the European Climate Exchange in London. Generators wanting to burn coal need about twice as many permits as they do for natural gas under the 27-nation bloc's plan to limit carbon-dioxide emissions.

A U.K. power utility can make a profit of about 12.70 pounds a megawatt-hour burning Dutch-delivery coal, compared with 10.05 pounds burning U.K. natural gas in the six months through September, so-called clean spark-spread and clean dark-spread calculators show.

The spreads are calculated using forward prices today for power, gas, coal and permits from energy brokers and exchanges published by Bloomberg.

To contact the reporter on this story: Alistair Holloway in London at aholloway1@bloomberg.net

Last Updated: January 25, 2008 12:56 EST