Feb. 13 (Bloomberg) -- Coal for delivery in northwest Europe rose to a record after the world's biggest producer of the fuel used in power plants said it may miss deliveries because of heavy rains in Australia.

Xstrata Plc, based in Zug, Switzerland, declared force majeure on shipments from its Newlands and Collinsville mines today. Rival BHP Billiton Ltd. said separately the weather had disrupted coal operations in the country's Queensland state. Force majeure is a legal clause that allows a company to miss deliveries because of circumstances beyond its control.

The ``coal supply position, already in a tight position, has been increasingly deteriorating,'' The Tex Report said today. Power-coal shipments may ``reach a critical phase.''

Disruption in Australia compounds a global shortage of available coal. Power cuts in South Africa, the biggest source of coal for European generators, are expected to continue until at least 2012 and may curb exports from the country. China has halted shipments of the fuel until April after the worst snowstorms in 50 years.

Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year advanced $3.25, or 2.7 percent, to $125 a metric ton as of 12:42 p.m. in London, according to ICAP Plc prices. ICAP has about 30 percent of trade in coal derivatives, used to hedge risks or for speculation.

Tom Albanese, chief executive officer of Rio Tinto Group, the fourth-largest hard coal producer, today said he expects continued strength in markets for the fuel used for generating power and in steelmaking. Hard coal is a higher-quality variety.

`Constrained Market'

``We intend to put as much coal as we can into this constrained market,'' Albanese said in an investor presentation in London. ``We have sold cargoes at well over $100 a ton for thermal and over $200 a ton for coking coal.''

ICAP's year-ahead coal contract has gained 8.9 percent this year, compared with a 5.9 percent rise for benchmark U.K. natural gas and a 3.4 percent drop in New York-traded crude oil. Power generators such as E.ON AG can switch fuels to cut costs.

U.K. natural gas for summer delivery declined 0.6 percent to 46.25 pence (91 cents) a therm, according to ICAP prices.

European Union emission permits declined. 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.

Permits for December 2008 retreated 18 cents to 19.79 euros ($28.85) a metric ton at 12:49 p.m. on the European Climate Exchange in London.

Power Utility

A U.K. power utility can make a profit of about 11.39 pounds a megawatt-hour burning U.K. natural gas in the six months through September compared with 11.14 pounds burning Dutch- delivery coal, so-called clean spark-spread and clean dark-spread show.

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

Day-ahead power in Germany, Europe's biggest electricity market, gained one euro, or 1.5 percent, to 67.75 euros at 2:04 p.m. in Berlin.

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

Last Updated: February 13, 2008 09:07 EST