Dec. 17 (Bloomberg) -- Rio Tinto Group, Xstrata Plc and other coal producers in northeast Australia forecast a doubling of exports through Dalrymple Bay port in four years, pressuring the terminal's operator to add more capacity.

The miners that use Dalrymple Bay this week told operator Prime Infrastructure Group they want to ship 87 million metric tons a year by about 2008, up from 43.6 million in the year ended June 30, Prime Chief Executive Chris Chapman said. Prime doesn't consider the growth is sustainable, he said.

Global trade in coking coal, which accounts for about 80 percent of Dalrymple Bay's exports, is expected to rise by half by 2010, BHP Billiton has said. Australian exports of the fuel are expected to rise 7 percent this year as economic growth in China fuels a surge in demand for steel from Asian producers.

``We're cautioning a bit of restraint,'' Chapman told reporters at the terminal yesterday. ``We're questioning China -- how sustainable is that growth? We don't want to overbuild capacity because we will be left'' with the risk of investing in plant that isn't used.

Prime last year boosted capacity at the terminal to 56 million tons a year and is studying three expansion options, all of which include an initial increase to 60 million tons by Christmas 2005.

Anglo, BHP, Peabody

Dalrymple Bay handles almost a quarter of the coal shipped from Australia and almost 5 percent of global trade in coking coal, the type used by steelmakers. Anglo American Plc, BHP Billiton Mitsubishi Alliance, Peabody Energy Corp. and Macarthur Coal Ltd. also export coal through the terminal.

``It depends a lot on what China does in terms of metallurgical coal imports,'' said Greg Dean-Jones, a coal analyst at AME Mineral Economics in Sydney. ``But there are other fish in the sea -- Canada is also ramping up production and the U.S. still has a lot of coal -- so 87 million tons would seem to be a very optimistic production forecast.''

Coal buyers and sellers may have to accept longer ship- loading times, which incur additional costs, rather than having access to all the requested capacity, Chapman said.

``Maybe demurrage is the way to go rather than overbuilding,'' he said. The terminal's capacity is fully contracted only until 2008, he said.

Queue of Ships

The queue of ships waiting to load at Dalrymple Bay, south of Mackay in Queensland state, has climbed to more than 40 at times in the second half of this year, from a normal queue of four to six, said Greg Smith, general manager, operations at Prime. The queue surged from July to a peak of 49 in mid-August, largely as a result of exporters committing to selling more than they could export, he said.

``They were accepting any nominations rather than lose the sale,'' Smith said. ``The queue has got nothing to do with terminal capacity if you purposely over-sell.''

Japanese steelmakers agreed to pay BHP Billion about $125 a ton for the fuel next year, up from $56 a ton in 2004-05, officials at Nippon Steel Ltd. and Sumitomo Metal Industries Ltd. said on Dec. 13.

About 25 ships were waiting off the terminal yesterday to load coal. Each vessel will wait about eleven days to load, compared with about three normally, Smith said.

In August exporters committed to selling about 5.7 million tons of coal, compared with a contracted capacity at the terminal of about 4.8 million tons, Prime said in a presentation to reporters yesterday. Since then, exporters have continued to over- commit on sales, the presentation shows.

`Struggling'

``It's true that the world market for raw materials is very strong at the moment so there's plenty of demand out there for additional volumes,'' said Gary Lee, vice-president of marketing at Macarthur Coal, which ships pulverized coal through Dalrymple Bay. ``The terminal has been constructed to match the volumes that were existing prior to this big jump in demand, so we've got a situation where we're struggling to push those additional exports out.''

Prime is due to decide by March on how it will expand the terminal. It's considering future investment alongside a regulator's draft decision to cut the price Prime can charge for handling coal by 26 percent to A$1.53 a ton.

Prime, which had sought a 33 percent increase in the charge, needs ``somewhat north of A$1.53'' to invest in expansion, Chapman said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@Bloomberg.net.

Last Updated: December 16, 2004 22:38 EST