South Korea negotiates for role

in $2.1 bln coal project in Russia

SEOUL, South Korea (Reuters) — South Korea is looking to take part in a $2.1 billion project to develop coal mines in Russia, Seoul's energy ministry said Monday.

A mine in the south of the republic of Sakha is estimated to hold 2.13 billion tons of high-quality coal, and annual production of 30 million tons should start by the end of 2009, the ministry said.

A consortium of South Korean trading house LG International and state-run Korea Resources wants to participate in the Elga coal project, said Vice Minister Lee Jae-hoon after talks with Georgy Nikonov, foreign affairs minister of the republic of Sakha.

The two sides will hold further talks next month. South Korean power generators are concerned about delays in coal supplies from traditional suppliers such as Australia, China and Russia due to high coal prices and strong domestic demand in these countries.

Sakha holds 45 percent of all Russia's coal reserves, the second largest in the world.

LG International already holds 35.2 percent in another coal development project in Russia. South Korea imports 4.8 million tons of coal per year from Russia, worth about $2.9 billion last year.

Australia ships about 27 million tons of coal per year to South Korea, while Indonesia supplies 17 million tons.

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