Mission Statement

Coal Trade Mission

to

Los Angeles Export Terminal, Los Angeles, CA

Comision Federal de Electricidad, Mexico City, Mexico

Petacalco Power Plant, Lazaro Cardenas, Mexico

Mission Description

This mission is being organized at the request of U.S. coal exporters and the National Mining Association. In a meeting with the Director of the Department of Commerce's Energy Division at the Western Hemisphere Energy Ministers Conference in July, 1999, Mexico's Secretary of Energy, Dr. Luis Tellez, agreed to accept a Department of Commerce led delegation representing the U.S. coal exporting industry. From September 28 - October 2, 1999, the Deputy Assistant Secretary (DAS) for Basic Industries will lead this coal trade mission to the Los Angeles Export Terminal, Los Angeles, CA; Comision Federal de Electricidad in Mexico City, Mexico; and the Petacalco Power Plant in Lazaro Cardenas, Mexico. The mission will include representatives from U.S. coal companies interested in entering or expanding their presence in the Mexican steam coal import market.

Commercial Setting

The Mexican domestic coal industry has traditionally supplied about 10 mmt (million metric tons) of the approximately 12 mmt of coal consumed annually in Mexico. Domestic production supplies about 3 mmt of metallurgical grade coal to the steel industry, about 4 mmt to the Comision Federal de Electricidad (CFE, Mexico's federal electricity monopoly) for Mexico's government-owned power plants, and about 3 mmt to industrial plants.

The remaining difference between domestic supply and demand has traditionally been covered by imports primarily from the United States and Canada. In the past, most of the imports were metallurgical coal from the United States. With recent expansion of coal-fired electric power generating capacity, imports of steam coal will increase.

Several years ago CFE doubled the generating capacity at its Rio Escondido (CARBON I & II) power plant. Located 20 miles from the Texas border, this 2400 MW (megawatt) plant annually burns 9-10 mmt of steam coal. Most of this coal is supplied by Mexico's Rio Escondido and Sabinas mine complexes and U.S. coal exporters. Over the past several years, U.S. coal exporters have supplied CARBON I & II by rail with up to 1.5 mmt of steam coal annually from U.S. western mines.

During this decade, CFE's plans for the construction of a dual-fired power plant (and a port to service it) on its Pacific coast have materialized. The 2100 MW Petacalco power plant located at Lazaro Cardenas, west of Mexico City, initially burned fuel oil until a deepwater port with a self-unloading facility opened this year. The plant will now burn over 4 mmt of imported steam coal annually. The stockpile area at the coal terminal will accommodate 2 mmt, segregating as many as nine different coal quality types. Petacalco's coal blending facilities are designed to blend lower rank coals with higher grades so that even minimum boiler specifications can be met.

CFE is currently preparing a tender for this fall to purchase 3.5 mmt of steam coal for Petacalco. It is anticipated that the tender will be divided into at least five different installments, each with its own set of specifications, and that coal grades will be sourced from multiple suppliers, including the United States. The U.S. wants to assure CFE that U.S. coal fusion and gradability is compatible with Petacalco's coal blending and boiler technical requirements. It is hoped that this trade mission will ensure that U.S. coal companies are not excluded from responding to this tender because of bid specifications.

In light of this, U.S. coal exporters view the new coal export terminal at the Port of Los Angeles, the Los Angeles Export Terminal (LATX), as the primary coal export terminal for any future coal exports to Petacalco.

Mission Goals

The mission will seek to increase exports of U.S. steam coal to Mexico, specifically targeting the Mexican power generation sector. The mission will further U.S. commercial policy objectives, advance specific U.S. coal exporting business interests, and resolve market access issues.

Mission Scenario

The mission will visit the Los Angeles Export Terminal (LATX) in Los Angeles, CA, and then proceed to Mexico City and Lazaro Cardenas, Mexico. The mission will focus on advancing the U.S. coal industry's export opportunities and resolving market access issues.

Briefings and business appointments will be made for members of the business delegation. The mission will expose the delegation to:

• Meetings with senior level government officials at CFE and the Petacalco power plant;
• Meetings with senior officials at the Los Angeles Export Terminal, Inc.

This mission will be an excellent opportunity to gather in-depth information on the Mexican coal import market, commercial opportunities in Mexico for U.S. coal exporters, and to meet with key decision makers at CFE.

Timetable

The mission is scheduled to arrive in Los Angeles, CA on Tuesday, September 28, 1999 and conclude in Mexico City on Saturday, October 2, 1999. The precise schedule will depend on the availability of CFE officials, as well as the specific goals and interests of the mission participants.

Criteria for Company Participation

Recruitment and selection of private sector participants will be conducted pursuant to the U.S. Department of Commerce Trade Mission Policy announced by Secretary Daley on March 3, 1997.

Selection Criteria

Companies will be selected on the basis of:

• Ability to produce coal in the U.S.

• A capacity to deliver relevant goods or services to Mexico.

• Consistency of the company's goals with the scope and desired outcome of the mission as described.

• Past, present, or prospective business in Mexico.



• Diversity of company size, type, location, demographics, and traditional under-representation in business.

• Timely receipt of mission application, and participation fee of $3,000.



• Whether the companies' overall business objectives, including those of any U.S. or overseas affiliates, are fully consistent with the mission's foreign and commercial policy objectives.

There is no limit on the number of companies that may participate in this mission.

Mission recruitment will be conducted in an open and public manner, including publication in the Federal Register, posting on the Internet, press releases to the general and trade media, direct mail and broadcast fax, e-mail, notices by industry trade associations and other multiplier groups, and at industry meetings, symposia, conferences, trade shows, etc.

An applicant's partisan political activities (including political contributions) are irrelevant to the selection process.

Applications

Application deadline: Friday, September 17, 1999. Applications may be submitted immediately to Helen Burroughs, Energy Division - Basic Industries, U.S. Department of Commerce, Room H4054, Washington, DC 20230; telephone: (202) 482-4931; facsimile: (202) 482-0170 or 5361; Internet: Helen_Burroughs@ita.doc.gov