Japanese power plants look to lower coal import cost through switching to cheaper low-to-mid-grade coal and expanding supply sources, a move to help strengthen energy security as Russia-Ukraine conflict kept raising global energy prices and reducing supplies available.

In the country's plans to seek alternatives to Australia, a major supplier of high-grade coal to Japan and contributes to 73% of its thermal coal imports in 2022, it will increase coal purchase from South Africa and South America, according to Reuters.

This came after the country's power sector took a hit from the elevated costs of imported fuels, which drove seven major regional utilities to have applied to lift electricity prices from April to June.

And more concerns arose that China's resumed coal imports from Australia and its economic recovery after the COVID policy relaxations will help push the market higher.

JERA, Japan's biggest power generator, has modified some equipment at its coal power plants so that it can burn a wider variety of coal, which has already helped bring down the fuel cost by about 26 billion yen ($202 million) in the nine months ended December 31, Tetsuo Yoshida, the head of finance, said.

The move will also be an active response to its ban on Russian coal, which previous accounted for 12% of Japan's thermal coal imports in 2021 and only 7% in 2022, according to the country's trade data.

Coal imports from Russia have been in sharp decline since mid-2022 and preliminary broker data suggests they have fallen close to zero for February, according to Henning Gloystein, director of energy, climate and resources at Eurasia Group.

Last year, Japan has boosted imports from Indonesia, Australia, South Africa, Canada, Colombia and the US., trying to lower the impact of decreased shipments from Russia.

(Writing by Tammy Yang  Editing by Alex Guo)
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