Somali pirates set to gain from Asia coal boom

By Jonathan Saul and Jackie Cowhig

LONDON (Reuters) - Booming Asian demand for South African coal will put more ships at risk from Somali pirates operating in the Indian Ocean and raise insurance and freight costs already hiked due to seaborne attacks.

Emboldened by rising ransom payments, Somali pirates have stepped up attacks in recent months, making tens of millions of dollars by hijacking ships in the Indian Ocean and the Gulf of Aden.

While pirates have hijacked oil tankers, passenger ships and yachts, they have started to target slow moving coal bulk carriers, which are easier to overcome than a large tanker.

A Somali pirate who gave his name only as Hassan told Reuters that armed gangs can operate far out to sea and were able to dodge naval warships deployed to combat their activities.

"If there are more coal ships coming, it is good news," said Hassan, who was involved in a coal vessel hijacking last year. "A bulk ship means bulk ransom."

Last October, a Chinese coal ship headed for Indian trader Adani's Mundra port was hijacked and ransomed for $4 million.

"Piracy is becoming a real headache and it's going to get much worse as more coal leaves South Africa for India, China and elsewhere in Asia," one South African shipping source said.

"It is definitely costing people more money in insurance, in fuel, in security measures."