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Australian state to soon finalise order for miners to beef up coal supply

MELBOURNE, Jan 31 (Reuters) - New South Wales is set to finalise an order by mid-February that will require all mining firms in Australia's biggest coal exporting state to reserve as much as 10% of their output for domestic supply.

A Department of Planning and Environment spokesperson said the government would issue final directions after talks with miners.

"The draft revised directions allow suppliers the option to provide coal from their own production or to strike an agreement from another supplier to meet their obligations under the directions," the spokesperson said.

The updated plan, disclosed last week, is designed to keep a lid on coal prices and drive down household power bills. The state last week had planned to issue the expanded order by the end of January, but has faced resistance from miners.

The department did not say how many tonnes of coal will be required.

Whitehaven Coal Chief Executive Paul Flynn has said the government appeared to be looking to secure around 3 million to 5 million tonnes, but the company was pressing the state to explain how that shortfall estimate had been determined.

Directions issued in December required a dozen coal mines that supply power plants in New South Wales to fill a shortfall in supply at a capped price of A$125 a tonne - well below the export price currently at about $265 a tonne - under a deal with the federal government.

The mines are mainly owned by Glencore Plc, Peabody Energy, New Hope Corp and Thailand's Banpu PCL .

The state now wants to spread the requirement to all the state's coal producers, including those that export all of their output, including BHP Group, Whitehaven Coal and Yancoal Australia.

BHP has said the new policy could affect its plan to keep its Mt Arthur coal mine, the state's largest single coal mine, open until 2030. (Reporting by Sonali Paul; Additional reporting by Melanie Burton; Editing by Edwina Gibbs)