Sydney: Australian miner Resourcehouse yesterday said it had signed a $60bn coal deal with energy-hungry China, calling it the country’s “biggest-ever export contract”.
Resourcehouse chairman Clive Palmer said the company had negotiated a 20-year agreement to supply China Power International Development (CPI) with 30 million tonnes of coal a year from a proposed mine in central Queensland.
“This deal with CPI is Australia’s biggest ever export contract,” Palmer said in a statement.
The latest in a string of major deals between China and resource-rich Australia, the project signals a thaw in diplomatic tensions surrounding the detention of Rio Tinto executive Stern Hu and fraught iron ore price talks.
It also reflects China’s gradual turn from being a major coal exporter to increasingly importing the fuel from countries such as Indonesia and Australia.
Palmer, Australia’s fifth-richest man, said he had awarded the engineering and construction management contract for the $8bn thermal coal mine, named “China First,” to Metallurgical Corp of China (MCC).
“MCC will manage a syndicated group consisting of Sino Coal International Engineering Group, China Communications Construction Company (First Harbour) and China Railway Group Limited (CREC) to build Australia’s largest coal mine along with the required export infrastructure,” the billionaire magnate said. The Export-Import Bank of China had financed a $5.6bn loan, Palmer said, but emphasised the project was 100 percent Australian-owned.
“This is Australia’s largest single, non-syndicated, finance deal and the interest from China highlights the strength of the project and the benefits for Queensland and Australia in developing a new world-class coal region,” he said.
A spokesman said Palmer was likely to fund the outstanding $2bn in construction costs.
Executive director Phil McNamara said the “once-in-a-century project,” which is expected to begin construction later this year, would include open-cut and underground mines and a 495km rail line.
Queensland premier Anna Bligh said the project would create tens of thousands of jobs, with annual royalties in excess of $605m to flow to the state government from 2014.
CPI chairwoman Li Xiao Lin said the project was “opening up a massive new coal resource and the CPI Group of companies are pleased to be involved”. China, the world’s largest producer and user of coal, underpinned 10 years of stellar growth for Australia’s economy until the global financial crisis. Treasury chief Ken Henry in October predicted Chinese and Indian demand for resources would underpin a return to a decades-long commodities boom.Australia is already China’s largest source of coal imports, accounting for 43.9 million of the 125.8 million tonnes of coal imported by the Asian giant in 2009.
China was Australia’s third-largest investor in 2008, behind the United States and Britain. It accounted for 49 of the 153 deals involving Asian investors, mostly in mining acquisitions.
In August Australia inked a record $41.3bn, 20-year deal to supply liquefied natural gas to PetroChina from its massive Gorgon gas field.
Two-way business between the countries has soared, averaging 22.5 percent growth over the past five years, putting China on course to outstrip Japan as Australia’s top trading partner.
Chinese state-owned firms have made a series of bids for Australian resources, including the approval last October of Yanzhou Coal’s $3.2bn takeover of miner Felix.
Palmer plans to float Resourcehouse on the Hong Kong stock exchange next month in a bid to raise up to $3bn for coal, iron ore and oil and gas projects in Australia and oil and gas exploration in Papua New Guinea.
A November research report prepared by Macquarie Group analysts said Resourcehouse had a strong relationship with the Chinese government and “it is expected that a large part of its projects will be debt funded out of China.”
