$60B Australian Coal Deal Is Good Business For China

It is being billed as Australia’s biggest export contract, but by any measure it is a whopping deal. China Power International Development, an arm of China Power Investment, owner of Hong Kong-listed China Power, has contracted to buy $60 billion-worth of coal over 20 years from privately held Resourcehouse, starting in 2014.

Resourcehouse will be suppling 30 million tones of coal a year from the new Galilee Basin coal field in northern Queensland. The company is reported to be now planning its delayed initial public offering in Hong Kong for March to help fund the $8 billion development of the field. Much of the work will be done by Chinese companies. Metallurgical Corporation of China will build the mine and associated export infrastructure which includes a port and new rail link. Sino Coal International Engineering. China Communications Construction, and China Railway Group will be sub-contractors on the project. Export-Import Bank of China is providing $5.6 billion of financing.

Resourcehouse’s owner, Clive Palmer, who is one of Australia’s 30 richest men with fortune of $420 million, according to Forbes, has previous with China. In 2006 and 2007, he sold iron-ore-deposit leases to Citic Pacific for $415 million.

For all China’s plans to switch to green energy technologies, it is still heavily dependent on coal for power generation. The deal also suggests that relations between the two countries are back on a reasonably even keel following the so-called Rio 4 industrial espionage affair and a number of other points of conflict including Chinalco’s rebuffed attempt to buy into Rio Tinto and the visit to Australia of exiled Uighur activist, Rebiya Kadeer.

Keeping the project a largely all-Chinese affair won’t have hurt it either. But it does raise a question about how many of the expected 6,000 jobs that are forecast to be created by the deal will go to Australians.

2 Comments

Filed under China-Australia, Energy, Industry

2 responses to “$60B Australian Coal Deal Is Good Business For China

  1. Pingback: $60B Australian Coal Deal Is Good Business For China « China Bystander | australianews

  2. Pingback: Palmer Faces The Perennial China Question: How Binding Is An Agreement Of Intent? « China Bystander

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