MercoPress. South Atlantic News Agency

Australia to supply 60 billion USD of coal to China in 20-year period

Clive Palmer, who controls privately-owned Resourcehouse is among the richest men in Australia

Australian company Resourcehouse Ltd. announced Saturday that it had struck a 60 billion US dollars, 20-year agreement to supply coal to China Power International Development Ltd., calling it Australia's biggest export contract.

The deal is the latest in a string of major contracts between Chinese firms and Australian resource companies as the Asian nation tries to secure the energy, steel and other materials it needs for its surging economy.

Resourcehouse said it would supply 30 million tons of coal a year to the Chinese company, at a price of about 3 billion USD a year, for 20 years starting from about 2014.

The deal will help bring about the planned development of a series of mines and other infrastructure including a 500 kilometre rail line and port facilities in the Galilee Basin in north eastern Queensland state.

“When you need a lot of money there is no better place to get it than in China,” said Clive Palmer, who controls privately-owned Resourcehouse.

“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 such as the Galilee Basin,” he said.

Hong Kong-listed China Power is the flagship company of China Power Investment Corp., one of China's top five power companies. The company did not immediately comment on the deal with Resourcehouse.

Saturday’s deal surpasses the 41.3 billion USD contract signed in August by PetroChina for access to liquefied natural gas from Western Australia, which was then the biggest trade deal in Australia’s history.

China relies on coal for as much as 70% of its energy needs, and is the world’s biggest consumer of coal. Though the government has stepped up investments in renewable energy in recent years, it still accounts for only 7% of the country’s energy requirements. With soaring energy demands, China, in 2008, became a net importer of coal for the first time.

China’s trade with Australia has risen sharply in recent years.

Bilateral trade touched 65.6 billion USD in 2008-09. Exports mainly iron ore and coal, amounted to 34 billion USD, up from 8.6 billion in 2004, according to Australia’s Department of Foreign Affairs and Trade.

Ken Henry, Australia’s Treasury Secretary, said in October China and India, with their “strong contribution to global demand for mineral commodities”, would increasingly become key drivers of the country’s growth and fuel a commodities boom.