Australia-China $60 billion coal deal

CANBERRA, Australia, Feb. 8 (UPI) -- Australian mining company Resourcehouse announced Saturday it reached a record $60 billion coal supply agreement with Chinese power stations.

Under the deal, Resourcehouse will supply 30 million tons of coal annually over 20 years to China Power International Development Ltd., a unit of major power producer China Power Investment Corp.

"This deal with CPI is Australia's biggest ever export contract," said Clive Palmer, an Australian billionaire and chairman of Resourcehouse, the Financial Times reports.

The project will include a large thermal coalmine in the Galilee Basin, as well as four underground mines, two surface mines and associated coal handling and processing facilities.

While the Export-Import Bank of China has agreed to contribute $5.6 billion for the construction plan, Palmer emphasized that the project is 100-percent Australian owned.

But Chinese companies are expected to carry out most of the work, which is projected to begin later this year. Metallurgical Corp. of China, under a contract worth more than $8 billion, will build the mines and associated export infrastructure, including a new port near Bowen, Queensland, and a new 500-kilometer rail link. Sino Coal International Engineering, China Communications Construction and China Railway Group will be subcontractors.

Resourcehouse Executive Director Phil McNamara said there is a potential to create 50,000 to 70,000 indirect jobs in Queensland.

The mine is scheduled to be operational by 2013, with the first exports to China occurring in 2014.

"This is Australia's largest single, non-syndicated, finance deal," Palmer said. "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."

Li Xiao Lin, chairwoman of China Power International Development, said the China First Project would open up a "massive new coal resource and the CPI Group of companies are pleased to be involved," the Financial Times reports.

Last week MCC signed an agreement to buy $200 million worth of shares in Resourcehouse. Under the deal, MCC will own no more than 5 percent of Resourcehouse. It also agreed to take a 10 percent stake in the China First coal project.

Palmer already has a track record of doing deals with China. In 2006 and 2007 he sold lease areas of iron ore deposits to China's Citic Pacific Ltd. for $415 million.

Resourcehouse also aims to become Australia's fourth-largest iron ore producer after Rio, BHP and Fortescue. The company has rights to mine an estimated 10 billion tons of iron ore in the Pilbara, according to the Financial Times.