Chinese miner acquires Australian coal exploration permits for $1.5 billion
September 21st, 2008 | by mantrionline |China’s state-owned Xinwen Mining Group has acquired Australian Linc Energy’s, Teresa exploration permits in the Bowen Basin for $1.5 billion as it expands overseas to gain supplies.
Despite having one of the the largest coal reserves in the world, China has begun acquiring Australian coal-mining rights, following the example of Indian, S Korean, Japanese and Taiwanese companies.
Xinwen is the third-largest coal miner in China and this acquisition comes after its bigger rival China Shenhua Energy bought an exploration licence near Gunnedah from the NSW government in Australia last month for $261 million.
Before a formal sale and purchase agreement can be finalised both companies will require undertaking a 30-day due diligence period after which the approvals are usually given in 45 days.
On receipt of government approvals, which is likely by 5 October 2008, both companies would be executing the contract and Xinwen Mining Group would pay 10 per cent or $150 million of the purchase price with the balance to be paid over six further monthly installments.
According to estimates Teresa is expected to contain approx more than 500 million tonnes of coal, out of which, a third is semi-soft to medium-hard coking coal, the remaining two-thirds is export quality thermal coal.
China is experiencing electricity shortages for the sixth consecutive year because of scarce coal supplies and since it uses coal to generate about 80 per cent of its power, Chinese coal companies are forced to source the globe to add to their capacity to meet the rising energy needs of the world’s fastest-growing economy.
According to the Coal Sales and Transportation Association of China, the country requires 2.76 billion tons of coal this year although its coal production rose 9.4 per cent to 2.3 billion tons last year but the demand this year will escalate to 5.3 per cent to 2.76 billion tons.
Xinwen Mining Group produces approx 35 million tonnes of coal per year and has over 30 billion tonnes of reserves. Xinwen also has interest in a number of Chinese steel mills.
