China and Russia signed $6 billion coal trade agreement

Thursday, 09 September 2010 11:39:05 (GMT+2)

China and Russia have signed a coal trade agreement in Blagoveschensk, a city in the far east of Russia, Chinese news sources reported.

According to the agreement, in the next five years following the deal, China will import at least 15 million mt of coal from Russia per year, with the amount increasing to 20 million mt in the following 20 years. In return, China will provide a $6 billion loan to Russia.

According to Russian data, China imported 12.09 million mt of coal from Russia in 2009, corresponding to 10 percent of China's total overseas power resources purchase amount in the year. In the first half of 2010, China imported 6 million mt of coal from Russia.

Orient Securities Ltd analyst Wu Jie comments, "Imports from neighboring Russia has strategic importance. The gradual increase in imports from this country will not affect Chinese coal market prices."

Data from Orient Securities Ltd indicates that China's average coal import price from Russia was $87/mt in 2009 while the same from Australia stood at much higher $111/mt.

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