Chinese power supply company China Power International Development Ltd (China Power) has declared that the coal purchase agreement it signed with Australian miner Resourcehouse was just a framework agreement and that the sides have not yet started price negotiations. Resourcehouse had announced on Saturday, February 6, that the two parties had signed a deal worth $60 billion for an annual supply of 30 million mt of coal over a 20-year period.
An official at China Power said that the sum of $60 billion was just an estimate made by Resourcehouse ahead of its listing on the Hong Kong stock exchange next month.
According to some industry insiders, based on the $60 billion estimate, the average price of coal ordered by China Power would be around $100/mt, higher than the spot price level of $91.83/mt for steam coal at the Australian port of Newcastle. Thus, the Resourcehouse estimate implies a very unfavorable price for China Power.