Russia's En+ Group, China Development Bank and Shenhua Group have signed a strategic cooperation agreement worth up to $2 billion to jointly develop coal resources in Eastern Siberia, the Russian energy company said Friday.
Under the agreement, China Development Bank will provide funding of up to $2 billion to En+ Group and Shenhua Group to develop coal resources and related infrastructure in Eastern Siberia and Russia's Far East, it said.
When the partners identify a potential project, they will bid for the license, and then set up a joint venture, a spokesman for En+ said, adding that the deal does not cover resources that En+ is already developing.
En+ and Shenhua "will invest in coal mining, exploration, preparation and processing in Russia's Siberia and the Far East region and build basic transportation infrastructure including railways, highways [and] bridges," the Russian company said in a statement.
The partners will build power stations and other infrastructure required for coal mines and also develop or improve port facilities in the Far East region, it said. They will also handle the transportation and sale of coal, En+ added.
The agreement was signed by the En+ CEO Artem Volynets and Shenhua Chairman Zhang Xiwu as well as the chairman of China Development Bank, Chen Yuan, in the presence of Russia's Deputy Prime Minister Dmitry Rogozin and China's Vice-Premier Wang Yang in Moscow.
"We are pleased to partner with Shenhua Group and China Development Bank to jointly develop [the] coal mining [sector] and infrastructure in Eastern Siberia and the Far East of Russia to supply coal products to Asia," Volynets said in a statement.
Russia possesses the world's second-largest coal reserves, more than half of which lie in the eastern part of the country, close to China and other Asian consumers, Volynets said.
"At En+ Group we believe that Eastern Siberia has the potential to become a major reliable supplier of commodities to the rapidly growing Chinese market given the geographical proximity and abundant resources. This will drive the economic growth and social progress of Russia's East," he said.
China is currently the largest consumer and a major importer of coal, accounting for about 50% of global consumption, En+ said in a statement.
En+ Group has been engaged in the development of coal mines since 2008. Its reserves of coking and thermal coal total more than 4 billion mt, while its output is more than 50 million mt/year. In 2012, En+ started supplying coal to China and other Asian countries.
Shenhua Group produced 460 million mt of coal in 2012, up 13% year on year. China's largest coal producer, Shenhua runs power plants with more than 63 GW of installed capacity as well as the Huanghua port with a capacity of 100 million mt/year and a coal port in Tianjin with a capacity of 45 million mt/year. It also operates a shipping company with 11 ships, according to the En+ statement.
