ChinaCoal to inject supply into seven Chinese utilities for five years

Base price starts at $77/t and will be adjusted monthly from 2019 to 2021.

State-held China National Coal Group Corporation (ChinaCoal) has signed a 5-year contract to supply 180 Mt of thermal coal to seven power utilities. Starting from 2019, ChinaCoal will provide coal to seven national utilities, including Guangdong Yuedean Group, Jiangsu Guoxin Group, Shenzhen Energy Group, Zhejiang Energy Group and Greenland Energy Group.

Prices will be adjusted monthly using CNY535/t (around U$S77/t) as a base price during the 2019-2021 period, while prices will be negotiated between the contractual parties based on market trends for the 2021-2023 period.

Two weeks ago, ChinaCoal already signed a similar contract to supply China's top six centrally-administered state-run power utilities (Datang Group, Huadian Group, China Resources Power Holdings, Huaneng Group, State Power Investment Corp and SDIC Power Group) using the same pricing policy.

ChinaCoal expects to sign additional mid-term and long-term coal supply contracts with other utilities soon, in line with the government's strategy to ensure coal supplies at stable prices. The company is a major domestic coal producer with 63 mines spread across several provinces and autonomous regions such as Shaanxi, Inner Mongolia and Jiangsu. 41 mines are in operations and 22 under construction, with a total production capacity of 288 Mt/year. In 2017, the company sold 129 Mt (-2.3% on 2016).

This article was originally published by Enerdata.