Shenhua signs $10bn contract with Rostec to develop deposits Siberia and Russia

4 September 2014 (Last Updated September 4th, 2014 18:30)

China's largest coal producer Shenhua Group has signed a memorandum of understanding (MoU) with Rostec to develop coal deposits in Siberia and the Far East of Russia.

Shenhua

China's largest coal producer Shenhua Group has signed a memorandum of understanding (MoU) with Rostec to develop coal deposits in Siberia and the Far East of Russia.

Under the deal, the companies also plan to develop industrial and transport infrastructure and build generating capacities and high-voltage transmission lines for exporting electricity to China.

Rostec CEO Sergey Chemezov said: "Rostec develops cooperation with the Chinese partners in a number of areas.

"Strengthening of this cooperation is mutually beneficial. Partnership with Shenhua is a part of the comprehensive effort to expand the Russian energy presence in the Asia-Pacific region. Total investment volume in the project will be $8bn to $10bn."

"Partnership with Shenhua is a part of the comprehensive effort to expand the Russian energy presence in the Asia-Pacific region."

As per the MoU, the firms plan to begin exploration work at Ogodzhinsky coal deposit in the Amur region of Russia and construct the $1bn coal terminal, Port Vera, in Primorsky Krai by 2016.

In addition, the development will see the construction of open pit coal mines and an enrichment plant, power generating facilities, and related social and transport infrastructure.

The coal mine, which is located in the Gerbikan-Ogodzhin coal basin, is estimated to have 1.6 billion tonnes of coal deposits and is expected to produce around 30 million tonnes of coal a year, upon going into production in 2019.

The project is also expected to solve the energy deficit problem of the Russian Amur region and Northern China.

According to the plan, the high calorific value coal concentrate will be exported to Asia-Pacific countries, whereas the lower-grade coal will be used to generate electricity at the proposed electric power plant.


Image: Rostec CEO Sergey Chemezov. Photo: courtesy of PR Newswire Asia / Rostec.

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