Three major electricity companies of Guangdong Province signed a contract with Pt Adaro Indonesia this week to import 32.5 million tons of coal in the next five years.
According to the contract, the Indonesian coal producer will supply 15 million tons, 9 million tons and 8.5 million tons of coal to Guangdong Yudean Group Co Ltd, Shenzhen Energy Corporation and Huaneng Power International INC respectively between 2008 and 2012.
This is the largest coal import deal energy-hungry Guangdong has signed with a foreign company.
Li Xiangming, deputy director of Guangdong Provincial Economic and Trade Commission, said the contract is of great significance in ensuring coal supply to the prosperous province.
Last year alone, Guangdong consumed more than 100 million tons of coal, accounting for about eight percent of the country's total. And all the coal had to be purchased from outside the province.
"The big coal purchase will also help further expand the cooperation between Guangdong and Indonesia in the energy sector," Li said.
Guangdong is talking with the Philippines as well for coal. The province's coal suppliers also include Vietnam, Australia, India and Russia.
The province will purchase over 20 million tons of coal from around the world this year. The figure, a record, will double that for 2006.
Guangdong's coal imports will continue to expand in the following years, offering even more business opportunities to major coal producers in the world, Li said.
Guangdong, which lacks natural and energy resources, has to annually increase its coal imports to support its economic development as major Chinese coal producers have failed to satisfy its demand.
Guangdong companies recently signed contracts with major coal producers in Shanxi Province and the Inner Mongolia Autonomous Region to buy more than 80 million tons of coal from 2008 to 2010.
Li estimates Guangdong's coal consumption will grow at an average 15 percent annually in the following years. The coal is mainly used by the thermal power plants.
Thermal power plays an important role in Guangdong, where nuclear, wind and solar power generation has not fully matured.