Peabody signs joint venture deal with China’s Shenhua Group

Peabody Energy (NYSE: BTU), the nation’s largest coal producer and also a major coal producer in Australia, and China’s Shenhua Group have entered into an agreement to create Sino-Pacific Coal Trading Corporation Pte. Ltd.

This will be a Singapore-based joint-venture company that will supply Shenhua’s growing coal import demand with thermal coal from Peabody’s global production and coal trading platform. 

Peabody Energy President-Asia and Trading Christopher Hagedorn said in a Dec. 18 statement that the new 50/50 joint venture between the two companies represents a significant milestone in Peabody’s Asia growth strategy.

“Globally, Shenhua is one of the world’s largest importers of thermal coal and this important partnership will give Peabody a priority position to supply Shenhua’s growing import needs with coal from Peabody’s expanding global platform,” said Hagedorn. “Annual world coal demand is expected to grow by 1.2 billion tonnes in the next five years, with more than 80 percent of projected global demand growth in China and India. Over the last decade, Peabody has been reshaping its global platform to better serve this high-growth region.” 

Subject to regulatory review, Sino-Pacific Coal Trading is expected to begin operating in 2014, sourcing coal from key global supply basins to provide Shenhua with thermal coal for its Chinese generating subsidiaries. 

Shenhua Group is the largest coal company in China and the largest coal distributor in the world. As of the end of November 2013, it had more than 65 million kilowatts of installed power generation capacity. 

St. Louis-based Peabody Energy is the world’s largest private-sector coal company. The company serves metallurgical and thermal coal customers in more than 25 countries on six continents.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.