Australian coal and iron ore company Resourcehouse said over the weekend it had signed a record $60 billion coal supply deal with Chinese power stations, a move analysts said underscored Chinese companies' growing demand for energy to fuel the country's economic development.

Resourcehouse will supply 30 million tons of coal annually over 20 years to China Power International Development Ltd, a unit of major power producer China Power Investment Corp (CPI), Clive Palmer, chairman of the Australian company, said on Saturday.

The deal with CPI is Australia's biggest export contract, Palmer was quoted by Reuters as saying, adding that coal will be developed from a major new project in Australia's Queensland state.

The contract marks how Chinese power companies are accelerating their efforts to secure overseas coal supply for further growth, said Han Xiaoping, chief information officer of energy portal China5e.com.

"With such a long-term contract, Chinese companies can have access to sustainable supply that is beneficial to their development," Han said.

China's power consumption is expected to rise 7 percent this year, in line with the anticipated economic growth rate of 8 percent, according to the State Electricity Regulatory Commission (SERC). Such growth will in turn boost the country's demand for coal, Han said.

Currently, China's coal imports come mainly from Southeast Asian countries such as Vietnam and Indonesia. New coal imports from Australia will also diversify the country's coal supplies, which will further ensure the country's energy security, he said.

Coal fuels about 70 percent of China's primary energy consumption, with the country becoming a net coal importer for the first time last year, according to the National Energy Administration (NEA).

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said that besides signing more long-term contracts, Chinese companies should also be more involved in developing overseas coalmines.

"We should learn the lesson from Chinese steel makers, which are relying too much on overseas iron ore," he said.

Rising coal prices in the domestic market are another reason for Chinese companies' growing attention on overseas coal resources, analysts said.

Domestic coal prices are currently higher than those in the international market and it is natural for Chinese power companies to set their sights on foreign suppliers, said an industry insider who did not want to be named.

Chinese power companies may also incur losses this year due to hikes in contract coal prices, said Xue Jing, director of the statistics and information department under the China Electricity Council.

"The industry is expected to see losses this year. Some thermal power plants have already plunged into the red in January," Xue said.

The contradiction between market-based coal prices and government-capped electricity tariffs is also a main reason behind the losses. Faced with rising coal prices, a number of power companies, especially those in southern China, have increased their use of imported coal, she said.

International coal prices had dropped sharply amid the financial crisis but they have also started to firm up with the global economic recovery gaining ground, she said.

LNG imports

China is also set to import more liquefied natural gas (LNG) and build more LNG terminals to meet its rising energy demand, said NEA head Zhang Guobao yesterday.

The country will build LNG receiving terminals in Qingdao of Shandong province and Zhuhai of Guangdong province this year. It will speed up development of natural gas fields in the central and western regions, as well as those offshore, he said.

The country imported about 3.5 million tons or 500 million cu m of natural gas last year, which is equal to nearly 6 percent of total consumption, he said.

Domestic companies should take advantage of the LNG oversupply on the international market to secure more long-term overseas supplies, Zhang said.

China is now importing the resource from countries including Australia, Indonesia, Malaysia, Qatar and Papua New Guinea.