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Palmer Says $8 Billion Coal Mine to Proceed on Funding Accord
March 19, 2010, 1:07 AM EDT
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e-mail this story print this story digg this save to del.icio.us add to Business Exchange By Rebecca Keenan

March 19 (Bloomberg) -- Resourcehouse Ltd., controlled by mining magnate Clive Palmer, said its $8 billion thermal coal mine in Australia will proceed after agreeing financing.

A $5.6 billion loan with Export-Import Bank of China is expected to be completed next week and new investors have agreed to provide the balance, Chairman Palmer said today.

Resourcehouse wants to sell coal and iron ore to supply steel mills and power companies in China, challenging producers such as BHP Billiton Ltd. and Rio Tinto Group. The company is still studying an initial share sale in Hong Kong, though no decision has been made, Palmer said.

We are in the final stages of issuing our term sheet for our loan, Palmer said in an interview in Sydney. I would expect that to be issued within the next week. It means the project is going ahead.

China Power International Holding, a unit of China Power Investment Corp., has agreed to buy 30 million tons of coal a year from the project in Queensland. Chinas demand for power coal may grow between 4 percent and 5 percent for at least the next 10 years, he said.

We have got other investors that have agreed to provide for the subscriptions of capital to the company, he said without naming the investors.

Palmer awarded an $8 billion engineering and construction- management contract for the China First project to Metallurgical Corp. of China Ltd., according to a Feb. 6 statement.

Metallurgical Corp. signed an accord to buy $200 million of shares in Palmers Resourcehouse, the Chinese company said Feb. 3 in a filing to Shanghais stock exchange.

Resourcehouse also has the rights to 10 billion tons of iron ore in Western Australia, according to a report from adviser Macquarie Group Ltd.

The company may be seeking to raise as much as $3 billion in a Hong Kong IPO, two people familiar with the plan said in November.

--Editors: Keith Gosman, Andrew Hobbs

To contact the reporter on this story: Rebecca Keenan in Melbourne at [email protected]

To contact the editor responsible for this story: Andrew Hobbs at [email protected].