Sembcorp Industries has annonced its plans to expand its energy business in China with the signing of a conditional joint venture agreement with a subsidiary of Chongqing Energy Investment Group, Chongqing Songzao Coal and Power LLC, to collaborate on a mine-mouth coal-fired power project in Chongqing municipality, China.
The agreement includes the acquisition of a 49% stake in an existing 300-megawatt coal-fired power plant as well as in the joint development of an adjacent 1,320-megawatt coal-fired power plant, which will be one of the most efficient power plants in Chongqing.
The two power plants are located at the mouth of the coal mines and are the only mine-mouth coal-fired power plants in Chongqing. This strategic location will bring about significant savings in logistics costs, enabling the joint venture to be a low cost power producer. The coal mines are owned by Sembcorp’s project partner, Chongqing Songzao Coal and Power LLC, further ensuring the reliability of coal supply.
The entire project will cost approximately RMB6 billion (US$1.2 billion), with the development of the new 1,320-megawatt plant expected to complete in 2017. The project will significantly strengthen Sembcorp’s energy business in China, increasing the Group’s power capacity in the country by about 2.5 times from 987 megawatts to 2,607 megawatts.
Tang Kin Fei, Group President & CEO of Sembcorp, said,
Together we are confident that the facilities will be developed and operated efficiently to international standards. We look forward to being a strategic partner to Chongqing Energy Investment Group and to further collaboration on other energy projects.
This transaction is expected to be completed by 2015 upon the satisfaction of certain conditions precedent, including approval by relevant Chinese authorities.