Prima Multi Artha (PMA), an Indonesia-based trade and investment company, has reached initial agreements with Beijing-based Datang International Power Generation Co Ltd, to supply some 6 million tons of thermal coal to its three power plants along the east coast.

"We are fully prepared on the Indonesia side, and will export coal to China as soon as the talks are finalized," Bambang Wiranto, business development director of PMA, told China Daily on Friday in an interview in Beijing.

The deal is the Indonesian firm's first attempt to cash in on China's surging energy demands. According to the negotiation timetable, the first ship carrying PMA's coal is expected to arrive in China by the end of this year, said Du Jinping, deputy board director of Beijing Zhongxing Henghe Investment Consulting Co Ltd, who is the business consultant to PMA's Chinese operations.

"We have signed letters of intent with Datang, and further long-term supply contracts can be expected soon," Du told China Daily.

PMA said their competitiveness lies in cheap transportation costs and high coal quality, notably its low sulphur content.

Since China's coal reserves are mostly located in the north of the country, insufficient transportation has created a bottleneck in supplying coal-fired power plants in economically-developed South China, keeping the prices high.

For example, shipping cost from Indonesia to Ningbo, a port in East China's Zhejiang Province, will be 97.2 yuan (US$12) per ton of coal, while the transportation cost from Datong, one of China's biggest coal-producing bases, to Ningbo, which involves both rail and shipping, is at least 20 yuan (US$2.5) more, said Du.

PMA expects to keep its coal price 2 percent lower than that of domestic coal.

Bai Fugui, manager of the fuel unit under Datang, told China Daily on Friday that his company would be interested in the competitive price.

"Coal quality from the domestic producers is not fully guaranteed as well," Bai said.

Datang is now building three coal-fired power plants in Zhejiang, Guangdong and Fujian provinces. These plants have a total capacity of 4,800 megawatts.

(China Daily November 28, 2005)