ASF Group to supply coal to Fujian Materials
Sydney-based China energy and resource conduit, ASF Group (ASX: AFA) has struck an agreement to supply coal to China.
In September 2009, ASF announced a venture with a Fujian state-owned enterprise, Fujian Materials (Group) Co., Ltd (FMGC) for sale and export of coal to China.
FMGC intends to import 2 million tonnes of coal annually from Australia, steadily increasing this to 10 million tonnes per annum.
FMGC has agreed to purchase coal exclusively from ASF Group sourced from the Australian energy and resources sectors.
The coal will be sourced from coal fines deposits at coalfields on the south coast of New South Wales.
ASF Energy is also seeking other supply sources of Australian east coast coal which could either be contracted for supply or acquired to assist ASF to expand its coal supply and export business.
FMGC has already raised a Letter of Credit in ASF Energy’s favour in respect of the first shipment, comprising approximately 45,000 tonnes of coal which is expected to depart Port Kembla by February, 2010.
Subject to the successful completion and delivery of this shipment, ASF Energy intends to make regular monthly 45,000-tonne coal export shipments to FMGC, thereby creating a significant source of recurring cash flow for ASF.
ASF Group chairman, Min Yang said the company is encouraged by the exclusive working relationship with Fujian Materials. The first transaction represents a qantifiable first step in the relationship with a key Chinese state owned enterprise.
ASF is looking to develop a profitable business in the export of coal from Australia to China. The company's key relationships in China had been instrumental in the procurement of the agreement.
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