Peabody Energy announced today that it has formed a joint venture with Chinese state-owned enterprise Shenhua Group to help facilitate Peabody's thermal coal imports.
Ownership of Sino-Pacific Coal Trading Corporation Pte. Ltd., based in Singapore, is split 50/50 between Peabody and Shenhua and represents a major milestone for Peabody's Asia growth strategy. Shenhua Group is China's largest coal company, and the largest coal distributor in the world.
"Globally, Shenhua is one of the world's largest importers of thermal coal and this important partnership will give Peabody a priority position to supply Shenhua's growing import needs with coal from Peabody's expanding global platform," said Christopher Hagedorn, Peabody Energy's president for Asia and Trading, in a statement today. "Annual world coal demand is expected to grow by 1.2 billion tonnes in the next five years, with more than 80 percent of projected global demand growth in China and India. Over the last decade, Peabody has been reshaping its global platform to better serve this high-growth region."
The thermal coal will be sourced from across Peabody's global operations, and will ultimately find its way to Shenhua subsidiaries to be used for generation purposes.
Subject to regulatory review, the JV should open shop sometime in 2014.
The article Peabody Energy Forms Joint Venture With China's Largest Coal Company originally appeared on Fool.com.Fool contributor Justin Loiseau has no position in any stocks mentioned. You can follow him on Twitter, @TMFJLo, and Motley Fool CAPS, @TMFJLo. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.