* Baosteel, Minmetals to sign MoUs with Australia's Celsius
Coal for supply
* Celsius's coal mine in Kyrgyzstan can start producing in
By James Regan
SYDNEY, March 4 China's Baoshan Iron & Steel
(Baosteel) and Minmetals Development are
near deals to buy at least half a million tonnes of coal a year
from an Australian firm operating in Kyrgyzstan, sources said.
The bid by the industrial conglomerates to get coal from
China's western neighbour comes amid efforts to curb the burning
of the resource in and around the capital Beijing, where air
quality has left the city shrouded in a noxious haze at times.
Baosteel, China's largest steel producer, intends to ship
its share of the coal to its Bayi Steel works in Xinjiang
province, a source close to the deal talks told Reuters on
Tuesday. The region is on the western edge of northern China,
bordering Kyrgyzstan and about 4,000 kilometres (2,500 miles)
The non-binding agreements are to be signed with
Australia-listed Celsius Coal Ltd which is developing a
metallurgical coal mine in the Central Asian country that could
be in production in two or three years.
"We should see these non-binding MoUs (memorandums of
understanding) signed by the end of this week," another source
close to the talks said. Baosteel and Minmetals did not
immediately respond to requests for comments.
The agreements would see Baosteel and Minmetals split 50-50
an estimated 500,000-600,000 tonnes of coal mined annually.
Xinjiang has been earmarked for policy-led economic growth
initiatives by Beijing, including building of new roads and
other infrastructure to encourage economic development.
China will boost development in ethnic minority areas and
spur their industrialisation, a senior Communist Party official
said on Monday, in implicit recognition of the economic causes
of some unrest in areas like Xinjiang.
The comments by Yu Zhengsheng, the fourth most senior ruling
party member came as China reeled from a deadly attack on a
train station blamed on militants from Xinjiang.
Under China's current Five-Year Plan, steel output in
Xinjiang is earmarked to climb to 23 million tonnes a year in
2015, with 7 million tonnes new capacity added in 2013 alone.
Baosteel, which acquired the Bayi Steel works in 2007, has
said it wants to become the primary supplier of steel in the
west region of China.
To do that, it will need coking coal for steelmaking, which
is in short supply in Xinjiang, where all coal but about 2
percent is of thermal grades used to generate electricity.
As a result, coking coal in Xinjiang typically sells at a
premium to other markets.
(Additional reporting by Fayen Wong in SHANGHAI; Editing by