CONFIDENTIAL
Sir Edward Youde, KCMG, MBE,
Ambassador,
British Embassy, Peking.
HKK 164/L
790. $1
2 MAR 1978
No lat ä
"B"KOW/ESC
13 March, 1978.
T
CHINA LIGHT & POWER COMPANY - COAL PURCHASES FROM CHINA.
I undertook to summarise our discussion with Sir Lawrence Kadoorie when we called on him on March 10.
2. The essence of China Light & Power's (CLP) problem is that they will require about 89,000 tons of coal per week for each of the 4 x 250 MW sets which will form the 'A' station at Castle Peak. This works out at about 1 million tons per set per annum i.e. 4 million tons per annum by the time they all come on stream in 1985. Looking to the future the 'B' station (4 x 500 MW sets) will create a requirement for a further 9 million tons per annum by the end of the next decade.
3. As I reported in my tel BTC 17 of 28 February the Australians have already made CLP an impressive offer both on grounds of price and on continuity of supply. Sir Lawrence is concerned lest the Chinese should be so late in the field that he will have had to make some commitments to the Australian suppliers; he is keen to get most of his coal from China in order to pursue his long term goal of supplying power to Kwangtung Province. Sir Sidney Gordon, on the other hand, believes that it would be prudent and commercial good sense to purchase only 60% of CLP's requirements from China and remain free to buy the remaining 40% from Australia or other free world sources. He, Sidney, is concerned byꞌ reports reaching him via China Resources that the Chinese would want to supply all the coal.
4.
Sir Lawrence is now hoping to take advantage of his invitation to Peking to have preliminary discussions about coal. You kindly undertook to discuss with Cheng To-pin whether the Chinese would prefer discussions to continue with China Resources here or to take place in Peking. Ideally, we thought it would be sensible for Sir Lawrence to discuss his requirements in broad terms with the Minister of Foreign Trade while he was in Peking leaving them to decide how the technical follow-up should be conducted. Sir Lawrence emphasised that he did not feel qualified to hold detailed technical discussions although he would, of course, be able to remind the Chinese suppliers of the need not only to make the coal available but to have the means of transporting it in bulk to the Castle Peak site. Preliminary investigations suggest that CLP would like the coal to be
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/delivered.....
CONFIDENTIAL