CRG wins contract to build and run Indonesian coal railway

China Railway Group (CRG; 0390.HK, 601390.SH) will build and operate an Indonesian coal railway under a US$4.8 billion, 24-year contract, the Financial Times reported. The deal, which will see the Chinese firm design, construct and manage the rail line in South Sumatra for Bukit Asam Transpacific Railway Corp, comes just two weeks before Premier Wen Jiabao is scheduled to visit Indonesia. CRG already has a 10% stake in Bukit Asam Transpacific Railway. It will fund the railway through an agreement with Agricultural Bank of China, whereby the bank will provide up to US$16 billion over a three-year period to support CRG projects, including those overseas. Bukit Asam, a mining group that part owns the railway company, said negotiations are underway with four Chinese banks to finance 70% of the project, with the rest coming from internal sources. Technologically competitive with their global rivals – and cheaper – China’s rail companies are wining a growing number of projects across the world.