Universal Bioenergy close to China export deal

US COAL and resources distributor Universal Bioenergy is gaining ground on a significantly valuable, multi-year export deal with an unidentified Chinese firm that would send millions of tons annually to China’s Middle Kingdom for electric power generation.
Universal Bioenergy close to China export deal Universal Bioenergy close to China export deal Universal Bioenergy close to China export deal Universal Bioenergy close to China export deal Universal Bioenergy close to China export deal

The Universal Bioenergy headquarters.

Donna Schmidt

The California-based company said it was in advanced negotiations with the Chinese company, which is seeking large quantities of high thermal steam coal for its generation needs.

In fact, the projected provision of the transaction could expand coal sales from $108 million to $270 million per year based on growing demand.

Universal officials said that it would sell an estimated 1.2-3 million tons per annum for the coming three years, with the total amount to be delivered over the term estimated to range between 3.6Mt and 9Mt at an estimated $90 per ton.

Combined, the estimated value of the transaction could total $324-810 million.

“We are forecasting the sales of coal could generate an estimated $12 million to $36 million in annual earnings,” senior vice president Solomon Ali said.

“We cannot guarantee an actual valuation, however, according to industry valuation standards using average [price to earnings] ratios from Standard & Poor’s, at a multiple of 15 times earnings a valuation of $180 million to $540 million is an estimate of the potential additional market capitalization value of this transaction to Universal.”

It did note that there was no guarantee that the negotiations would result in a completed transaction, though it felt the estimated earnings would have a positive impact on the company’s value.

According to the recently released International Energy Agency annual medium-term coal market report, coal's share of the global energy mix is growing and could surpass oil as the world’s top energy source by 2017.

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