Under a memorandum of understanding with major multinational China Metallurgical Group Corporation, the JV will develop a $US5.15 billion, 40 million tonnes per annum mine in Queensland.

To be renamed “China First”, the development will create tens of thousands of jobs and help Queensland recover its AAA credit rating.

The project will also develop 490 kilometres of railway line and a two-berth export terminal at Abbot Point.

Waratah chairman and billionaire investor Clive Palmer said MCC had agreed to be the engineering, procurement and civil (EPC) contractor for the project.

“They have also agreed to arrange debt funding of up to 60 per cent of the total capital cost, estimated at $US3.1 billion, from Chinese banks,” he said.

“MCC will provide or arrange, from Chinese sources, 10 per cent of the estimated capital cost, around $US515 million for 10 per cent of the project.

“One hundred per cent of the project will be contracted by MCC as the EPC main contractor, and MCC is responsible to procure all the engineering equipment for the project.”

Apart from taking care of the construction needs, MCC will also take up a major slice of the future mine production.

Palmer said MCC had guaranteed it would purchase 30Mtpa, at an estimated value of $US3 billion per annum and $70 billion over the life of the mine.

The China First project is aiming to mine 1.4 billion tonnes of coal over 25 years, while Waratah’s acreage has more than 4.9Bt of inferred thermal coal resources.

The mine is targeting first coal production in late 2013, with the coal to be processed at an onsite facility north of Alpha and 160km west of Emerald.

Waratah is expecting the China First project to create 6000 direct jobs during construction and 1500 during operation.

“The impact on the Australian economy overall is estimated at an additional 45,000 jobs,” Waratah said in a statement.

Palmer is expecting China First to lead Queensland’s economic recovery.

“This project will assist the Queensland government in regaining their AAA credit rating once it is operational and will provide great support for the people of Queensland,” he said.

“It is creating billions of dollars in exports and thousands of jobs for Queenslanders.

“This is the project of the century as it will open up all the wealth of the Galilee Basin – wealth that can be deployed for the benefit of Queenslanders and Australians.”

Waratah chief executive officer Peter Lynch also praised the new JV deal.

“Within just six months a relatively small company like Waratah Coal, who previously had a modest capital base, has acquired funding and has sales in place for a project that has a net present value of more than $US8 billion,” Lynch said.

Previously listed on both the Australian Securities Exchange and the Toronto Stock Exchange, Palmer’s private company Mineralogy recently bought up whole ownership of Waratah.

Waratah was delisted from the TSX only last month.

“Palmer acquired Waratah late last year and we’ve had no redundancies,” Lynch said.

“In fact, we’ve moved forward in a positive manner and this announcement today, along with the sheer scale of this development, demonstrates that in amongst the doom and gloom of the global financial crisis there are still great opportunities.”

Lynch told ILN MCC had made a definitive bid for the project based on detailed pricing and costing of its design.

He said Australia had a stable coal industry compared to some of the other options, and Chinese companies were very keen to invest.

“Australia is still the biggest coal exporter in the world and the Chinese recognise it’s a good place to have a strategic interest,” Lynch said.

He said it was great to be involved in opening up a large resource in a brand new, undeveloped basin.

“The Galilee Basin is very large and it hasn’t been on many people’s radar screens.”

He views the China First project as similar to the pioneering work Utah Corporation did in the 1970s in opening up the Bowen Basin with its development of ports, mines and the little towns in the region.

“This project will be the first project that brings in the infrastructure to open up the Galilee Basin.”

Lynch added the project would have to order mining equipment at different stages throughout the 30-month construction process, and a lot depended on turnaround and delivery timeframes in current order books.

“Different equipment has different delivery durations. We basically want to have coal production in 2013, so these days sometimes a dragline can take 30 months to build. You can get a truck turned around in about five months.”

Lynch said further details of the project had yet to be rolled out.