Engie and Mitsui have reached an agreement with China’s Alinta Energy to sell the Loy Yang B coal-fired power plant in Australia.

Alinta’s owner, Chow Tai Fook Enterprises, has entered into a conditional binding agreement to acquire the plant in Victoria state.

It will pay over A$1.1 billion for the 1000 MW plant, according to the Reuters news agency. Engie owns 70 per cent of the plant and Mitsui the remainder.

Engie CEO Isabelle Kocher said that the transaction “confirms Engie’s positioning in low carbon generation”. Coal will represent six per cent of Engie’s global power production capacity after the sale, compared with 13 per cent at the end of 2015, the firm said.

Alinta said that the acquisition of Loy Yang B would secure the future of the plant and also provide certainty to electricity supplies in Victoria’s Latrobe Valley region.

“This transaction, led by the Alinta Energy team, adds modern, reliable and efficient baseload generation of scale to our portfolio and will further support us playing a key role as a responsible and growing energy company driving real competition on the east coast of Australia,” said Alinta Energy Managing Director & Chief Executive Officer, Jeff Dimery.

Alinta operates around 2000 MW of generating capacity and serves around 800 000 combined electricity and gas retail customers in Australia.

The acquisition of Loy Yang B will help the company compete with Australia’s other large energy firms, including Origin Energy, AGL Energy and Energy Australia.