One of China’s major coal production bases, Northern Henan Province in central China, has announced a new round of mergers and acquisitions in its coal industry.
The Henan provincial government said in a plan released on Tuesday that the mergers will target small coalmines with an annual production capacity of 150,000- 300,000 tons.
Twenty-one ‘backbone’ mining enterprises, each with an annual production capacity of over 1 million tons will play a pivotal role in the restructuring, according to the plan. One the round of mergers is complete the 21 large enterprises must hold stakes of at least 51 percent in the smaller firms.
By the end of the year three hyper-mining enterprises, each with an annual output of over 50 million tons will be created and by March 2011 the number of mining enterprises will be cut to around 50. There are currently 793 coal mines in Henan with an annual production capacity of less than 300,000 tonnes, some 85 per cent of which is accounted for by 670 small coalmines.
Investment in Henan's coalmines is mostly from local investors and the plan requires that small coalmines not participating in the M&A process will be ordered to cease mining exploration.
Henan is China’s fourth-largest coal production base with output in 2009 totalling 230 million tonnes, some way behind Inner Mongolia with 637 million tonnes, Shanxi with 615 million tonnes and Shaanxi with 283 million tonnes.
The amount of coal resources controlled by the backbone companies will exceed 85 percent of the province's total, and their output will account for more than 75 percent of the total, according to the plan's targets.
Henan is the second major coal producing province to launch a new round of reforms, following Shanxi, which started a process of consolidation in its coal sector in April 2009, although with fewer mines than in Shanxi the process is expected to run somewhat smoother.
No comments:
Post a Comment