China Resources Power To Buy 21 Shanxi Coal Mines

Company To Invest In Renewable Energy

China Resources (CR) Power Holdings is to buy 21 coal mines in the northern part of China’s Shanxi province in a bid to achieve self-sufficiency in a third of its consumption by 2012.

The new mines - which follow the purchase in a joint-venture of 39 mines in Shanxi last year - will have a total production capacity of 7 million tonnes per year. The company is expected to consolidate them into 13 mines in an attempt to cut costs.


Speaking on the sidelines of a regional power conference in Singapore, Chief Executive Wang Shuai Ting said the purchase of the Shanxi mines "will drastically lower our exposure to high coal prices and raise our profitability."

By 2012 the company expects total coal production to be more than 30 million tonnes, accounting for around a third of its consumption.

Mr Wang also said that CR is to make an annual investment in renewable energy of $1.5 billion for up to five years to take renewable energy up to 15 per cent of its energy mix, up from 4.7 per cent at present. The company's wind power capacity will be raised to 5,000 megawatts in around 2014 from 400 megawatts now.

"Obviously, the investment return ratio of new energy is much lower than that of conventional energy, but by buying coal mines we can raise our profitability in conventional energy, which will offset the lower profitability of new energy," Mr Wang said.

"Thus the investment return ratio of the whole company will remain stable."

Tanshan Signs Coking Coal Supply Deal

According to the Assets Supervision & Administration of Hebei Province, Hebei Steel Group's Tangshan Iron & Steel Corp has signed a 15 year strategic cooperation pact with Shanxi Meijin Group and Shanxi Guangda Coking Co.

Meijin Group ranks No 1 in terms of output and assets in Shanxi's privately owned enterprises. It boasts output of 5.4 million tonnes of coke and 10 million tonnes of coal washing capacity per annum. The group possesses its own coking coal mines with workable reserves of 2 billion tonnes.

Guangda Coking Co boasts 1.7 million tonnes per year of coke output and 2 million tonnes per year of coal washing capacity. Both companies have a strong transport capacity, and will allocate a special train for Tangshan Steel to guarantee its coke and coal supply.

Tangshan Steel has sped up the development of high value added products amidst the escalating raw materials prices. Annual output will reach 16 million tonnes with output capacity hitting 18 million tonnes in the near future. Its first half profits gained 50% over the same period last year.

Source: Steel Guru