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Shanxi coal firms jump on restructuring bandwagon

By Yu Tianyu (China Daily)
Updated: 2009-07-09 08:00

Coalmines in Shanxi are quickening their pace of restructuring, backed by the government, in a move that could eventually see the public listing of all choice assets instead of fragmented pieces held by various listed subsidiaries and units.

The overall plan calls for the listing of the five leading coal producing enterprises in the province known for its rich coal deposits before 2015, said an official with one of the enterprises.

The five companies are Datong Coal Mine Group, Shanxi Coking Coal Group, Lu'An Group, Yangquan Coal Industry Group and Jincheng Anthracite Mining Group.

Wen Shihua, vice-general manager, Jincheng Anthracite Mining Group, told China Daily that the company has been planning an initial public offering for some time now and is accelerating its efforts by setting up a special department headed by a general manager for the listing.

Wen's comments come close on the heels of those made by Ren Runhou, chairman of Shanxi Lu'An Environmental Energy Development Co Ltd, a listed subsidiary of Lu'An Group, to Shanghai Securities News, that the parent firm was in the process of going public.

The fineprint of Shanxi's Capital Market Development Plan between 2009 and 2015, issued by the provincial government in April, has said the listing of the five top coal enterprises is key to promoting the province's economic development and also the enhancement of the nation's energy security.

It also said Shanxi is striving to complete the full listing of one or two coal producers by 2012 and all the top five coal firms are expected to go public by 2015.

Apart from Jincheng Group, the other four firms have already owned listed subsidiaries. Jincheng Group is committed to listing its subsidiary Jincheng Blue Flame Coal Industry Co Ltd by 2010, said Wen.

He said the company abandoned its IPO plans last year, partly because of the country's gloomy capital market and some other reasons that he refused to disclose. The company has roped in China International Capital Corp (CICC) for the IPO plans.

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"The listing would help the company to raise funds, especially at a time when the company is accelerating its development plans," said Wen.

He said it was also difficult for an old State-owned enterprise to transform into a listed company as it carries with it legacies like excess staff and an old style of management.

Currently, only a part of these firms' coal assets have been listed. Industry insiders said that in a bid to eliminate internal competition, it would be better to bring all coal assets into the listed arms and achieve complete listing.

Once completed, the listing would also help coal firms strengthen resource reserves and the production capacity of their listed arms, industry insiders said.

According to statistics, Datong Coal Mine Group produced 122 million tons of coal in 2008, while it owns 6,157 sq m coalfield with reserves of 89.2 billion tons. Its listed subsidiary, Datong Coal Industry Co Ltd, produced 20.3 million tons of coal.

The coal output of Shanxi Coking Coal Group in 2008 was about 80.3 million tons with reserves of 50.3 billion tons. Its listed Shanxi Xishan Coal and Electricity Power Co Ltd produced 16.3 million tons.

Lu'An Group produced 42.1 million tons of coal with 40 billion tons in reserves while coal output of Lu'An Environmental Energy Development Co Ltd was 25.8 million tons last year.

China's largest anthracite coal producer, Yangquan Coal Industry Group, has an annual capacity of producing 44 million tons of coal, with about 12 billion in reserves. Its listed entity Shanxi Guoyang New Energy Co Ltd produced 17.7 million tons of coal.