Firm could transform electricity sector

Tongmei invested 20.4 billion yuan to build the park, starting from 2004 and following the sharpest decline in coal prices.

"It was a bold investment at that time," Wang Aihua, the plant's Party chief, said. "Although we know integrated development of coal and electricity is the future, the decision-makers did need some bravery to invest so much money in the park - especially when the group was in extreme difficulties."

FACT BOX Datong Coal Mine Group, or Tongmei, was founded in 1949 on the base of former Datong Coal Mine Bureau in north Shanxi province. Tongmei now has 73 mines across an area of 180,000 square kilometers in Shanxi and the Inner Mongolia autonomous region. With 200,000 employees, the group has produced nearly 2.5 billion tons of coal in the past 64 years, with the record exceeding 200 million tons last year. Output changes with coal-price fluctuations. Tongmei is one of the four largest coal mine groups in China and produces one-tenth of the national total. Its businesses include coal mining, thermal power, coal chemical, metallurgy, machinery manufacturing, construction, logistics and tourism.

The efforts paid off. The park's annual net profit hit nearly 3 billion yuan, about 10 percent of it earned by the power plant.

Tongmei is cooperating with other large State-owned power groups to build similar plants at three more big mines, Yang Qiping, director of the Tashan power plant, said.

The central government recently opened the power generation sector in accordance with the reform plan approved at the Third Plenum of the Communist Party of China's 18th Central Committee in November. That has encouraged Tongmei to seek further independent growth in the industry.

"Turning coal into electricity collectively and efficiently at the mine helps clean the air for a large area of the country that would burn the coal separately otherwise," Yang said.

Tashan power plant also helps clean the air in Datong. It replaced the former 240 small coal-fired boilers with 5.5 million square meters of miners' apartment buildings in Datong. That cut 6,900 tons of smoke dust each year.

According to Tongmei's plan, the non-coal businesses should contribute 40 percent of group revenue by 2015. Most of the non-coal businesses are from the recycling economy of the Tashan park model.

This is a necessary transformation, if not an enforced change, for Tongmei because of coal-price fluctuations, serious air pollution and the exhaustion of coal resources.

The best coal at the layer of Jurassic Period is almost depleted after more than 100 years' excavation in Datong. The lower-quality coals are buried deeper, along with associated minerals.

If Tongmei does not change its exploitation technology, it cannot earn enough money to pay its miners.

If the company can seize the opportunity and expand to other related industries, it can make better use of the coal that is increasingly hard to come by and also turn associated minerals into treasures that would otherwise be thrown away as pollutants, Tongmei President Zhang Youxi said.

By 2015, Tongmei's power generation capacity will increase to 1,500 megawatts from the current 800. That will generate 2.5 billion yuan in net profit. It would be a backbone industry for Tongmei.