Hengyuan Power purchases two coalmines for $159 mln
Shanghai. December 7. INTERFAX-CHINA - Hengyuan Coal and Electricity Power Co. Ltd., a state-owned coal producer and thermal power plant operator, has purchased two Anhui Province-based coalmines from parent company Wanbei Coal and Electricity Group for a combined RMB 1.01 billion ($159 million), Hengyuan Power announced Dec. 7.
Hengyuan Power will obtain the Liuqiao Coalmine in Anhui's Huaibei City for RMB 715.17 million ($112.63 million). The mine has some 163.19 million tons of geological reserves and 33.05 million tons of proven reserves, according to the company's announcement.
In a separate deal, the company also bought the Longwangmiao Coalmine in Anhui's Suzhou City for RMB 295.39 million ($46.52 million). The mine's geological reserves total 76.21 million tons and proven coal reserves reach 10.96 million tons, said the company, noting that both deals are expected to be finalized Dec.12.
"Considering the soaring price of coal on the domestic market, the cost of the two deals is reasonable," coal industry expert Li Zhaolin told Interfax. "Coal will continue to feed the majority of China's power consumption over the next few years which should reinforce coal prices in the short term."
"While a number of private coalmine owners are being phased out of the market, state-owned companies such as Hengyuan Power are quickly grabbing upstream coal resources to lock in long-term profits," said Li.
Shanghai Stock Exchange-listed Hengyuan Power produced 12.26 million tons of coal in 2010, up 11.45 percent year-on-year. The company booked business revenues and net profits of RMB 6.99 billion ($1.10 billion) and RMB 951.17 million ($149.77 million), respectively, last year.
Shares of Hengyuan Power rose 1.06 percent Dec. 7, closing at RMB 15.25 ($2.40).
-WV