Datong Coal plans 2b yuan listing
Assets are expected to include stake in a joint venture with Datang International
Datong Coal Mining, China's second-largest coal producer, aims to raise between 1.8 billion yuan and two billion yuan through a Shanghai listing this year. The proceeds will fund its expansion amid growing demand from the power industry.
The recently restructured company - based in the nation's largest coal-producing province, Shanxi - received approval last Tuesday from the China Securities Regulatory Commission to issue Shanghai A shares.
'It has hired United Securities to handle the listing,' a source close to the company said. 'It is hoping to raise as much as two billion yuan, but that will depend on market conditions at the time of listing.'
Assets to be included in the listing vehicle will include a 51 per cent stake in a recently formed joint venture with Hong Kong-listed Datang International Power Generation, a 15 million-tonne-a-year mine in Ta Shan, Shanxi.
Other mines to be listed include the 10 million-tonne-a-year Tongxin mine, 15 million-tonne Suonan mine and five million-tonne Youyu mine.
Including the Ta Shan mine, which is scheduled to start operations next year, the four mines will have total output capacity of up to 45 million tonnes.
Founding shareholders of Datong Coal Mining included China Huaneng Group, Shanghai Baosteel Corp, Qinhuangdao Port Authority and the Datong Railway Bureau, all of which had stakes in some of the mines, the source said. The listing candidate is part of Datong Coal Mining Group, formed in December last year by the merger of three firms operating nine coal mines with combined assets worth 22 billion yuan.
The merger was part of the central government's plan to create eight to 10 mining groups with minimum yearly production capacities of 50 million tonnes, consolidating the industry.
With coal reserves of an estimated 89 billion tonnes, Datong Coal Mining Group specialises in the production of thermal coal, and supplies to power plants mainly in Shanghai and the provinces of Zhejiang, Jiangsu, Guangdong and Hebei.
The group's annual output is expected to reach 80 million tonnes this year and 100 million tonnes in 2006.
The No1 supplier, Shenhua Group, produced about 100 million tonnes last year, mainly in Shaanxi province, to the immediate west of Shanxi. It is hoping to list in Hong Kong late this year to raise some US$1.5 billion.
Shanxi is the mainland's largest coal-suppling province, providing about 25 per cent of total output of 1.7 billion tonnes last year, and 75 per cent of exports of about 90 million tonnes.
Analysts expect the national output to rise to 1.9 billion tonnes this year, on the back of strong power demand. China plans to invest more than 200 billion yuan on new electricity plants this year to alleviate crippling power shortages.
Higher than expected power demand and under-investment in coal mine development have resulted in tight coal supplies since the middle of last year, and higher prices.
H share Yanzhou Coal Mining's domestic sales prices for long-term contracts this year rose 10.4 per cent year on year, while that of exports rose about 70 per cent.