China Resources Power bosses deny coal mine-purchase fraud accusation
Senior executives of China Resources Power maintain they are not aware of any irregularities concerning a controversial acquisition of coal mines in 2010.
Company president Wang Yujun said yesterday the firm had no plan to invest in more coal mines, after setbacks due to Shanxi provincial government policies that delayed resumption of mine production after a period of industry consolidation.
"Since we invested in the three mines in Gujiao, Shanxi, in 2010 on invitation from the local government, to help consolidate the industry, the provincial government has been supportive and no government official has told us our mining rights are invalid," Wang said.
Former chairman Song Lin, now the chairman of parent China Resources Holdings, was accused by a mainland investigative journalist of ordering the acquisition at an inflated price even though the mines' exploration and production rights had expired.
Six minority shareholders are seeking a court order to nullify the 7.9 billion yuan (HK$10 billion) deal by a 49 per cent-held unit of China Resources Power, claiming the management of the firm hurt their interests.
Wang said one of the mines received a production permit last month and had the capacity to produce 1.8 million tonnes next year. The other two mines were expected to receive permits soon and might start production next year.
Although the three mines primarily contain coking coal, used to smelt steel, he said they held premium quality coal.
China Resources Power's investment in them was not in conflict with its goal of enhancing coal self-sufficiency, since it could "swap" output with other coal miners in the region, he said.
Chairman Zhou Junqing said the renewal of mining permits had been delayed by the Shanxi government's effort to ensure safe production.
Asked why the management had been unwilling to respond to external inquiries since allegations surfaced in March, chief financial officer Wang Xiaobin said there was a need to ensure commercial confidentiality and fair and simultaneous disclosure.
The company released statements through the stock exchange on July 18 and August 5 denying any wrongdoing. Yesterday was the first time executives of the company publicly responded to the accusations in an interactive manner.
It said yesterday its net profit in the first half rose 78 per cent to HK$5.33 billion on a 19 per cent fall in the per-unit cost of producing coal.