Rule eased to attract funding for coal mines
China's ailing coal industry is looking to foreigners to give it a shot in the arm after the State Council decision earlier this year to allow overseas investors to hold controlling stakes in mining operations.
The industry needs 180 billion yuan (about HK$167.2 billion) for investment from now to 2000.
The director of the general office of the Ministry of Coal Industry, Wang Changchun, said the State Council decided to lift the restriction on the percentage of interest held by foreigners in coal mines in March.
This is part of the move to attract more capital to the industry. In all, 30 per cent of its state-owned enterprises are in the red.
'In the past, efficient coal mines in the country were not to be opened to foreigners,' Mr Wang said.
'Now they, including the Yanzhou one in Shandong, will be opened to foreigners.' The Yanzhou coal mine achieves profit of 500 million yuan a year.
The efficiency of the industry was improving with the introduction of more advanced technology, he said.
The losses incurred by the state-owned enterprises were narrowed to 1.4 billion yuan last year, down from two billion yuan in 1994, four billion yuan in 1993 and six billion yuan in 1992.
The ministry planned to turn all those enterprises around by 2000.
It was the only government department to have received an interest-free loan, aimed at taking the industry out of its losses.
The loan, worth three billion yuan a year, was being used by the industry to venture into the tertiary sector, which eventually would accommodate the huge workforce made redundant by the use of modern technology.
The industry aimed to reduce its triangular debt by 25 per cent this year.
The figure stood at 21 billion yuan by the end of last year, down 7.9 billion yuan from the year earlier.
Some of the projects opening to foreigners offered an internal rate of return of between 10.6 and 21 per cent.
Mr Wang said the investment environment was good, efficiency was improving, the range of products was wide and China's coal reserves were abundant.
