China Shenhua Energy, the nation's largest coal producer, plans to acquire four coal companies from its parent, which could boost its reserves by 31 per cent and output by 39.5 per cent.
Chairman Chen Biting yesterday confirmed the acquisition plan that was referred to in a JP Morgan research report on Wednesday.
'We are in talks with the companies to be acquired,' he said. 'As we have not reached an agreement, I cannot tell [the size].'
The report said Shenhua aimed to buy Xisanju, which has an annual coking coal output of about 17 million tonnes in Inner Mongolia, next year. It is estimated to have 872 million tonnes of coal reserves.
Also in the acquisition pipeline are Baorixile in Inner Mongolia with 234 million tonnes of reserves and five million tonnes of annual output; Shenhua Ningxia Coal with 1.3 billion tonnes of reserves and 20 million tonnes of output; and Shenhua Xinjiang with 2.08 billion tonnes of reserves and six million tonnes of output. The parent has a 70 per cent stake in each.
Their total reserves came to 4.5 billion tonnes based on mainland estimation standards, and equivalent to about 2.25 billion tonnes when converted into international standards, the report quoted Shenhua management as saying.