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China's second-largest coal producer listed in Hong Kong, the
Shandong-based Yanzhou Coal Mining Co Ltd, intends to buy a 95.67 per cent stake
in Yankuang Heze Power Chemical Co from its parent company for 584 million yuan
(US$70.6 million).
The acquisition is expected to wra
p up by the end of this year at the
latest, the listed coal producer said to the Hong Kong stock exchange yesterday.
Heze Power Chemical will be entitled by the government to exploit two
coalmines at the Juye Coalfield in Shandong Province.
A shareholders' meeting is to be held on August 19 to vote on the deal
after the coal producer signed an initial agreement with the Yanzhou Coal Mining
Group as early as November 16 last year.
Under the terms of the agreement, Yanzhou Coal has already paid its parent
company 574 million yuan (US$64.9 million) as an advance payment, and will add
the remaining 10 million yuan (US$1.2 million) when the acquisition finalizes by
year-end.
The deal has yet to win the final nod from pertinent departments of the
central government, the announcement said.
"The takeover will greatly increase Yanzhou Coal's coal reserves, as well
as in the long term advance our profitability if China's economic and market
situation remain unchanged," said president Wang Xin.
Heze Power Chemical Co, established in 2002 as a joint venture between
Yanzhou Coal Mining Group and another two local coal firms in Shandong Province,
currently has two coal mines named Zhaolou and Wanfu in the province's only
undeveloped Juye Coalfield, which boasts coal reserves of at least 208 million
tons.
The Zhaolou Mine has already won the central government's approval to start
building the infrastructure within the year, and is expected to commence
operations from December 2007 to turn over 3 million tons of coal a year.
Companies involved are still conducting a feasibility study into the other
Wanfu Mine, production capacity of which is unknown, company sources said.
Yanzhou Coal said it will have to spend some 1.2 billion yuan (US$145
million) to get the Zhaolou Mine into commercial operation, and at most 1.5
billion yuan (US$181 million) is on its budget for the Wanfu Mine.
Yanzhou Coal Mining Group owns 1.67 billion shares of its subsidiary
Yanzhou Coal Mining Co Ltd, or 54.33 per cent of its total share capital.
The 2006 International CES, the world's largest annual technology
tradeshow, runs January 5-8, 2006, in Las Vegas, Nevada.
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