Huadian Power buys into 2 coal mining firms

Nov. 4, 2009 (China Knowledge) - Huadian Power International Corp<600027><1071>, China's largest independent power producer, on Wednesday announced that it has signed an agreement with the Inner Mongolia subsidiary of Xinwen Mineral Group to buy into the latter's two coal mining firms, the Shanghai Securities News reported.

Huadian Power said in a statement filed with the Hong Kong Stock Exchange that it will spend RMB 498 million and RMB 180 million to take a 35% stake and a 25% stake in Fucheng Mining Co and Changcheng Mining Co, respectively.

The acquisition will give Huadian Power the right of first refusal on coal produced by the two mining firms.

Moreover, the deal will help Huadian Power expand into upstream and downstream businesses and increase its self-sufficiency.

Reportedly, Fucheng Mining has 237 million tons of coal reserves in Inner Mongolia, 155 million tons of which are recoverable reserves. Changcheng Mining has 111.4 million tons of coal reserves, of which 65.3 million tons are recoverable.