Shenhua Group, Shanxi Yanchang Petroleum set up coal JV

Nov. 5, 2009 (China Knowledge) - Shenhua Group Corp Ltd, the largest coal producer in China, on Tuesday set up a RMB 4.8-billion coal joint venture with Shaanxi Yanchang Petroleum Group Co Ltd.

Shenhua Group, the parent of China Shenhua Energy Co Ltd<601088><1088>, will hold a 51% stake in the new JV, which will be called Shaanxi Shenyan Coal Ltd, while Shaanxi Yanchang Petroleum, a state-owned affiliate of the Shaanxi provincial government, will own the remaining 49%.

The new JV, located in Yulin City, Shaanxi Province, will be mainly engaged in the production and sale of coal and will also supply a coal conversion project jointly run by Shenhua Group and Yanchang Petroleum.

In its initial stage, the JV will produce 10 million tons of coal per year at the Xiwan coal mine.

Shenhua Group Deputy General Manager Wan Xiaolin said that the group is expected to realize RMB 45 billion in profit this year and to produce more than 320 million tons of raw coal.

Shenhua Group, founded in 1995 under the direct control of the Chinese central government, had 29 fully-owned and controlled subsidiaries and total assets valued at RMB 411.1 billion at the end of 2008.