Fushan International Energy Enhances Profitability by Its Extending Capacity into Three Coal Mines
2008-07-25 11:07:50 -
- Fushan International Energy Group Limited ("Fushan" or "our Company", Stock code: 00639) is pleased to announce that its wholly owned subsidiary, Jade Green Investments Limited, concluded a conditional sales and purchase agreement with Fortune Dragon Group Limited ("Fortune Dragon") to jointly develop Fortune Dragon's three coking coal mines at Xingwu, Jinjiazhuang and Zhaiyadi with an annual total raw coking coal production capacity of 6.3 million tonnes for a total consideration of HK$10.53 billion. Upon the completion of the deal on 25 July 2008, the three coal mines became a subsidiary of our Company.
The Xingwu, Jinjiazhuang and Zhaiyadi mines are in southern Liulin County, Luliang, Shanxi Province, where the coal excavated is mainly hard and semi-hard coking coal. The annual raw coking coal production of the three coal mines from 2005 to 2007 was 2.52 million tonnes, 4.14 million tonnes and 5.082 million tonnes, respectively, or a CAGR of 41.95%. The annual production capacity for each of the mines is designed at 2.1 million tonnes. In addition, the Xingwu coal mine operates a coal preparation plant. Once the coal preparation plants in Jinjiazhuang and Zhaiyadi are completed and start production in 2009, the Company's production capacity of clean coking coal will be greatly enhanced.
The three coal mines are located in Liulin County, which is Shanxi Province's major coking coal production centre. The coal-rich Shanxi Province is proven to have approximately 59.7% of China's total coal reserves, and it could have the best coking coal reserves in China and possibly the world. The total in-place reserves of the three coal mines are estimated to be 205.75 million tonnes, with coal recoverable reserve amounts of 142.35 million tonnes, according to a technical review report published on 25 June 2008 by John T. Boyd Company, an independent coal mine expert, and as stipulated in the JORC regulations. Coking coal, an important element in steel production, accounts for no more than 10% of the proven global total coal reserves. China's steel industry that has undergone rapid volume growth of 23.9% CAGR over the past 5 years, is now the driving force behind the strong national and international demand for coking coal.
Mr. Wong Lik Ping, Chairman of Fushan International said, "Upon the completion of the deal, we will own productive hard coal mines with rich reserves that will greatly enhance our coking coal business. On top of that, our coke plant which has a production capacity of 1 million tons has already gone into the initial phase of production. We are happy to have the financial support of Shougang Corporation, which is China's prominent leader in the steel industry. We have now gained a formidable and reliable strategic investor as well as a long term partner. We believe this is an excellent beginning to a win-win situation."
Our Company is principally engaged in the production and sales of coking coal and ancillary products. We are well-connected within the province with the Datong - Qinhuangdao and the Shijiazhuang Taiyuan railways as well as a well-developed highways network. This extensive transportation network enables us to ship our products economically and efficiently across the country. Once the deal is concluded, we will increase the annual production of coking coal. To meet our increasing production capacity and rising market demand, we strive to improve our transport capability and efficiency. Furthermore, we will examine acquisitions of other coal mines and resources to create more room for greater profitability.
Mr. Wong concluded, "Through this merger we will improve our economies of scale as we will benefit from the three coal mines' technical skills in coal mining and various support services. We will be able to further enhance our growth, efficiency and competitiveness. We aspire to be the market leader in China's coking coal industry and to continue creating greater value for our shareholders."
About Fushan International
Fushan International Energy Group is a Hong Kong listed company, stock code: 00639. It is principally engaged in the production and sales of coking coal products and ancillary products. Its Xingwu, Jinjiazhuang and Zhaiyadi coal mines are in Liulin County, Shanxi Province, an area in China that is rich in coking coal. Its major business is coal excavation and related downstream business. Its mines are well connected by an efficient railway and highway network, and its products are sold throughout China.
Fushan International Energy Group
Jimmy So, 852 2765 0839
jimmyso@fushan.com.hk
Joannae Lam, 852 2765 0839
joannae@fushan.com.hk
or
PR China
Jane Liu, 852 2522 1838
jliu@prchina.com.hk
Henry Chik, 852 2522 1838
hchik@prchina.com.hk
