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BIZCHINA / Review & Analysis
License a positive for foreign players
By Xiao Wan (China Daily)
Updated: 2007-08-24 11:45
Shanxi Asian American-Daning Energy Co (SAADEC) is the first Sino-foreign
venture to get a license to develop a coal mine in China for some time.
It got the go-ahead to develop the Daning mine in North China's Shanxi
from the provincial coal bureau in July. The approval gave SAADEC its
sixth and final license needed to develop the Daning coal mine, which
will have an annual production capacity of 4 million tons. The mine is in
Jincheng, in the south of Shanxi.
SAADEC is 56 percent owned by Asian American Coal Inc (AACI). Local firm
Shanxi Lanhua Sci-Tech Venture Co Ltd takes a 36 percent share in the
venture, and Shanxi Coal Transportation & Sales Corp (Jincheng) the
remaining 8 percent stake.
US private equities including Resource Capital Funds, First Reserve Corp,
Evan Energy Investments, and Thai coal company Banpu Public Co Ltd are
all stakeholders in AACI.
"The Daning coal mine is our first project in China. The total investment
of the project is $230 million," said Michael Cosgrove, CEO of AACI.
AACI was set up in 1999 to develop coal and related assets in China. It
set up its Shanxi office in August 1999, and a Beijing office in March
2002. It set up SAADEC with two Chinese companies in April 2000, said
Cosgrove.
AACI set up another joint venture in 2006, Shanxi Gaohe Energy Co, with
Lu'an Mining Group to develop the Gaohe coal mine in Shanxi Province's
Changzhi. AACI owns 45 percent of the joint venture, while the Chinese
firm takes 55 percent.
In the pipeline
The Gaohe project is expected to get a production license in 2009,
Cosgrove told China Daily.
"AACI's success in getting a license for Daning comes down to good
preparation. The company has been focused on China's coal industry for
several years, and it has adapted to the local market," said Liang
Dunshi, an analyst at the China Coal Transport and Distribution
Association.
The firm said it hired Chinese staff for its senior positions to help
ease its way in the local coal industry.
China's booming coal industry has attracted many foreign investors in
recent years. Global coal giants such as Anglo American and Peabody
Energy have all entered the Chinese market.
Apart from coal, coal-bed methane, which is similar to natural gas, is
also luring foreign investors. For instance, Asian American Gas Inc,
which has the same stakeholders as AACI, has two coal-bed methane
projects in operation in China.
Aside from the upstream business, including developing coal mines and
coal-bed methane, downstream sectors such as coal-to-chemicals are also
generating foreign interest.
(For more biz stories, please visit Industry Updates)
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