According to statements published by the two groups' subsidiaries late Monday, the Henan State-owned Assets Supervision and Administration Commission (SASAC) – the actual controller of both groups – has decided to inject its 100 per cent stake in Henan Energy into Pingmei Shenma "as a capital contribution at an appraised fair value". Following the transfer, Henan Energy will become a wholly owned subsidiary of Pingmei Shenma.
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The statements stressed that the consolidation should not influence the two groups' and their subsidiaries' production and operations. After the transfer, Henan SASAC – which currently holds a controlling 50.15 per cent stake in Pingmei Shenma – will retain control over the Pingdingshan city-based energy and coal-chemicals giant, Mysteel Global learnt from public information.
Some market observers suggest the move reflects the Henan government's strategy to support the development of leading miners. They note the impact of stubborn domestic coal oversupply and consistent price declines during the first half of the year, which had led to sharp declines in coal miners' profits, the Beijing-based China Times reported.
The half-year report of Pingdingshan Tianan Coal. Mining Co., Ltd., the major coal mining arm of China Pingmei Shenma, listed on the Shanghai Stock Exchange, showed that its net profit attributable to shareholders had slumped by 81.5 per cent on year to RMB 258 million (USD 36.2 million) during January-June.
The company mainly produces primary coking coal, 1/3 coking coal, and fat coal for steelmaking, as well as some thermal coal types to generate power, and boasts coal reserves of around 3 billion tonnes, Mysteel Global learned from the firm's half-year report.
Meanwhile, the major coal mining subsidiary of Henan Energy, the Shanghai Stock Exchange-listed Henan Dayou Energy Co., Ltd., registered a dramatic net loss of RMB 852 million in the first half of this year, some RMB 362 million larger than its loss over the same period last year, according to the firm's half-year report.
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Henan Energy in total holds coal reserves of 28.4 billion tonnes and operates 52 mines with a combined capacity of 88.65 million tonnes per year, Mysteel Global learned from the group's website.
"Such strategic restructuring can help the two groups eliminate excess capacity, increase industry integration, and enhance competitiveness," China Times quoted Zhou Lisha, a researcher on China's state-owned enterprises (SOEs), as saying.
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Beijing has been actively encouraging restructuring among SOEs in recent years to nurture their competitiveness and optimise resource allocation in strategic sectors. In August, China Shenhua Energy Co. Ltd., the country's largest listed coal producer, also announced the acquisition of 13 coal-related assets from its state-owned parent, China Energy Investment Corporation, to enhance its coal resource reserves and fully integrated operational capability, as Mysteel Global reported.
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