China Shenhua Energy pumps $40bn into coal investment in race to the top
CHINA Shenhua Energy, the world’s most valuable coal producer, plans to invest $39.5bn (£24.4bn) through 2013 to expand production capacity as it races to supply the world’s top coal consumer.
Shenhua, which also has power, rail and port divisions, will earmark about 30-50 per cent of the total investment for capital expenditure, Chairman Zhang Xiwu said.
“In line with national strategy, building coal reservation bases not only secures national energy safety, but facilitates our integrated operations,” Zhang said
BNP Paribas analyst Kathryn Ding said: “This investment should help the company fund its plan to more than double its annual capacity to 500m tonnes in five years.”
Ding expects the money will be used to buy assets from Shenhua’s parent, fund the development of two new 100m tonne-per-year coal bases and for overseas acquisitions
Shenhua is one of 10 bidders keen for a stake in what is known as the world’s biggest untapped coking coal deposit, with a coal reserve of 6.5bn tonnes in the Gobi desert.