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Mining group bullish on Shaanxi-province opportunity
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9th September 2005
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Premier of the Chinese province of Shaanxi Dr Chen Deming says that an agreement between Anglo Coal and Shenhua Energy Company, concluded in August, will result in the exploitation of Shaanxi's rich coal reserves.

The agreement between the two companies was one of the topics debated at a recent investment symposium in Johannesburg, involving corporate, government and industry delegates from Shaanxi and their counterparts in South Africa.

Deming says that a joint venture between AngloCoal and Shenhua to create a coal-mining operation would allow the companies to exploit several billion tons of coal in Shaanxi and potentially create a mine with a 50-year life.

It is estimated that Shaanxi has 166,3-billion tons in coal reserves, in additon to oil reserves totalling 1,1 billion tons and natural-gas stocks of 585,8-billion m3.

The agreement comes after the announcement by mining group Anglo American that it would invest $150-million in the initial public offering of Shenhua.

“China is an important player in the global coal sector and we have been actively pursuing a strategy of developing a China-based coal business,” said AngloCoal chairperson Tony Redman, speaking after the announcement of the company's investment in June.

“AngloCoal is already involved in an exploration programme in the Shaanxi province, and the strategic investment in Shenhua strengthens AngloCoal's China strategy,” said Redman.

“We are pleased to be cooperating with Shenhua – it has a long-standing experience in the region and we look forward to a mutually-beneficial strategic alliance with the group.” Last year, AngloCoal completed a joint-exploration agreement with the Shaanxi Coalfield Geology Bureau to investigate the potential of a coal lease in Shaanxi.

Tests showed that the lease had the potential for the foundation of a significant coal-mining operation.

Redman explained that the benefit of the investment in Shenhua is that it is the largest coal producer in China and the fifth-largest in the world, based on its production last year.

In 2004, bilateral trade between South Africa and China nearly exceeded $ 6 billion, an increase of 52,8% over the previous year. Meanwhile, the total volume of two-way investment between China and South Africa is about $500-million.

Besides Anglo Coal, other companies that enjoy a business presence in China include SABMiller, Kumba Resources, Sappi and Naspers.

Edited by: peter cromberge


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