China Shenhua mulls asset injection

Company to undertake $3 billion asset injection.

 

{reg} China Shenhua Energy Co Ltd , plans to spend up to 19 billion yuan ($2.98 billion) to buy assets from its state parent reports Reuters.

 

The company says it had started implementing a plan to buy coal and power generation assets from the parent company but gave no details. The assets that it would buy from its parent would not exceed 5 percent of the listed firm's total assets at the end of June. That would mean Shenhua would spend up to 19 billion yuan on the acquisition, which is likely to be completed in six to nine months. The company says it has received asset injections from its parent in the past few years as part of a strategy to boost its profitability. Its parent aims for a full listing eventually through such asset injections.  It is also seeking to acquire overseas coking coal assets to meet China's rapidly growing steel demand, adding that it was currently looking at coking coal projects in Russia and Australia.

A venture led by Shenhua will hold a 40 percent stake in the western Tsankhi block of Mongolia's Tavan Tolgoi coal project, giving it the biggest share of one of the world's biggest coking coal deposits, according to a draft proposal submitted to the Mongolian parliament in July. A Russian-led consortium would control 36 percent of the project, while U.S. miner Peabody Energy Corp would own the remaining 24 percent. {/reg]