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Shaanxi Coal sets sights on Australia

Updated: 2012-03-07 07:52

By Zhou Siyu (China Daily)

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Shaanxi Coal and Chemical Industry Group Co Ltd, a large State-owned energy and coal chemical company, plans to invest in an Australian coal mine, Group Chairman Hua Wei said while attending the fifth session of the 11th National People's Congress on Tuesday.

"We are currently conducting geological exploration in the coal mine (in Australia)," said Hua.

The investment will be carried out with other energy companies based in Northwest China's Shaanxi province, according to a source close to the matter.

Neither the source nor Hua revealed further details.

The company's previous overseas investment involved a fertilizer plant in Argentina in 2011. Hua's company made the investment through a joint venture with Shaanxi Xinyida Investment Ltd and Jinduicheng Molybdenum Group Co Ltd.

Set for completion in 2013, the plant was the company's first overseas project and the largest Chinese investment in Argentina.

"We have made steady progress" in the plant's construction, Hua said.

Industry analysts said overseas investments could strengthen the company's ability to compete in China and the global market.

"An overseas presence could help boost the company's revenue," said Li Junfeng, an analyst with China Securities Co Ltd.

China's overseas investments have increased steadily in recent years.

In January, the total value of the nation's overseas investments jumped 60 percent year-on-year to $4.38 billion, according to data from the Ministry of Commerce.

The investments are expected to continue rising. The country will guide companies in making overseas investments and pursuing foreign mergers and acquisitions in industries including energy, raw materials, agriculture, manufacturing and services in 2012, said Premier Wen Jiabao at the fifth session of the 11th National People's Congress on Monday.

"China's outward investment is in an important stage of accelerated development," Wen said.

In the coal sector, several major Chinese companies have increased their international presence. In December, Yanzhou Coal Mining Co Ltd said it planned to merge its Australian unit with Gloucester Coal Ltd in a A$700 million ($743.5 million) deal. This will create one of Australia's largest listed coal companies.

But analysts warned that Chinese companies in the coal sector lack the necessary experience to undertake foreign investments and takeovers. "Companies should devise a sound strategy before scrambling for overseas expansion," including a thorough study of local regulations and customs, Li said.

China's coal imports in January rose 3.9 percent year-on-year to 19.7 million tons, according to data from the General Administration of Customs.

In 2011, China imported 1.82 trillion tons of hard coal, up 10.8 percent, official data show.

zhousiyu@chinadaily.com.cn

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