April 03, 2008

China encourages mergers among coal miners

According to the National Development and Reform Commission latest report China encourages large coal mining companies to merge and acquire smaller ones.

The report suggests lifting the industrial access threshold to fend off unqualified coal mining enterprises, and establishing a system to channel coal resources to dominant enterprises under the principle of a key enterprise developing a mining area.

The report calls on the government to provide policy in favor of key coal enterprises to annex, purchase, reorganize or join hands with smaller valuable ones, and extend industrial chain through mergers and acquisition. In addition, the report urges the government to provide subsidies and favorable policies to large coal enterprises to finish technological and industry upgrading.

Currently, the reshuffle of coal mining industry confronts challenges of low industry access, high M&A cost and risks, local protectionism, corporate cultural integration, complex approving procedures and lack of infrastructure in local area