Yongcheng Coal and Electric Group, a Henan province-based industrial conglomerate, plans to raise US$1 billion to US$1.5 billion from an initial public offering in Hong Kong next year, market sources said. A mandate for the deal had not yet been awarded.

Yongcheng's primary business is coal mining - it produced 7.94 million tonnes of coal in the first eight months of the year - but it also runs thermal energy, cement and hotel subsidiaries. The company earned 1.12 billion yuan in net profit for the first eight months of the year on 13.5 billion yuan in revenue.

China's coal companies are raising funds because the government is forcing the industry to consolidate with the intention of building three or four giants and 10 other or so medium-sized companies.

China is the world's biggest producer and consumer of coal, relying on it for two-thirds of the country's energy needs. Mainland power demand could rise 11 per cent to 3.1 billion megawatt-hours next year and a further 10 per cent to 3.4 billion megawatt-hours in 2008.

Yongcheng plans in March to open a US$186 million alumina refinery with a capacity of 400,000 tonnes a year. It signed an agreement with the government of Kaifeng, Henan, in October to provide about one billion yuan of financing to bail out Kaifeng Iron Tower Rubber Group, a car parts supplier.

Source:佚名