China's electric power investment will continue to increase during the "Eleventh Five-Year Plan" period. Its annual average electricity generation volume will achieve the growth rate of 10-12%. The upstream demand will guarantee the demand of steam coal to keep growing.

Regarding industrial carbamide, currently, China owns over 100 melamine enterprises with annual accumulated production capacity 750,000 tons and over 20% annual growth rate. In 2007, the demand of melamine is expected to surpass 1.4 million tons.

In 2006, China's output of coal injection was 44 million tons, and the output of pig iron was 404 million tons, therefore, the average injection ratio was 109 kg/ton pig iron. China's pig iron output is forecasted to keep the growth rate of 12%-15% more during 2007-2009. By 2008, pig iron output in China is expected to surpass 500 million tons, and the consumption of coal fines will reach 65 million tons if the industrial injection ratio increases to 130 kg/ton pig iron.

The current anthracite production capacity of Shanxi Guoyang New Energy Co., Ltd is 14 million tons, but its actual output exceeds 15 million tons.

Comparison of Resource Reserves of Listed Companies

Quantity Comparison of Self-produced Coals and Coals Sourced from Yangquan Coal Group
£¨Unit: 10,000 tons£©

Gross Profit Margin Comparison of Listed Companies in China's Coal Industry

2 Financial analysis
2.1 High price in connected transactions leads to low gross profit margin
2.2 Proportions of operating expense and administrative expense
2.3 Loose account sale policy leads to low accounts receivable turnover

3 Industrial integration creates favorable opportunities for company reform
3.1 Group socialization lightens burdens
3.2 Strong acquisition desire

4 Growth of downstream industries promotes coal demand
4.1 Demand of steam coal
4.2 Demand of lump coal
4.3 Demand of coal Injection

5 Forecast of company development