BEIJING: A Chinese power company has agreed a deal to buy a 34 percent stake in a South African coal mine for US$114 million.
Qingdao Hengshun Zhongsheng Group said in a statement yesterday that it had signed a memorandum of understanding with Coal of Africa Ltd to buy the stake from its unit Baobab Mining and Exploration Ltd.
Baobab currently runs the Makhado coal project, which has gross reserves of 790 million tons, recoverable reserves of 340 million tons and an expected annual yield — of mostly coking and steam coal — of 12.6 million tons.
On completion of the deal, which is set to be next year, Coal of Africa will own 40 percent of the project, with the remaining 26 percent belonging to local people, which is a stipulation under South African law.
Hengshun Zhongsheng has been keen to increase its exposure to foreign markets due to falling demand at home. In the first half of this year, its revenue rose 215 percent year on year to 631 million yuan (US$98.6 million), with 94 percent of that coming from its overseas activities.
The company last month started construction of the first phase of a power project in Indonesia, in which it plans to invest 1 billion yuan.
