China Company Report -- Yanzhou Coal Mining Company Limited

China Company Report -- Yanzhou Coal Mining Company Limited

Yanzhou Coal Mining Company Limited is a listed company held by Yankuang Group Co., Ltd. in controlling shares, whose shares has been listed in Hong Kong, New York, Shanghai in 1998 respectively. It has been the only Chinese coal enterprise whose share listed at home and abroad.

In 2007, Yanzhou Coal Mining made 16.595 billion yuan of total revenue, an increase of 14.78 per cent year-on-year; 4.384 billion yuan profits, an increase of 36.95 per cent year-on-year; 46 per cent net profit growth; the total output of coal was 35.64 million tons, among 17.28 million tons cleans, which accounting for 48 percent of the total output.

Yanzhou Coal Mining is the first Chinese coal mine listed company invested in overseas coal industry. The types of product in the Australia coal mine are hard and semi-soft coking coal, which are the shortage coal products in the international coal market. According to the Australian coal reserves evaluation standards, this mine currently has valid coal reserves of about 41 million tons, planned throughput 3 million tons.

In the first quarter of 2008, the output of four major coal consumed industries has increased sharply in China, among 16.5 per cent year-on-year of thermal power; 8.8 percent year-on-year of crude iron; 9.2 per cent year-on-year of cement and 1.2 percent year-on-year of synthetic ammonia. The growth of coal output was 7.8 per cent year-on-year.

The average price of Yanzhou coal products has increased 45.9 per cent year on year in the first quarter of 2008. Currently, the total domestic sales contracts including contracted and intended order are 32.3 million tons, 9.51 million tons has already contracted, the average price of those has risen 45.9 per cent than last year; 22.791 million tons are intended contracts, the sales price of those will fluctuate in line with market conditions; the reason that the rising pace of Yangzhou coal prices is higher than the market average is, the massive spot sales, which accounting for about 70 per cent of the total sales, a rapid increasing than 2007, also, higher than other domestic coal enterprises. Therefore, company can benefit of the higher rising prices.

Methanol project is another profit maker for Yanzhou Coal Mining. The 100,000 tons of methanol project of Shanxi Energy& Chemicals Company has been operated in the second quarter of 2008; 600,000 tons of methanol project of Yulin Energy& Chemicals Company will be operating in the second half of 2008 and a 1.73 million tons methanol project is planned. Methanol output is expected to reach 200,000 tons in 2008. The marketing price of Methanol now has rebounded from a lower point in the end of last year, the current prices is rising 33.3 per cent than February. The materials of this two methanol projects are relying on own coal mine, which are able to utterly support their raw materials and reducing the cost to 1500 yuan/ton, lower than peer average cost.

Contents
1 Brief of Yanzhou Coal Mining Company Limited

2 Performances of 2007
2.1 Coal Business
2.2 The Rising Price of Coal Benefits Company Profits
2.3 Operating Charge

3 Output
3.1 The Decline of Output of Main Coal Mines
3.2 The Increase of Output of Subsidiary Coal Mines
3.3 The Reduction of Coal Exports

4 The Unexpected Rising of Coal Prices
4.1 The Average Price of Coal Has Increased 45.9 per cent in the First Quarter of 2008
4.2 The Rising Trend of Coal Price in the Second Half of 2008

5 The Reasonable Increasing Costs
5.1 Cost Increase in Line with Expectation
5.2 The Relationship with Local Villages

6 The Development of Coal Chemical Business
6.1 Methanol Projects Contribute to the total Profits
6.2 The New Project of Coal to oil



Figure Index
The Sales volume and types of Coal
The Coal Prices Change
The Price/ton, Cost and Gross Profit Ratio
The Gross Profit Ratio 2005-2007
The Output of Main Mines in Six years
The Coal Export Volume
The Prices of different kind of coal Figure 1
The Prices of different kind of coal Figure 2
Comparison the Output Growth between Coal and downstream Products
The Spot Price of Australian Stream Coal
The Prices of Methanol in Xi’an Market

Table Index
Brief Introduction of the main six mines of Yanzhou
Brief Introduction of subsidiary mines
Sales Volume of Coal