China’s Shenhua Energy Co., the nation’s largest coal producer, is planning to issue shares on the Shanghai Stock Exchange to raise as much as $6.7 billion as demand for the fuel surges.
Shenhua Energy announced plans to sell as many as 1.8 billion Yuan-denominated shares in Shanghai. Collected money from the sale will be utilized to buy coal, power and transport operations in domestic and overseas acquisitions. Shenhua Energy also disclosed its intentions of buying Shendong Coal and Shendong Power from their parent company, which will boost its marketable reserves by 6.19 percent.
All Shenhua Energy shares will become tradable once listed in the market. At present, 81.2% of the 18.08 billion issued shares are non-tradable state shares.
Analysts are expecting that the Hong Kong listed company will be welcomed in its homeland and will get good response. Market analyzers also added that the company’s plan to list it in Shanghai Stock Exchange would help to cool the coal market as it has quadrupled in value since 2006.
China, which is the largest producer of coal and second largest consumer after U.S, imported a large amount of coal to resist country’s growing needs of energy. China gets its 78 percent of electricity from coal.
Growing demand for energy has forced the country to explore its all-possible sources as last week coal prices at Qinhuangdao, China’s largest port for the fuel, rose to a record high as increased use of air conditioners in the summer season boosts power demand.
The price of coal at Qinhuangdao has risen almost threefold in the past five years. The nation’s coal output rose 7.1 percent in the first half of this year.
Increasing demand has forced China to produce more coal. China Economic Information Network asserts that China’s 2007 coal production can mount by 8.6 percent to 2.52 billion tons and demand may gain 8.5 percent to 2.51 billion tons.
Market responds well over Shenhua Energy decision to list in Shanghai Stock Exchange, as its shares climbed by 6.6 percent.
